Section 95 insolvency against a personal guarantor can proceed at one lender's instance when consortium documents do not bar it.

An individual financial creditor may maintain a Section 95 insolvency application against a personal guarantor even where the loan was originally granted by a consortium, if the guarantee documents and consortium arrangements do not prohibit separate action and the other lenders do not object. The text also notes that a belated objection to maintainability cannot be raised at the admission stage in a second round of litigation by parties who are not genuinely aggrieved. On that reasoning, the admission orders were affirmed and the appeals were found meritless.

---

---

Issues: (i) Whether an application under Section 95 of the Insolvency and Bankruptcy Code, 2016 could be maintained by one financial creditor alone against a personal guarantor where the loan was granted by a consortium of banks. (ii) Whether the appellants were entitled to challenge maintainability at the stage of admission in the second round of litigation and could be treated as aggrieved parties.

Issue (i): Whether an application under Section 95 of the Insolvency and Bankruptcy Code, 2016 could be maintained by one financial creditor alone against a personal guarantor where the loan was granted by a consortium of banks.

Analysis: The guarantee had been invoked by the lead bank and the demand notice had also been issued by it. Section 95 permits an application by the creditor concerned, jointly with other creditors, or through a resolution professional, and does not require all creditors of a consortium to join in every case. The clauses in the deed of guarantee and security trustee agreement governed the consortium arrangements and did not bar an individual bank from proceeding where the other lenders had raised no objection. The decision relied on by the appellants was held distinguishable on facts because, there, the controversy arose from an inter se dispute within the consortium.

Conclusion: The application under Section 95 was held to be maintainable at the instance of one bank.

Issue (ii): Whether the appellants were entitled to challenge maintainability at the stage of admission in the second round of litigation and could be treated as aggrieved parties.

Analysis: The objection to maintainability was available earlier and was not permitted to be raised belatedly in the second round after prior litigation had already gone up to the Supreme Court. The appellants were found not to be aggrieved parties because the consortium members stood by the lead bank and none supported the appellants' challenge. A threshold objection to maintainability could not be raised at the fag end of the proceedings when the matter was already at the stage of admission.

Conclusion: The belated challenge was rejected and the appellants were held not to have a sustainable ground of appeal.

Final Conclusion: The impugned admission orders were affirmed and the appeals were found to be without merit.

Ratio Decidendi: An individual financial creditor may maintain a Section 95 insolvency application against a personal guarantor where the governing documents do not bar such action and the other consortium lenders do not object, and a belated challenge to maintainability by a non-aggrieved appellant is not entertainable.

---