Authority: National Company Law Tribunal, Kolkata Bench

Order Date: 12 June 2026

Case Overview

The petition was filed by Bank of Baroda under Section 7 of the Insolvency and Bankruptcy Code, 2016 against M C Industries Private Limited, which acted as a corporate guarantor for credit facilities availed by Supreme & Company Limited (the principal borrower).

The principal borrower had enjoyed various working capital facilities with Axis Bank, ICICI Bank, and Bank of Baroda (formerly Vijaya Bank) under individual security documents, which were later consolidated into a consortium arrangement with Bank of Baroda as the lead bank. The consortium lastly sanctioned credit facilities of ₹117.40 crores on 02.03.2022.

M C Industries Private Limited executed a Deed of Corporate Guarantee dated 24.06.2022 for ₹117,40,00,000/- (One Hundred Seventeen Crores Forty Lakhs) in favor of Bank of Baroda, providing an unconditional, absolute, and irrevocable guarantee. The principal borrower defaulted on repayment, leading to the account being classified as NPA on 25.07.2022.

Bank of Baroda issued a demand notice upon the corporate debtor on 04.11.2022, demanding payment of outstanding dues of approximately ₹101 crore plus interest. This notice was recalled on 22.03.2023 due to a clerical error. A fresh demand notice was issued on 18.04.2023, invoking the corporate guarantee and demanding ₹94.62 crores. The principal borrower had already been admitted into CIRP vide order dated 05.06.2024 in C.P. (IB) No. 70/KB/2023.

The corporate debtor contested the petition on three main grounds: (1) lack of proper authorization of Mr. Prakash Agarwal (Chief Manager of Bank of Baroda) to file the application; (2) invalid invocation of guarantee due to alleged non-receipt of the recall notice dated 22.03.2023; and (3) improper classification of NPA.

The tribunal addressed three primary issues:

1. Authorization: The tribunal held that Mr. Prakash Agarwal was duly authorized based on the amalgamation of Vijaya Bank, Dena Bank and Bank of Baroda (notified in Official Gazette on 02.01.2019) and Board Resolution dated 14.11.2017, which empowered executives not below the rank of Chief Manager to undertake all acts necessary for IBC proceedings. The tribunal cited Tek Travels Private Limited v Altius Travels Private Limited to support that authorization prior to IBC enactment is valid.

2. Validity of Invocation: The tribunal found that the recall notice dated 22.03.2023 was validly dispatched to the corporate debtor's last known address, and based on the guarantee deed's Clause (20) and the principle of deemed service (citing Rajandan Kumar, RP of Anindita Mukherjee case), held that actual receipt was not required. The notice was deemed delivered when it would ordinarily reach in due course of post.

3. Classification of NPA: The tribunal ruled that NPA classification doesn't determine default occurrence, and as long as debt and default exist, IBC proceedings can be initiated. Citing Laxmi Pat Surana v Union of India and Archana Deepak Vs Indian Bank, it held that the liability of the guarantor is co-extensive with the principal borrower under Section 128 of the Indian Contract Act, 1872, and limitation period commences from date of guarantee invocation.

Final Outcome

The tribunal admitted the petition and initiated Corporate Insolvency Resolution Process (CIRP) against M C Industries Private Limited with the following directives:

  • Moratorium declared under Section 14 of IBC with immediate effect
  • Mr. Sanjai Kumar Gupta (IBBI Registration No. IBBI/IPA-001/IP-P00592/2017-2018/11045) appointed as Interim Resolution Professional
  • Financial creditor directed to pay ₹3,00,000 to IRP for CIRP costs as per Regulation 33(3) of IBBI Regulations
  • IRP to make public announcement within 3 days and call for claims submission
  • Management of corporate debtor vested in IRP under Section 17
  • Officers and managers directed to provide all documents and information to IRP within one week
  • IRP authorized to seek police assistance for taking charge of corporate debtor's assets and documents
  • Registry directed to communicate order to all parties and to IBBI and Registrar of Companies, Kolkata
  • Next hearing posted on 20.07.2026 for filing periodical progress report

Topics: Corporate Insolvency, Guarantor Liability, Banking Debt Recovery