NCLT has jurisdiction over personal guarantor insolvency proceedings under Section 60(1) IBC regardless of corporate debtor status

NCLAT dismissed appeal challenging NCLT's jurisdiction over personal guarantor insolvency proceedings. Appellant argued NCLT lacked jurisdiction under Section 60(2) IBC when no CIRP against corporate debtor was pending. NCLAT held Section 60(1) establishes NCLT as appropriate adjudicating authority for personal guarantor insolvency proceedings. Section 60(2) does not restrict applications to situations where corporate debtor proceedings are pending, as "without prejudice" clause preserves Section 60(1)'s generality. Court emphasized personal guarantors are treated as separate species under IBC scheme, confirming NCLT's jurisdiction regardless of corporate debtor proceedings status.

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ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment are:

• Whether the appointment of the Resolution Professional (RP) was in accordance with Section 97, sub-section (3) of the Insolvency and Bankruptcy Code, 2016 (IBC).
• Whether the National Company Law Tribunal (NCLT) has jurisdiction to entertain an application under Section 95 of the IBC against a Personal Guarantor, or if such jurisdiction lies with the Debts Recovery Tribunal (DRT).

ISSUE-WISE DETAILED ANALYSIS

1. Appointment of the Resolution Professional

• Relevant Legal Framework and Precedents: Section 97(3) of the IBC mandates that when an application under Section 94 or 95 is filed by the debtor or creditor, the Adjudicating Authority should direct the Insolvency and Bankruptcy Board of India (IBBI) to nominate a resolution professional.
• Court's Interpretation and Reasoning: The Tribunal examined the mechanism provided under Rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019, which allows the IBBI to share a panel of insolvency professionals with the Adjudicating Authority.
• Key Evidence and Findings: The Adjudicating Authority relied on Form-C submitted by the Interim Resolution Professional (IRP), where the RP conveyed consent and confirmed no pending disciplinary proceedings.
• Application of Law to Facts: The Tribunal found that the appointment of the RP was in compliance with the legal framework and did not violate Section 97(3).
• Treatment of Competing Arguments: The Appellant's argument that the appointment was not in accordance with Section 97(3) was dismissed based on the Tribunal's interpretation of the rules and the absence of any procedural violation.
• Conclusions: The Tribunal concluded that the appointment of the RP was valid and in accordance with the IBC.

2. Jurisdiction of the NCLT

• Relevant Legal Framework and Precedents: Section 60 of the IBC outlines the jurisdiction of the NCLT concerning insolvency resolution and liquidation for corporate persons, including corporate debtors and personal guarantors. Section 179 specifies the DRT's jurisdiction for individuals and partnership firms, subject to Section 60.
• Court's Interpretation and Reasoning: The Tribunal interpreted Section 60(1) as granting the NCLT jurisdiction over insolvency processes for personal guarantors, irrespective of whether proceedings against the corporate debtor are ongoing. The Tribunal referred to previous judgments, including State Bank of India vs. Mahendra Kumar Jajodia, which supported this interpretation.
• Key Evidence and Findings: The Tribunal noted the legislative intent to treat personal guarantors differently due to their connection with corporate debtors, as emphasized by the Hon'ble Supreme Court in Lalit Kumar Jain vs. Union of India.
• Application of Law to Facts: The Tribunal applied Section 60(1) to conclude that NCLT has jurisdiction over personal guarantors, even if no CIRP or liquidation is pending against the corporate debtor.
• Treatment of Competing Arguments: The Appellant's reliance on judgments from the Madras High Court and NCLT Kolkata Bench was dismissed as contrary to the binding precedents set by the Tribunal and the Supreme Court.
• Conclusions: The Tribunal held that the NCLT has jurisdiction to entertain Section 95 applications against personal guarantors, and the Appellant's objections were unfounded.

SIGNIFICANT HOLDINGS

• Core Principles Established: The Tribunal reaffirmed that the NCLT is the appropriate adjudicating authority for insolvency proceedings against personal guarantors of corporate debtors, as per Section 60(1) of the IBC. The Tribunal emphasized that Section 60(2) does not restrict the filing of applications against personal guarantors to situations where proceedings against the corporate debtor are pending.
• Final Determinations on Each Issue: The Tribunal dismissed the appeals, affirming the validity of the RP's appointment and the NCLT's jurisdiction over the insolvency proceedings against the personal guarantors.

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