Resolution Professional Cannot Convene Creditors' Meeting Without Repayment Plan: NCLT Kochi

On 13 April, the Kochi Bench of the National Company Law Tribunal (NCLT) held that, in the absence of a repayment plan, insolvency proceedings against a personal guarantor cannot proceed to the stage of convening a creditors' meeting and the Resolution Professional must file a report recording such non-submission.

A Bench comprising Judicial Member Vinay Goel observed:

“Where no Repayment Plan is submitted, the Resolution Professional has no option but to refrain from convening a meeting of the creditors and instead file a report stating that, since no Repayment Plan has been filed, there is no justification for summoning such a meeting. In these circumstances, an order in terms of the proviso to Section 114 of the Insolvency and Bankruptcy Code, 2016 would be warranted.”

State Bank of India initiated the proceedings against Sanam Basheer, the personal guarantor to Furnace Fabrica (India) Ltd. The insolvency resolution process commenced on 15 December 2025, after which the Resolution Professional issued a communication dated 22 January 2026 seeking submission of a repayment plan and financial details.

The guarantor did not furnish the required information despite the communication. State Bank of India and Exim Bank filed their claims, which the Resolution Professional admitted. The Committee of Creditors, in its meeting held on 4 March 2026, recorded continued non-cooperation and directed the Resolution Professional to file a report on non-submission of the repayment plan.

The Tribunal noted that the absence of a repayment plan prevented completion of the statutory procedure and stopped the process from moving forward. It held that such non-submission effectively amounted to rejection of a repayment plan under the Code.

Accordingly, the Tribunal discharged the Resolution Professional, closed the insolvency resolution process, and granted liberty to the creditors to initiate bankruptcy proceedings against the personal guarantor.

For Applicant: Advocate Sankar P Panicker