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 seeking to initiate Personal Insolvency Resolution Process (PIRP) against Mr. Rajesh Madan, who stood 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 crore, increased to Rs. 32 crore, and subsequently reduced to Rs. 25.50 crore as of December 2, 2022. The Corporate Debtor's account was classified as Non-Performing Asset (NPA) on March 16, 2023, with an outstanding amount of Rs. 34,69,24,086 as of July 5, 2023. The Financial Creditor issued multiple notices including a demand cum Loan Recall Notice (May 15, 2023), Guarantee Invocation Notice (May 24, 2023), and SARFAESI notice under Section 13(2) (July 10, 2023). The present application was filed for a debt due of Rs. 170,730,327.96 as of September 30, 2024.

The Personal Guarantor raised four main objections: (1) Invalid invocation and service of demand notice claiming no proper notice was issued as per Clause 29 of the Guarantee Deeds; (2) No default on his part as liability arises only upon proper invocation; (3) Lack of independent assessment by the Resolution Professional; (4) Prematurity of the application since CIRP proceedings against the Corporate Debtor were pending and the Financial Creditor was negotiating debt assignment to an ARC.

The Tribunal analyzed each objection and found that the notice under Section 13(2) of SARFAESI Act dated July 10, 2023 constituted valid invocation of the personal guarantee, relying on the NCLAT judgment in Ujwal Gupta v. Union Bank of India. The Tribunal also held that the RP performed duties properly and that insolvency proceedings against a personal guarantor can proceed irrespective of the Corporate Debtor's CIRP status, citing State Bank of India v. Mahendra Kumar Jajodia.

Final Outcome

The petition is admitted and insolvency resolution process against Mr. Rajesh Madan is initiated. A moratorium under Section 101 is declared for 180 days. Mavent Restructuring Services LLP is confirmed as Resolution Professional and directed to publish notices, invite claims, prepare creditor lists, and facilitate repayment plan preparation. The Financial Creditor must deposit Rs. 1,00,000 for expenses. The Personal Guarantor is directed to cooperate with the RP and submit detailed asset and liability information including Income Tax Returns for FY 2023-24, 2024-25, and 2025-26, along with net worth certificates and details of any asset sales in the last two years. The matter is listed for status report on November 25, 2026.

Topics: Personal Guarantor Insolvency, Debt Recovery, Banking Litigation