Authority: National Company Law Tribunal Mumbai Bench - I (Members: Prabhat Kumar - Member Technical, Sushil Mahadeorao Kochey - Member Judicial)

Order Date: 14 July 2026

Case Overview

The National Company Law Tribunal (NCLT) Mumbai Bench heard a petition filed by Canara Bank Limited under Section 95(1) of the Insolvency & Bankruptcy Code, 2016 read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019. The petition sought initiation of insolvency proceedings against Mr. Sitaram L. Shivale, who stood as personal guarantor for M/S. Raireshwar Packaging Pvt. Ltd (Corporate Debtor).

The financial creditor (Canara Bank) had extended multiple credit facilities to the corporate debtor between 2019-2020: (1) Cash Credit Facility of Rs. 4,90,00,000/- sanctioned on 23.10.2019 under MSME Scheme; (2) Working Capital Term Loan of Rs. 21,00,000/- sanctioned on 15.07.2020 under GECL Scheme; (3) Term Loan of Rs. 3,37,50,000/- sanctioned on 25.09.2020 for boiler purchase; and (4) Vehicle Loan of Rs. 34,00,000/- sanctioned on 13.11.2020 for Kia Carnival purchase.

Mr. Shivale executed Guarantee Agreements dated 30.10.2019 and 30.09.2020, creating co-extensive liability under Section 128 of the Indian Contract Act, 1872. The corporate debtor committed persistent defaults in repayment, leading to accounts being classified as Non-Performing Assets (NPA) on 03.01.2023. The bank issued a Demand Notice under Section 13(2) of SARFAESI Act on 04.01.2023 and later filed OA No. 182 of 2023 before DRT Pune, which remains pending.

A statutory demand notice under Rule 7(1) was issued to the personal guarantor on 22.12.2025, but no repayment was made. The total outstanding amount as of 09.12.2025 was Rs. 8,35,41,516/- with further interest and charges. The respondent was proceeded ex-parte on 22.06.2026 after failing to appear despite opportunities.

The Resolution Professional, Mr. Akhil Ahuja (IBBI/IPA-001/IP-P-02072/2020-2021/13213), appointed vide order dated 13.03.2026, submitted a report under Section 99 recommending admission of the petition, confirming that all statutory requirements were met and the default amount exceeded the threshold of INR 1,000.

Final Outcome

The NCLT admitted the petition (C.P. (IB) No. 250/MB/2026) and initiated insolvency resolution process against Mr. Sitaram L. Shivale. The tribunal declared a moratorium for 180 days from the date of admission (14.07.2026) under Section 101 of IBC, 2016, staying all legal proceedings, preventing creditor actions, and restricting asset transfers by the debtor. Mr. Akhil Ahuja was confirmed as Resolution Professional and directed to publish a public notice on NCLT website within 7 days inviting claims from all creditors within 21 days. Canara Bank was directed to deposit INR 75,000 towards the Resolution Professional's fees and expenses within one week.

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