NCLAT Quashes Guarantor Insolvency Proceedings Filed Before Different NCLT Bench Than CIRP

The National Company Law Appellate Tribunal (NCLAT) at New Delhi, has quashed insolvency proceedings against a personal guarantor after finding that the corporate debtor's Corporate Insolvency Resolution Process (CIRP) was pending before another NCLT Bench.

The bench of Judicial Member Justice Sharad Kumar Sharma and Technical Members Arun Baroka and Indevar Pandey held that where the CIRP of a corporate debtor is pending before one NCLT Bench, proceedings concerning its personal guarantor must be filed before the same Bench under Section 60(2) of the Insolvency and Bankruptcy Code, 2016 (IBC).

“Thus, this is an overriding statutory mandate under Section 60(2) of the Insolvency and Bankruptcy Code, 2016. Therefore, NCLT, New Delhi, lacks both territorial jurisdiction as well as inherent jurisdiction to entertain or proceed with the Section 95 application against the Appellant, and any continuation of such proceedings would be void ab initio and without jurisdiction,” the bench observed.

The appeal was filed by Kamlesh Rani Singla, suspended director-cum-personal guarantor of Laxmi Pipes Ltd., against the December 5, 2025, order of the NCLT Principal Bench.

Laxmi Pipes Ltd.'s CIRP was pending before NCLT Chandigarh Bench-II when operational creditor Praveen Kumar Garg initiated insolvency proceedings against its personal guarantor, Kamlesh Rani Singla, under Section 95 of the IBC before NCLT New Delhi Bench-II.

The proceedings were admitted on May 28, 2024. Singla later sought their transfer to Chandigarh, arguing that Section 60(2) required the personal-guarantor proceedings to be heard by the same NCLT where the corporate debtor's CIRP was pending.

Section 60(2) provides for such proceedings to be filed before the NCLT handling the corporate debtor's insolvency. The NCLAT noted that the provision seeks to keep related proceedings together and avoid conflicting decisions.

The NCLAT held that NCLT New Delhi lacked jurisdiction and quashed the proceedings, allowing the creditor to file afresh before the appropriate NCLT.

The tribunal accordingly set aside the NCLT President's order and quashed the Section 95 proceedings. It gave the operational creditor liberty to file proceedings afresh under Section 95 before the NCLT, having appropriate jurisdiction.