2025 (6) TMI 607 - AT - IBC

Corporate Guarantor Blocked from Multiple Insolvency Applications Under Section 95, Preventing Procedural Abuse of Legal Mechanisms

Indian Bank Versus KR Tirumuruhan, Chennai

NCLAT Chennai dismissed a Company Appeal challenging an NCLT order on insolvency resolution. The tribunal upheld a previous precedent that bars multiple ... Maintainability of application preferred under Section 95 of I & B Code, to initiate Insolvency Resolution Process Proceedings - HELD THAT:- Based upon the similar facts and circumstances, has already been considered by us on merits in Indian Bank, SAMB, Chennai Vs T. Prabhakar [2025 (5) TMI 2003 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL AT CHENNAI]. In the said appeal, a challenge was given to the Impugned Order dated 13.12.2024, as it was passed by the National Company Law Tribunal, Chennai Bench, in CP (IB)83/2024, by virtue of which the application filed by the Appellant herein under Section 95(1) of I & B Code, against another personal guarantor was dismissed on the ground that IDBI Trusteeship Services Limited, another Financial Creditor has already initiated proceedings under Section 95 of I & B Code, against the personal guarantor in CP(IB) No.785/2020, and hence no subsequent application under Section 95 can be entertained against the Personal Guarantor owing to the bar created by Section 96 of I & B Code. The said Company Appeal has been dismissed by Judgment dated 30.04.2025, with a request to Ld. NCLT to expedite the proceedings in the pending Section 95 proceedings. The Impugned Order would stand dismissed with a request to Ld. NCLT to expedite the pending Section 95 proceedings, whose pendency is the source of grievance of the present Appellant. Application dismissed. The National Company Law Appellate Tribunal (NCLAT), Chennai Bench, dismissed the Company Appeal challenging the Impugned Order dated 06.01.2025 passed by the NCLT Chennai in CP(IB)80/2024, which had declared the Section 95 application for initiating Insolvency Resolution Process against the Respondent as infructuous. The dismissal was grounded on the precedent set in Comp App (AT)(CH)(Ins) No.121/2025 (Indian Bank, SAMB, Chennai Vs T. Prabhakar), where the NCLAT held that once a Financial Creditor initiates proceedings under Section 95 against a personal guarantor, subsequent applications under Section 95 by other Financial Creditors are barred by Section 96 of the Insolvency and Bankruptcy Code (I&B Code). The Tribunal emphasized the binding effect of this prior judgment and accordingly dismissed the present appeal 'with a request to Ld. NCLT to expedite the pending Section 95 proceedings,' which was the core grievance of the Appellant.