Case Overview

This order pertains to an application (CP (IB) No.79/ALD/2024) filed on 19 April 2024 by Siemens Financial Services Private Limited (the Financial Creditor) under Section 95 of the Insolvency and Bankruptcy Code (IBC), 2016, read with the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019.

The application sought to initiate a Personal Insolvency Resolution Process (PIRP) against Mr. Rasik Khandelwal, who provided a personal guarantee for credit facilities extended to Rasik Products Private Limited (the Corporate Debtor).

The Financial Creditor had sanctioned four secured loans to the Corporate Debtor:

  • 31 January 2022: Secured Loan 1 (₹3,65,11,956) and Secured Loan 2 (₹84,88,404) via Finance Agreements A9813943 and A9814174.
  • 22 September 2022: Secured Loan 3 (₹1,30,00,000) via Finance Agreement A9874677.
  • 14 November 2022: Secured Loan 4 (₹70,00,000) via Finance Agreement A9985776.

Clause 11 of the finance agreements established Mr. Khandelwal's unconditional, irrevocable, and joint-and-several liability as a personal guarantor for the repayment of all dues. The Corporate Debtor defaulted on repayments, and its account was classified as a Non-Performing Asset (NPA) on 14 December 2023. The total debt claimed as due and defaulted was ₹3,81,04,993.

Following the default, the Financial Creditor issued a demand notice under Section 13(2) of the SARFAESI Act on 16 February 2024 to both the Corporate Debtor and the Personal Guarantor, invoking the guarantee. As no payment was received, a statutory demand notice in Form B under IBC rules was issued to the Personal Guarantor on 12 March 2024, which also went unanswered.

The Tribunal appointed Mr. Amit Ojha (IBBI Reg. No. IBBI/IPA-002/IPN01005/2020-2021/13275) as the Resolution Professional (RP) on 18 October 2024. The RP examined the application, sought information from the Personal Guarantor (who did not respond), and filed a report under Section 99 on 01 November 2024, recommending the admission of the application and initiation of PIRP.

The Personal Guarantor filed a reply raising objections on the maintainability of the petition, arguing the absence of a specific due date for repayment, questioning the Financial Creditor's status, challenging the computation of the debt as arbitrary, and alleging an abuse of process for not exhausting remedies against the principal borrower first. The Financial Creditor filed a rejoinder, countering these objections with contractual clauses (acceleration and cross-default), relevant legal precedents (Laxmi Pat Surana v. Union Bank of India), and evidence of debt acknowledgment.

Tribunal's Findings and Reasoning

The Tribunal addressed the respondent's objections:

1. Limitation: The application, filed in April 2024 for a default from September 2023, was within the three-year limitation period under Article 137 of the Limitation Act.

2. Exhaustion of Remedies: Citing the Supreme Court's judgment in Mahendra Kumar Jajodia v. State Bank of India, the Tribunal held that initiation of Corporate Insolvency Resolution Process (CIRP) against the principal borrower is not a prerequisite for proceeding against a personal guarantor. It was also noted that CIRP against Rasik Products Pvt Ltd had already been initiated in a separate case (CP(IB) No.38 of 2023).

3. Computation of Debt: The objection regarding the computation of the default amount was rejected, stating that precise computation is to be done by the RP during the PIRP, and at the admission stage, it only needs to be established that the default exceeds the threshold of ₹1 lakh (as per the Code).

4. Procedural Irregularities & Date of Default: The Tribunal found the petition compliant with Section 95 requirements and held that the manner of stipulating the date of default was not a valid ground for rejection. The debt and default were established through finance agreements, repayment schedules, and statements of account.

5. NeSL Record: The Tribunal clarified that a NeSL record is not mandatory for establishing debt and default under Section 95, as other documents can suffice.

The Tribunal concurred with the RP's report, confirming that the application met all requirements under Section 95, the debt was due and defaulted, the guarantee was validly invoked, and the personal guarantor was not eligible for a fresh start.

Final Outcome

The application was admitted. The Personal Insolvency Resolution Process (PIRP) is initiated against Mr. Rasik Khandelwal.

Key Directions:

  • A moratorium is declared for 180 days from the order date (09.10.2026) on all debts of the personal guarantor, as per Section 101 of the IBC.
  • Mr. Amit Ojha is confirmed as the Resolution Professional.
  • The RP is directed to publish a public notice on the NCLT website and in two newspapers (one English, one vernacular) within 7 days to invite claims from all creditors within 21 days.
  • The RP is to prepare a list of creditors and assist the debtor in preparing a repayment plan under Section 105.
  • The RP must submit periodic progress reports to the Tribunal every 30 days.
  • The matter is listed next on 16 November 2026 for a progress report.

Topics: Personal Guarantor Insolvency, Debt Recovery, NCLT Proceeding