TaxTMI 
TaxTMI 
2026 (8) TMI 860
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....y, National Company Law Tribunal, Mumbai Bench, in C.P. (IB) No. 75/MB/2026, whereby the Learned Adjudicating Authority, directed initiation of the Bankruptcy Process against the Appellant under Section 121(1) of the Code and appointed Respondent No. 2 as the Bankruptcy Trustee. The Impugned Order was uploaded on 18 February 2026. Factual Background: 2. M/s. Aniirudh Civil Engineers and Contractors Private Limited, the ("Corporate Debtor"), a private company stood incorporated under the Companies Act, 1956 bearing CIN U45400MH2011PTC223994, the Corporate Debtor had availed financial assistance from Respondent No. 1/Bank of Maharashtra, on several occasions: a Cash Credit Limit of Rs. 300.00 Lakhs was sanctioned on 17.02.2012, a Term Loan of Rs. 190.00 Lakhs was sanctioned on 22.03.2012, a Working Capital Term Loan of Rs. 200.00 Lakhs was sanctioned on 30.03.2013, and a Performance Bank Guarantee of Rs. 279.50 Lakhs was too sanctioned on 14.05.2013. To secure these facilities, the Appellant, along with his father Mr. Vivek Kawade, had executed personal guarantees dated 17.02.2012, 28.03.2012, 30.03.2013 and 15.05.2013 in favour of Respondent No. 1. The debt fell due on 28.02.2....
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....or commercially viable, because of fact that, the Corporate Insolvency Resolution Process costs alone exceeding Rs. 4 Lakhs against total admitted claims of Rs. 90,74,96,492/-. The Committee of Creditors, comprising Central Bank of India, holding 50.57% of the voting share, and Respondent No. 1, holding 49.43%, rejected the plan in exercise of their commercial wisdom. 6. The PIRP Closure Order was passed on 26.06.2025. Upon gaining knowledge of the said Order, the Appellant addressed an email dated 28.06.2025 to the Resolution Professional, and thereafter filed IA(I.B.C)/3437/MB/2025 on 02.07.2025, seeking to set aside the Closure Order. The said Application was dismissed on 07.01.2026, the Adjudicating Authority thereof observing that the proposed Repayment Plan of Rs. 2 Lakhs against outstanding dues of Rs. 35.69 Crores was "nothing but an absurd, ludicrous and preposterous offer." A further Application, IA(I.B.C)/828/MB/2026, was instituted for seeking clarification/rectification, which was filed on 16.02.2026 and dismissed on 27.02.2026. Neither order's has been appealed. 7. In the connected proceeding, of C.P.(IB) No. 297/2023 against Mr. Vivek Kawade, the Learned Adjudi....
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....5 on IA 572 of 2025 in C.P.(IB) No. 296/2023, wherein the Learned Adjudicating Authority had recorded that, the Appellant did not furnish any data or material to the Resolution Professional nor submitted any repayment plan. This observation was erroneous as the Appellant had duly submitted all the requisite data to the Resolution Professional. This fact could be borne out from the order dated 30 May 2025, passed by the Learned Adjudicating Authority in IA 787 of 2025 filed by the Resolution Professional for Non-Cooperation. The Learned Adjudicating Authority had disposed of the said Application on the very ground that all the requisite data was provided to the Resolution Professional. This is the particular reason as to why the Learned Adjudicating Authority ought to have given an opportunity to the Appellant to apprise the true and correct facts. 10. Appellant contends that the PIRP was closed even without enquiring about the fact of service of the application, being IA 572 of 2025 upon the appellant. Additionally, the Adjudicating Authority relied upon the order dated 26 June 2025 passed in IA 572 of 2025, which is the order of PIRP Closure Order. On 4 January 2025, the Resolu....
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....s that the Appellant did not submit any repayment plan. Hence, there is no reason for recalling the PIRP Closure Order. The order dismissing the IA 3437 of 2026, was contrary to what actually transpired before the Learned Adjudicating Authority because the said IA was listed on 25 February 2026 in the cause list at Sr. No. 106. This evidences that on 7 January 2026, the Learned Adjudicating Authority had not dismissed the IA No. 3437 of 2026. Hence, the Impugned Order arising from the fact that no repayment plan was submitted is also flawed making the Impugned Order illegal and void. 11. Appellant further contends that the Bankruptcy was initiated without proper invocation of personal guarantee. On account of purported default by the Company, the account of the Company turned NPA on 29 May 2014. Accordingly, Bank of Maharashtra addressed a Recall Notice and Demand Notice dated 31 January 2015, under Section 13(2) of the SARFAESI Act invoking the Personal Guarantees of both the Guarantors. Pertinently, after a lapse of 7 years, Bank of Maharashtra addressed a Demand Notice dated 28 June 2022, in Form B under Rule 7 of Insolvency and Bankruptcy (Application to Adjudicating Authori....
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....or, but fell on deaf ears. Therefore, this present notice to the Guarantor, of the Corporate Debtor seeking for the payment of the aforementioned outstanding dues along with the interest as specified." 13. From the aforesaid reasoning of the Bank issuing the Demand Notice under the provisions of the Code in June 2022 was because admittedly there was already a Recall cum Demand Notice issued in January 2015. Thus, evidently, the three-year statutory period to file a Company Petition against the personal guarantor would end in 2018. This fact, the Bank was well aware. Hence, the Bank issued a Demand Notice under the provisions of the Code in 2022 to give a false impression that the personal guarantees were invoked in 2022 and not in 2015. Whereas, the truth of the matter was that the personal guarantors including the Appellant was called upon to repay the entire purported outstanding under the Demand Notice issued in 2015 as per provisions of the SARFAESI Act being the first invocation of the personal guarantees. The Learned Adjudicating Authority by an order dated 14 May 2024, allowed IA No. 574 of 2024 and took the Report on record submitted by the Resolution Profession....
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....ear limitation period from invoking/demanding under the Guarantee. Whereas, in the present case the Guarantee was invoked and purported outstanding was recalled and demanded vide Bank of Maharahtra's Recall cum Demand Notice of 2015. Hence, the three-year period ended in 2018. There was no acknowledgement by the Appellant within this period of limitation which could extend the limitation beyond 2018. Certainly, any demand after the expiry of the three-year statutory limitation would be barred under law. Therefore, C.P.(IB) No. No. 296 filed in 2023 against the Appellant was wholly barred by limitation and could not have been entertained on the basis of the Demand Notice issued in 2022. 15. Appellant also contends that there have been inconsistent and contradictory orders on identical facts. Au contraire, on 7 May 2025, in the identical Company Petition that of the Appellant, C.P.(IB) No. 297/2023 filed against the Appellant's father Vivek Kawade, the Learned Adjudicating Authority enquired with the Resolution Professional regarding invocation of the Personal Guarantee and limitation to which the Resolution Professional sought time to clarify the queries posted by the Lea....
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....from the Admission Order which itself was illegal and bad in law on account of limitation. Submissions of the Respondents 16. That Respondent No.1, Bank of Maharashtra, and Respondent No.2/Bankruptcy Trustee, have filed similar counter to the appeal. For brevity, the counters of Respondent No.1/Bank of Maharashtra is being taken up representing both the Respondents. 17. Learned Counsel for the Respondents submit that the Appellant has approached this Appellate Tribunal with unclean hands, having concealed the dismissal of IA(I.B.C)/3437/MB/2025 on 07.01.2026 and of IA(I.B.C)/828/MB/2026 on 27.02.2026, both of which have attained finality and were never disclosed or annexed to the Appeal. It is submitted that this amounts to suppressio veri and suggestio falsi. 18. It is submitted that the Appellant was set ex parte vide Order dated 05.04.2024 in C.P.(IB) No. 296/2023, an order that has never been assailed, and that the following orders have all attained finality without challenge: the RP Appointment Order dated 03.01.2024; the ex parte Order dated 05.04.2024; the Order dated 14.05.2024 taking the RP Report on record; the PIRP Admission Order dated 22.08.2024; the Order ....
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....RFAESI notice was for enforcement of the security interest and not for invocation of the personal guarantee, and that the guarantee was invoked for the first time only vide the Demand Notice dated 28.06.2022. Since C.P.(IB) No. 296/2023 was filed on 31.03.2023, within three years of such invocation, it is submitted that the reliance placed on Margaret Lalita Samuel and Pooja Ramesh Singh was not misplaced, both authorities supporting the position that a petition filed within three years of invocation is within limitation. 22. On the plea of inconsistent orders, it is submitted that each Company Petition is a separate proceeding, and that the outcome of C.P.(IB) No. 297/2023 against Mr. Vivek Kawade does not govern C.P.(IB) No. 296/2023 against the Appellant. It is submitted that the PIRP Admission Order dated 22.08.2024, having attained finality, cannot be collaterally assailed, and that the Appellant himself has admitted, at Grounds EE and HH of the Appeal, that he could not challenge the Admission Order and the PIRP Closure Order, and that the Impugned Order arises from the Admission Order, thereby conceding that the Bankruptcy Order is derivative of orders that were never cha....
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.... can be agitated at this stage, • whether there are Inconsistent and Contradictory Orders on Identical Facts. Violation of the principles of natural justice 27. Learned Counsel for the Appellant submits that the Impugned Order was passed in violation of the principles of natural justice, inasmuch as neither IA No. 572/2025 (for seeking closure of PIRP and permission to initiate bankruptcy) nor C.P.(IB)/75/MB/2026 (to initiate bankruptcy proceedings under Section 121(1) of the Code on the basis of the PIRP closure order passed in IA No. 572 of 2025 in C.P.(IB) No. 296/2023) was served upon the Appellant, and no notice or opportunity of hearing was afforded to him before the Bankruptcy Process was initiated. It is claimed by the Appellant that the Closure Order's observation that the Appellant had not furnished data to the Resolution Professional was erroneous, since the Non-Cooperation IA No.787/2025 had already been disposed of on 30.05.2025 on the ground that all requisite data had been provided. It is further contended that IA No.572/2025 seeking closure of the PIRP was never served upon the Appellant, that it was reserved for orders on the very first date ....
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....passed by this Hon'ble Tribunal on 22.08.2024 in CP (IB) No. 296/MB/2023. k. Thereafter, the RP had published Public Announcement inviting claims from Creditors of Personal Guarantor to Corporate Debtor on 24.08.2024 l. During the PIRP Process, RP sent email/s on 25.09.2024, 03.10.2024, 09.10.2024, 14.10.2024 & 04.12.2024 and sought for data/information from the Guarantor in order to prepare statement of affairs of the Guarantor and further sought for a Repayment Plan, however no response from the Personal Guarantor. m. Further, the Personal Guarantor was present through VC in the 1st meeting of creditors held on 21.11.2024, wherein the Personal Guarantor agreed to provide the data as requested by RP, within a week time, failing which an application for non-cooperation would be filed against him. n. In pursuance to the 1st Meeting of Creditors, RP had filed non-cooperation IA bearing IA(I.B.C) No. 787/MB/2025 on 13.12.2024, which was listed on 01.05.2025 wherein Ld. NCLT directed Appellant to handover whatever documents/information as has been sought by the RP and finally said IA (I.B.C) No. 787/MB/2025 was next listed for hearing on 30.05.2025. ....
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....ther as per the format set out in IBC, 2016 r/w. rules & regulations nor acceptable since Guarantor proposed to pay only Rs. 2 Lakhs, whereas the CIRP Cost is itself more than Rs. 4 Lakhs and further the Bank's claim sums up to Rs. 35,69,35,879/- as on 28.02.2023 along with further interest till the date of payment/actual realization. 30. It is also brought to our notice by the Respondents that post closure order the Appellant had filed IA(I.B.C)/3437/MB/2025 before Ld. NCLT on 02.07.2025 seeking to set aside the Closure order dated 26.06.2025 in IA(IBC) No.572/MB/2025 and restore the Company Petition for continuing the Personal Insolvency Resolution Process (PIRP) against him in accordance with law. However, said IA (I.B.C)/3437/MB/2025 was dismissed on 07.01.2026. 31. Not satisfied with the above noted dismissal order of 07.01.2026, the Appellant had further filed IA (I.B.C)/828/MB/2026 on 16.02.2026 seeking to clarify/rectify the Order dated 07.01.2026 passed in IA No. 3437/2025 in C.P.(IB) No. 296/MB/2023. However the said IA(I.B.C)/828/MB/2026 was also dismissed on 27.02.2026 and the same has not been assailed and is final, binding and res judicata. 32. We find that t....
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....hree months of the date of the order passed by the Adjudicating Authority under the sections referred to in sub-section (1). (3) Where the debtor is a firm, the application under sub-section (1) may be filed by any of its partners." 38. Perusal of Section 121 of the Code reveals that it does not mandate service of prior notice upon the bankrupt before a Bankruptcy Order is passed, and furthermore the Bankruptcy Process follows as a natural sequel to an unchallenged PIRP Closure Order. 39. We further note that the Code contemplates a right of objection to a Resolution Professional's Report under Section 99, but provides no corresponding requirement of service of, or objection to, a Closure Report under Sections 112, 114(1) and 115(2). 40. The plea regarding non-furnishing of data is, in substance, a challenge to a finding recorded in the PIRP Closure Order, which was itself never appealed, and cannot be re-agitated at this stage. 41. We find that on the one hand the Appellant has sought for setting aside the Bankruptcy order dated 03.02.2026, and on the other hand, the Appellant has not raised any grounds for rebutting the bankruptcy order. Perusal of questi....
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....ts and record. The PIRP Admission Order dated 22.08.2024 in C.P.(IB) No. 296/2023 has attained finality and cannot be collaterally challenged through this Appeal against a subsequent, consequential order. We note, moreover, that the Appellant has himself admitted, at EE and HH of the Appeal, that he could not challenge the Admission Order or the PIRP Closure Order, and that the Impugned Order arises from the Admission Order. This amounts to a concession that the Bankruptcy Order is derivative of orders that were never assailed and have long attained finality. 45. We also find that the grounds now urged before this Appellate Tribunal, including the contentions on natural justice and limitation, were never raised before the Learned Adjudicating Authority in either C.P.(IB) No. 296/2023 or C.P.(IB)/75/MB/2026. It is well settled that a party cannot raise, for the first time in appeal, a plea that was never urged before the forum below. Reliance placed by the Respondents on ^1Anish Lawrence & Anr. v. Mr. Renahan Vamakesan, Liquidator of Axiomata Elevators Pvt. Ltd., Company Appeal (AT) (CH) (Ins) No. 377/2023 (Paras 18-19), and ^2Union of India v. Ibrahim Uddin & Another, (2012) 8 S....
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....e available during the proceedings before the learned NCLT, and yet were not produced for the purposes of deciding the Company Appeal as they don't fall under any of the exceptions culled out under Order 41 Rule 27 of CPC, the principles of which would apply to this case as per sub section 2 of Section 424 of the Companies Act, 2013... ...The Appellants did not avail of the opportunity given by the Liquidator to produce the evidence in his support, which they now seek to produce. They also, for the reasons best known to them, did not produce the evidence before the learned NCLT... ...We find no reason to interfere with the impugned order passed by the learned NCLT The Appeal is dismissed and the same is accordingly dismissed. All the pending IAs are closed." 2 Union of India v. Ibrahim Uddin & Another, (2012) 8 SCC 148 "36. The general principle is that the appellate court should not travel outside the record of the lower court and cannot take any evidence in appeal. However, as an exception, Order 41 Rule 27 CPC enables the appellate court to take additional evidence in exceptional circumstances... The parties are not entitled as a matter of right to the admission of ....