Personal guarantor insolvency admission upheld where statutory report independently found default and repayment was not proved.

In insolvency proceedings against a personal guarantor, the admission order was upheld because the resolution professional's report contained an independent statutory assessment of default and the guarantor failed to produce evidence of repayment as required under Section 99(2) of the Insolvency and Bankruptcy Code, 2016. The earlier observation made at the stage of appointing the resolution professional did not displace the later recommendation, since the report itself supported the finding of default. Partial recovery by the creditor did not negate the subsisting unpaid claim. The challenge based on alleged non-application of mind therefore failed.

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Issues: Whether the admission of the application under the insolvency framework for a personal guarantor was vitiated by non-application of mind, and whether the record supported a finding of default by the personal guarantor.

Analysis: The application under Section 95 of the Insolvency and Bankruptcy Code, 2016 was preceded by service of the demand notice under the prescribed rules, and the personal guarantor did not respond with evidence of repayment. The recommendation report under Section 99 contained its own assessment, including the guarantor's acknowledgment that no payment had been made, which satisfied the statutory requirement under Section 99(2) concerning proof of repayment. The earlier observation recorded at the stage of appointing the resolution professional did not control the later recommendation, because the report disclosed an independent basis for concluding that default existed. The contention regarding partial recovery by the creditor did not displace the subsisting unpaid claim that remained above the threshold.

Conclusion: The finding of default and the resulting admission of the insolvency application were upheld; the challenge based on alleged non-application of mind failed.

Ratio Decidendi: In proceedings against a personal guarantor, an admission order will not be interfered with where the resolution professional's report records an independent statutory assessment of default and the debtor fails to establish repayment in the manner contemplated by Section 99(2) of the Insolvency and Bankruptcy Code, 2016.

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