Authority: National Company Law Tribunal, Mumbai Bench Court III

Order Date: 09.10.2026

Case Overview

The petition was filed by Unity Small Finance Bank Limited (erstwhile Punjab and Maharashtra Cooperative Bank Limited) under Section 95 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of insolvency resolution process against Mr. Sarang Rakesh Wadhawan as personal guarantor for M/s Guruashish Construction Private Limited.

The financial creditor had sanctioned a term loan of ₹75 crore to the corporate debtor on 04.03.2017, with ₹35 crore disbursed on 29.04.2017 and ₹62,00,168 disbursed on 05.06.2017. The respondent had executed a Common Letter of Guarantee dated 29.04.2017 along with others to secure the loan. The corporate debtor was admitted into corporate insolvency resolution process on 24.07.2017 and subsequently ordered into liquidation on 04.09.2020.

On account of default by the corporate debtor, the original lender invoked the personal guarantee through invocation letter dated 06.11.2021 demanding ₹69,07,10,842 due as on 31.10.2021. A Demand Notice dated 15.11.2021 was issued under Rule 7(1) of the PG Rules, 2019. The present petition was filed on 18.12.2021 for the outstanding amount of ₹69,07,10,842 as of 31.10.2021 along with interest at 15% p.a. and penal interest at 2% p.a. from the date of default (14.11.2021).

The respondent raised several defenses including: (1) improper service of notices while he was incarcerated from December 2019 to April 2024; (2) alleged irregularities in loan sanctioning and disbursement; (3) pending Economic Offences Wing investigation and chargesheet regarding fraud; (4) alleged misconduct by the resolution professional; and (5) incorrect date of default.

The tribunal examined the resolution professional's reports dated 05.04.2022 and amended report dated 05.07.2022 which recommended admission of the application, noting that the respondent had not made any payment toward the unpaid debt and no evidence proving contrary to the existence of debt had been provided.

Final Outcome

The tribunal admitted the petition and initiated insolvency resolution process against Mr. Sarang Rakesh Wadhawan with the following directions:

  • Moratorium declared on all debts for 180 days or until repayment plan approval under Section 114
  • Mr. Hemendra Paliwal (Registration No. IBBI/IPA-001/IP-P01830/2019-20/12788) appointed as resolution professional
  • Public notice to be published on NCLT website and in Business Standard (English) and Lok Satta Marathi newspapers
  • Creditors given 21 days to submit claims from publication date

The tribunal rejected all defenses raised by the respondent, noting that service through jail superintendent was valid, the RP's registration was valid when reports were filed, pending EOW investigations don't affect debt determination under IBC, and the contract of guarantee is independent of the underlying loan transaction.

Topics: Personal Guarantor Insolvency, Debt Recovery, Banking Litigation