Writ jurisdiction and insolvency remedy: challenge to personal guarantor demand notice was left for the NCLT

A writ petition challenging a demand notice under Rule 7(1) of the personal guarantor insolvency framework was not entertained because the petitioners could raise their contention before the NCLT. The Court held that, where the Insolvency and Bankruptcy Code provides a self-contained mechanism and the relief sought can be examined by the statutory adjudicating forum, writ jurisdiction under Articles 226 and 227 should ordinarily not be used to bypass that remedy. The petitioners' claim that they had been released as personal guarantors was left for determination before the NCLT, and the High Court declined to interfere.

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Issues: Whether a writ petition under Articles 226 and 227 of the Constitution of India was maintainable to challenge a demand notice issued under Rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process of Personal Guarantors to Corporate Debtors) Rules, 2019, when the petitioners claimed that they stood released as personal guarantors and that the issue could be raised before the NCLT.

Analysis: The notice was issued in contemplation of proceedings under the Insolvency and Bankruptcy Code, 2016, and the petitioners had already been put to notice of the proposed insolvency action. The Court noted that the petitioners could agitate before the NCLT the contention that they were no longer within the net of the proposed CIRP on account of the alleged release of their guarantees. Since the insolvency statute provides a self-contained mechanism and the relief sought could be considered by the adjudicating forum, the Court declined to exercise writ jurisdiction. The Court also relied on the governing principles stated in the cited precedents on interference in insolvency-related matters.

Conclusion: The writ petition was not entertained and the challenge to the demand notice failed.

Final Conclusion: The dispute was left to be pursued before the NCLT, and the High Court declined to interfere under its writ jurisdiction.

Ratio Decidendi: Where an insolvency-related notice can be effectively questioned before the statutory adjudicating forum under a self-contained code, writ jurisdiction should ordinarily not be invoked to bypass that remedy.

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