Repayment plan non-filing treated as rejection, allowing creditors to invoke bankruptcy provisions under insolvency law.
Non-submission of a repayment plan by a personal guarantor is treated as rejection within the insolvency sequence, so creditors may invoke the bankruptcy-triggering provision once no plan is filed for consideration and approval. The text also states that, where the appellate provision allows an appeal by any aggrieved person, no separate leave application is required to file the appeal. On that basis, the challenge to the bankruptcy-related order failed and the ancillary leave applications were unnecessary.
Issues: (i) Whether the non-submission of a repayment plan by a personal guarantor can be treated as a rejection of the repayment plan so as to enable creditors to seek bankruptcy under the insolvency code; (ii) whether an independent application for leave to file the appeal is required where the appeal is presented under the appellate provision available to any aggrieved person.
Issue (i): Whether the non-submission of a repayment plan by a personal guarantor can be treated as a rejection of the repayment plan so as to enable creditors to seek bankruptcy under the insolvency code.
Analysis: The statutory scheme contemplates submission of a repayment plan by the personal guarantor, consideration of that plan by the resolution professional and the committee of creditors, and a further order of the adjudicating authority on approval or rejection. Where the guarantor does not file any repayment plan, nothing is placed before the adjudicating authority for approval. In that situation, non-submission operates as a rejection for the purpose of the statutory sequence, and the consequence under the bankruptcy provisions follows. The entitlement of creditors to apply for bankruptcy is therefore attracted under the provision governing applications after rejection of the repayment plan.
Conclusion: The non-filing of the repayment plan was correctly treated as rejection, and the direction permitting initiation of bankruptcy proceedings was upheld.
Issue (ii): Whether an independent application for leave to file the appeal is required where the appeal is presented under the appellate provision available to any aggrieved person.
Analysis: The appellate provision itself permits an appeal by any aggrieved person. Once the appeal falls within that statutory right, no separate leave application is necessary. The ancillary applications seeking leave were therefore unnecessary and could be closed.
Conclusion: No independent leave application was required.
Final Conclusion: The appeals failed on the substantive challenge to the bankruptcy-related order, and the statutory consequence of non-submission of a repayment plan was affirmed. The connected leave applications did not survive as separate requirements.
Ratio Decidendi: Where a personal guarantor fails to file a repayment plan within the prescribed insolvency process, the omission is treated as rejection for the purposes of the bankruptcy-triggering provisions, entitling creditors to proceed accordingly; no separate leave is needed where the appellate statute permits an appeal by any aggrieved person.
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AI Drafter ✕
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