Authority: National Company Law Tribunal, Bengaluru Bench (Special Bench)

Order Date: 09.07.2026

Case Overview

Canara Bank (Petitioner/Financial Creditor) filed a petition under Section 95(1) of the Insolvency and Bankruptcy Code (I&B Code), 2016, read with Rule 7(2) of the I&B (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019. The petition seeks to initiate an Insolvency Resolution Process against Mr. Mehashoof Ahmed Bava, a personal guarantor to the corporate debtor, M/s. Bava Infrastructure Developers Private Limited.

The petitioner had granted various credit facilities to the corporate debtor. Mr. Bava, as a director, had personally guaranteed these debts. The corporate debtor defaulted, leading the financial creditor to initiate proceedings under the SARFAESI Act. The Debt Recovery Tribunal (DRT)-1, vide its order dated 28.03.2024 in O.A No.1615/2025, had already held that the creditor was entitled to recover a total sum of Rs. 41,50,36,807/- (approx. Rs. 41.5 crore) from both the corporate debtor and the personal guarantor, along with interest from the date of filing until realization. Furthermore, the NCLT itself had admitted a petition against the corporate debtor (Bava Infrastructure Developers Pvt Ltd) on 20.06.2024.

The present petition states that despite the DRT order and sufficient opportunity, the personal guarantor remains liable for an outstanding sum of Rs. 52,82,70,499.79 (approx. Rs. 52.83 crore). A demand notice was issued to the guarantor on 26.05.2025, which was not complied with. The tribunal noted that an interim moratorium under Section 96(1) of the Code commenced automatically upon the filing of this application.

Final Outcome

The NCLT bench preliminarily examined the matter and admitted the petition. It appointed Shri Gururaj K. (IBBI/IPA-002/IP-N01330/2025-2026/14581) as the Resolution Professional (RP). The RP is directed to file his consent and credentials within one week. The financial creditor, Canara Bank, is directed to make an initial deposit of Rs. 30,000 with the RP to enable him to commence his duties; this amount is adjustable against future costs and remuneration.

The interim moratorium remains in effect, meaning: (i) any pending legal action or proceedings in respect of any debt of the debtor are stayed; and (ii) creditors cannot initiate any new legal action or proceedings for any debt.

The RP is directed to exercise all powers under Section 99 of the Code. His primary task is to examine the petition and submit a written report to the tribunal with recommendations for its acceptance or rejection, providing reasons. A copy of this report must also be provided to the creditor and the personal guarantor. The case is listed for the next hearing on 20.08.2026 for consideration of the RP's report.

Topics: Insolvency Proceeding, Personal Guarantor, Debt Recovery