Authority: National Company Law Appellate Tribunal, Principal Bench, New Delhi

Order Date: September 17, 2026

Case Overview

The National Company Law Appellate Tribunal (NCLAT) heard four consolidated appeals (Company Appeal (AT) (Insolvency) Nos. 636, 637, 638, and 696 of 2025) filed by personal guarantors - Ravindra Gopalkrishan Agarwal, Sunita Jayprakash Chitkote, Vijaykumar Ramgopal Gilda, and Ramnivas Vishnudas Agarwal - challenging orders dated 04.02.2025 passed by the National Company Law Tribunal (NCLT), Mumbai Bench-IV. The NCLT had admitted petitions under Section 95 of the Insolvency and Bankruptcy Code, 2016 filed by Jankalyan Sahakari Bank Ltd. through its Resolution Professional M/s MVK IPE LLP, initiating Personal Insolvency Resolution Process against the appellants as personal guarantors for debts owed by Corporate Debtor Oasis Alcohol Limited.

The corporate debtor had availed credit facilities from a consortium of 11 cooperative banks in 2010, with Janata Sahakari Bank Ltd. as lead bank. The appellants had executed Personal Guarantee Deeds on 20.03.2010 and 08.08.2011. The account was declared NPA on 30.09.2013, and a demand notice under SARFAESI was issued on 13.06.2016. On 22.02.2017, consortium members entered into consent terms with the company, culminating in an arbitral award dated 23.03.2017. Six consortium members assigned their debt to CFM Asset Reconstruction Pvt. Ltd., but Jankalyan Sahakari Bank did not assign its debt. The respondent bank filed applications under Section 95 of IBC against all personal guarantors, claiming ₹22,42,01,475.68 as due on 25.03.2023.

Key Issues and Tribunal's Analysis

The appellants raised six main contentions:

1. Status Change from Guarantor to Co-debtor: Appellants argued the arbitral award dated 23.03.2017 converted them from guarantors to co-borrowers through Clause 7 which made opponents liable "jointly and severally." The Tribunal rejected this, noting the award expressly preserved liability in event of default and no fresh loan documentation was executed. The original guarantee agreements contained clauses making them irrevocable and continuing until full repayment.

2. Locus Standi and Debt Assignment: Appellants claimed the respondent bank assigned its debt to CFM ARC on 21.08.2020, depriving it of standing to file Section 95 petitions. The Tribunal found no evidence that Jankalyan Sahakari Bank executed any assignment agreement - the assignment was between other consortium members and CFM ARC. The sale of appellant's property by CFM ARC did not establish assignment of the respondent's specific debt.

3. Discharge under Section 133 of Contract Act: Appellants contended restructuring by CFM ARC amounted to material variation discharging them. The Tribunal found no evidence that the respondent bank itself entered into any variation or restructuring that would attract Section 133.

4. Limitation: Appellants argued the petition was time-barred as original default occurred much earlier. The Tribunal accepted the respondent's chronology showing demand notice under SARFAESI on 16.07.2020, with default occurring on 13.09.2020 after 60-day period, and Section 95 petition filed on 05.05.2023 within three-year limitation period.

5. Contractual Cap on Liability: Appellants claimed liability was capped at ₹6.5 crore and ₹2.5 crore under respective guarantees. The Tribunal noted Clause 19 of guarantee agreements covered not only principal but also interest, damages, costs, and other consequential liabilities.

6. Effect of MOU and Corporate Guarantor: Appellants argued a MOU dated 16.12.2017 with corporate guarantor Rajlakshmi Petrochem Pvt. Ltd. discharged them. The Tribunal found no express release by the respondent bank and payments received did not establish full satisfaction of debt.

Final Outcome

The NCLAT dismissed all four appeals, upholding the NCLT's orders initiating personal insolvency resolution process against the appellants. The Tribunal found no error in the NCLT's admission of Section 95 petitions, confirming that: (i) the respondent bank had locus standi as it had not assigned its debt; (ii) the arbitral award did not change the appellants' status from personal guarantors; (iii) no variation by the respondent bank discharged the guarantors; (iv) the petitions were filed within limitation from the September 2020 default date; and (v) disputes about liability computation don't invalidate insolvency initiation. The insolvency resolution process against the appellants shall proceed in accordance with law.

Topics: Personal Guarantor Insolvency, Debt Assignment Dispute, Limitation in Insolvency