Authority: National Company Law Tribunal, New Delhi Bench, Court-III

Order Date: 17 July 2026

Case Overview

The National Company Law Tribunal (NCLT) heard an application (IA-119/2025) filed by Resolution Professional Debashis Nanda seeking approval of a repayment plan submitted by personal guarantor Siddarth Jain. The proceedings originated from CP(IB) No. 648/ND/2023 filed by State Bank of India against Siddarth Jain as personal guarantor for credit facilities of ₹98.15 crores sanctioned to Kotson's Pvt. Ltd. on 08.09.2020.

The insolvency resolution process against Siddarth Jain was commenced on 22.03.2024. The Resolution Professional received and verified claims from four financial creditors totaling ₹168.30 crores: State Bank of India (₹134.90 crores, 80.16% voting share), Punjab National Bank (₹17.83 crores, 10.60%), Small Industries Development Bank of India (SIDBI) (₹14.78 crores, 8.79%), and ICICI Bank (₹0.76 crores, 0.46%).

A joint repayment plan was prepared on behalf of all three personal guarantors (Mohnish Jain, Pawan Jain, and Siddarth Jain) belonging to the same family. The plan proposed a settlement amount of ₹1.50 crores to be distributed among creditors proportionally: SBI (₹1.20 crores), PNB (₹0.16 crores), and SIDBI (₹0.14 crores), with payment due within 90 days of plan approval. The plan was approved by 91.17% of voting share (SBI and PNB voting in favor).

SIDBI, the dissenting creditor with 8.83% voting share, objected specifically to Clause 6 of the repayment plan, which stipulated that SIDBI's show cause notice dated 19.04.2024 (regarding potential fraud classification) would be deemed withdrawn and all proceedings under it would stand abated upon plan approval. SIDBI argued that it had already classified Kotson's account as fraud on 25.06.2024 and reported it to RBI on 01.07.2024, and had filed a complaint with CBI on 29.08.2024. SIDBI cited RBI guidelines (Clause 8.12.3 of Previous Guidelines and Clause 4.4.1 of Latest Guidelines) that prohibit compromise settlements involving fraudulent borrowers unless criminal complaints continue.

The tribunal noted that SIDBI did not object to the commercial terms of the repayment plan but only to Clause 6. Importantly, the tribunal found that SIDBI had previously voted in favor of an identical clause in the resolution plan for the corporate debtor (Kotson's Pvt. Ltd. in IB-761/2022) and had accepted and appropriated proceeds from that implemented plan. The tribunal applied the doctrine of estoppel, preventing SIDBI from objecting to the same clause in the personal guarantor's repayment plan.

Final Outcome

The NCLT approved the repayment plan with the following directions:

  • The delay of 25 days in filing the application is condoned
  • The report under Section 112 is taken on record
  • The repayment plan submitted by Siddarth Jain is approved
  • The Resolution Professional will supervise implementation, including opening an escrow account
  • The Resolution Professional will file a final report after implementation
  • Financial creditors shall release personal guarantees upon full implementation
  • The approval does not constitute waiver of excluded debts under Section 79(15)
  • Critically, the order specifically states that approval "shall not, under any circumstances, operate as a bar, waiver, or immunity against any criminal proceedings, investigations, or prosecutions" and does not grant "any immunity to the Suspended Director, Promoter, or Personal Guarantor from their personal liability regarding any criminal offence, fraud, or misfeasance committed by them."

Topics: Personal Guarantor Insolvency, Repayment Plan Approval, Fraud Allegations