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NCLT: Adjudicating Authority Can Conclude Insolvency Process Based on RP’s Report If No Repayment Plan Is Filed by Personal Guarantor

NCLT: Adjudicating Authority Can Conclude Insolvency Process Based on RP’s Report If No Repayment Plan Is Filed by Personal Guarantor

Pranav B Prem


The National Company Law Tribunal (NCLT), New Delhi Special Bench (Court-II), comprising Hon’ble Judicial Member Sh. Ashok Kumar Bhardwaj and Hon’ble Technical Member Sh. Man Mohan Gupta, has held that when no repayment plan is submitted by the personal guarantor, the Adjudicating Authority is empowered to pass an order under Section 114(1) of the Insolvency and Bankruptcy Code, 2016 (IBC), based on the Resolution Professional’s (RP) report without summoning a creditors’ meeting.

 

Also Read: Corporate Debtor May Be Permitted To Complete Project Under IRP's Supervision If A Structured Plan Is Proposed: NCLT Indore

 

In the matter of Karur Vyasa Bank v. Vishnoo Mittal (IB-313/ND/2022), the Applicant bank filed a petition under Section 95(1) of the IBC for initiating insolvency proceedings against the personal guarantor. Pursuant to this, Ms. Shruti Gupta was appointed as the Resolution Professional. She submitted a report under Section 99 of the IBC recommending the admission of the application. The Tribunal accepted the recommendation and admitted the petition vide order dated 02.12.2024.

 

Subsequently, the Applicant filed an Interlocutory Application (IA-1210/2025) contending that the personal guarantor had not extended any cooperation to the RP and failed to respond to communications. The RP then filed IA-1261/2025 under Section 106 of the IBC, seeking the Tribunal’s direction to take the report on record. It was specifically stated that no repayment plan had been received from the personal guarantor. In her report, the RP detailed her efforts, including personal visits to the known addresses of the personal guarantor, all of which proved unfruitful. The RP also noted that the meeting of creditors was called on 23.01.2025, but the voting on resolutions had not been received. On the creditors’ advice, she proceeded with filing the report before the Tribunal.

 

The Tribunal undertook a detailed examination of the statutory provisions, especially the provisos to Sections 106(2) and 114(1) of the IBC. Section 106(2) allows the RP to avoid convening a creditors’ meeting by giving recorded reasons. Further, Section 114(1) states that where no meeting is summoned, the Adjudicating Authority shall decide the matter based on the report under Section 106.

 

While Regulation 17A of the IBBI (Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019, mandates calling a creditors’ meeting even in the absence of a repayment plan, the Tribunal clarified that such a meeting serves only to notify creditors of the non-availability of the plan. Importantly, the Tribunal asserted that in the event of a conflict between the IBC and the subordinate regulations framed thereunder, the IBC, being parliamentary legislation, would prevail.

 

Also Read: NCLT Amravati Rules, Successful Bidder Prohibited From Claiming Reliefs Or Concessions Not Provided In Sale Document

 

Since no repayment plan was filed and the RP had submitted a report indicating the same, the Tribunal observed that the consequence of non-submission of a repayment plan is equivalent to its rejection by the creditors. In such a scenario, the Adjudicating Authority is empowered to direct closure of the insolvency resolution process under the proviso to Section 114(1) of the IBC. Accordingly, the Tribunal directed the closure of the insolvency resolution process and granted liberty to the creditors to initiate proceedings under Sections 114, 115(2), 121, and 123 of the IBC. Both the interlocutory applications were disposed of.

 

Appearance

For the Applicant: -

For the RP: Advocate Yashu Gupta

 

 

Cause Title: Karur Vyasa Bank V. Vishnoo Mittal

Case No: IB-313/ND/2022 IA-1261/2025, IA-1210/2025

Coram: Sh. Ashok Kumar Bhardwaj [Hon'ble Member (Judicial], Sh. Man Mohan Gupta [Hon'ble Member Technical]

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