Authority: National Company Law Tribunal (NCLT), Kolkata Bench, Court No. I

Order Date: 10 June 2026

Case Overview

The case involves an application (C.P. (IB) No. 101/KB/2025) filed by Canara Bank under Section 95 of the Insolvency and Bankruptcy Code (IBC), 2016, read with the Personal Guarantor Rules, 2019. The bank sought to initiate an Insolvency Resolution Process (IRP) against Mr. Baibhab Kumar Roy, a personal guarantor for corporate debtor B.K Roy Private Limited. The guaranteed debt amounted to ₹58,27,85,789.54 (Rupees Fifty Eight Crore Twenty Seven Lakh Eighty Five Thousand Seven Hundred Eighty Nine Only) as of 31 January 2025.

The corporate debtor, B.K Roy Private Limited, was already admitted into Corporate Insolvency Resolution Process (CIRP) by the same tribunal on 27 November 2024. A Resolution Professional (RP), Mr. Umesh Kumar (IBBI Reg. No. IBBI/IPA-001/IP-P-01978/2020-2021/13152), was appointed on 02 April 2025 to examine the application against the guarantor. The RP submitted a report (via I.A. 1023/KB/2025) on 23 June 2025, recommending the admission of the bank's petition.

The personal guarantor filed an interlocutory application (I.A. 1390/KB/2025) challenging the maintainability of the main petition. The core legal dispute was whether the personal guarantee had been validly invoked. The guarantor argued that since a loan recall notice and a formal demand notice under Rule 7 (Form B) of the PG Rules were issued on the same date (28 November 2023), the guarantee was not properly invoked. Canara Bank refuted this, submitting that it had first issued a notice under Section 13(2) of the SARFAESI Act on 30 August 2023, which specifically demanded the guarantor discharge the liability, and this constituted valid invocation.

Analysis and Finding

The tribunal analyzed the terms of the guarantee agreement, which stated that a notice could be served personally or by post and would be deemed served on the third day after posting. It examined the SARFAESI notice dated 30 August 2023, which explicitly demanded the personal guarantor "discharge in full the liabilities of the borrower... within 60 days."

The tribunal relied heavily on precedent from the National Company Law Appellate Tribunal (NCLAT), particularly the judgment in Ujwal Gupta Vs. Union Bank of India and others, which established that a notice under Section 13(2) of the SARFAESI Act can constitute a valid invocation of a personal guarantee if its wording clearly demands payment from the guarantor as per the terms of the guarantee agreement. The bench concluded that the 30 August 2023 notice fulfilled this requirement and thus the guarantee was validly invoked. The application (I.A. 1390/KB/2025) filed by the personal guarantor was therefore rejected.

Final Outcome

The main company petition (C.P. (IB) No. 101/KB/2025) filed by Canara Bank is admitted. The Insolvency Resolution Process is initiated against the personal guarantor, Baibhab Kumar Roy. A moratorium under Section 101 of the IBC is declared with immediate effect for 180 days or until the tribunal passes an order on repayment under Section 114, whichever is earlier. During the moratorium, all pending legal proceedings related to any debt of the guarantor are stayed, and the guarantor is prohibited from transferring or alienating any assets.

The appointed Resolution Professional, Mr. Umesh Kumar, is directed to perform duties under Sections 102 to 110 of the IBC. This includes publishing a public notice in newspapers, inviting claims from all creditors, preparing a list of creditors, assisting the debtor in preparing a repayment plan, and conducting meetings of creditors to consider the plan. The RP must submit periodic progress reports to the tribunal every 30 days. The matter is next listed for hearing on 17 July 2026.

  • Topics: Personal Guarantor Insolvency, Debt Recovery, NCLT Proceedings