Authority: National Company Law Tribunal Principal Bench

Order Date: 12.10.2026

Case Overview

Yes Bank Ltd. (Financial Creditor) filed a petition under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 to initiate Personal Insolvency Resolution Process (PIRP) against Mr. Anil Madan, who served as a personal guarantor for credit facilities extended to M/s Johnson Watch Company Private Limited (Corporate Debtor). The credit facilities included a Cash Credit Facility initially sanctioned at Rs. 14,00,00,000/- in 2013, which was later increased to Rs. 32,00,00,000/-, then reduced to Rs. 27,90,00,000/-, and finally to Rs. 25,50,00,000/- on 2nd December 2022. Mr. Anil Madan executed Deeds of Personal Guarantees dated 28.06.2013, 29.06.2016, 26.07.2017 and 26.06.2018 to secure these payments.

The Corporate Debtor's account was classified as Non-Performing Asset (NPA) on 16.03.2023 with an outstanding amount of Rs 34,69,24,086/- as of 05.07.2023. Yes Bank issued a demand cum Loan Recall Notice on 15.05.2023, followed by a Demand cum Guarantee Invocation Notice on 24.05.2023. A notice under Section 13(2) of the SARFAESI Act, 2002 was issued on 10.07.2023. Subsequently, an application under Section 9 of the Code was admitted against the Corporate Debtor on 17.01.2024. Yes Bank filed the current application on 07.12.2024 seeking to initiate insolvency against the personal guarantor for a debt due of Rs. 170,730,327.96 as on 30.09.2024.

The Resolution Professional, Mavent Restructuring Services LLP (IBBI/IPE-0154/IPA-3/2023-24/50058), was appointed on 18.12.2024 and submitted a report recommending admission of the petition. The Personal Guarantor raised four key objections: (1) invalid invocation and service of demand notice, (2) no default on his part, (3) lack of independent assessment by the Resolution Professional, and (4) prematurity of the application since CIRP proceedings were pending against the Corporate Debtor and debt assignment negotiations were underway.

The Tribunal analyzed these objections and found that the notice under Section 13(2) of the SARFAESI Act dated 10.07.2023 constituted valid invocation of the guarantee as it specifically demanded payment from the personal guarantors. The Tribunal relied on the NCLAT judgment in Ujwal Gupta v. Union Bank of India & Ors. which established that SARFAESI notices can validly invoke guarantees when they demand payment from guarantors. The objection regarding the RP's independence was dismissed as unsubstantiated, and the prematurity argument was rejected based on settled law that insolvency proceedings against personal guarantors can proceed independently of corporate debtor proceedings.

Final Outcome

The petition was admitted under Section 100 of the Code, initiating the Insolvency Resolution Process against Mr. Anil Madan. A moratorium under Section 101 was declared for 180 days or until an order under Section 114 is passed. Mavent Restructuring Services LLP was confirmed as the Resolution Professional and directed to publish notices, prepare a list of creditors, and facilitate the repayment plan process. Yes Bank was ordered to deposit Rs. 1,00,000/- with the RP for expenses. Mr. Anil Madan was directed to cooperate fully with the RP, disclose complete details of his assets and liabilities, and submit copies of Income Tax Returns for FY2023-24, 2024-25, and 2025-26 within two weeks, along with net worth certificates and details of any assets sold in the last two years.

Topics: Personal Guarantor Insolvency, Debt Recovery, Banking Litigation