Authority: National Company Law Appellate Tribunal, Chennai Bench (Justice N Seshasayee, Member (Judicial) and Jatindranath Swain, Member (Technical))

Order Date: 04 August 2026

Case Overview

The appellate tribunal heard consolidated appeals (Company Appeal (AT)(CH)(Ins) Nos. 360/2026, 361/2026, and 363/2026) filed by three family members - Nuzhat Aisha Naseer, Awaiz Ahmed, and Naseer Ahmed (parents and son) - challenging separate orders dated 08.06.2026 from the Adjudicating Authority that initiated bankruptcy proceedings against them. The proceedings were initiated by Canara Bank (Respondents 1-3) over an alleged liability of approximately ₹1,455 crores.

The background reveals that personal insolvency resolution process (PIRP) was initiated against the appellants under Section 100 of the Insolvency and Bankruptcy Code (IBC) on 07.06.2022. The appellants failed to submit any repayment plan under Section 105, leading the Committee of Creditors (CoC) on 19.09.2022 to characterize this as a 'deemed repayment plan' with 'NIL' value. On 26.02.2024, the tribunal rejected this concept as alien to the Code and directed the CoC to reconsider. On 06.03.2024, the CoC noted the non-submission and resolved to apply for bankruptcy proceedings.

The resolution professional then filed applications (I.A.218/2024, I.A.220/2024, I.A.219/2024) seeking leave to file under Section 121, which were allowed on 11.12.2024. These became subject to appeals that were ultimately dismissed on 03.06.2025. Meanwhile, on 17.03.2025, the lender banks filed separate applications (I.A.343/2025, I.A.341/2025, I.A.342/2025) under Section 121 IBC, resulting in the impugned orders initiating bankruptcy.

The appellants' counsel argued that the Section 121 application was filed beyond the three-month limitation period from the rejection of the repayment plan under Section 115, and no application for condonation of delay under Section 5 of the Limitation Act was filed. More significantly, they invoked Section 142(1)(b) of the Code, which allows the tribunal to modify or recall bankruptcy orders if the debt is paid or secured to the satisfaction of the Authority, reflecting legislative intent to help debtors resurrect themselves.

The respondents emphasized that any settlement must conform to Part V of the Code, requiring the personal guarantors to share all information under Section 150 and involving the CoC as per Section 153. The bankruptcy trustee (R4) highlighted the appellants' poor conduct, noting they never contacted him during the repayment plan preparation stage or thereafter, and mentioned that some of their personal assets had already been sold.

The tribunal acknowledged the appellants' failure to act when they had the opportunity under Section 105 but recognized that Section 142(1)(b) reflects Parliament's intent to provide optimum opportunities for personal guarantors to save their honor and dignity, linked to the right to life under Article 21 of the Constitution. The tribunal noted the legislative sympathy toward debt-trapped individuals compared to companies.

Final Outcome

The tribunal decided to grant the appellants an opportunity to work out a repayment plan under Section 142 of the Code. It was reported that the appellant in C.A.363/2026 (Naseer Ahmed) had contacted the bankruptcy trustee by 30.07.2026 as directed. The tribunal requires the appellants to develop a plan of action for debt repayment with the bankruptcy trustee and comply with Section 150 obligations. The bankruptcy trustee is instructed not to alienate any of the appellants' assets during this process. The matter is listed for further monitoring on 17.08.2026 to track progress.

Topics: Personal Insolvency, Bankruptcy Proceedings, Debt Repayment