IBC Amendment On Personal Guarantors Applies Retroactively To Pending Proceedings: NCLT New Delhi

The National Company Law Tribunal (NCLT), New Delhi held on 31 August that the 2026 amendment to Section 96 of the Insolvency and Bankruptcy Code, 2016 (IBC) applies retroactively to pending insolvency proceedings against personal guarantors to corporate debtors.

A Bench comprising Judicial Member Ashok Kumar Bhardwaj and Technical Member Atul Chaturvedi held that the amended Section 96 does not bar insolvency proceedings against personal guarantors merely because proceedings initiated by Canara Bank against them were pending before the NCLT's Ahmedabad Bench. It observed:

“As can be seen from IBC (Amendment) Act, 2026, by way of the provisions contained in Section 51 thereof, the provisions of Section 96 of the Original Act are amended and it is made clear that the provision of Section 96 would not apply where an application is filed for initiating insolvency resolution process in respect of a personal guarantor to a corporate debtor.”

The Tribunal admitted insolvency resolution proceedings against Sangeeta Aggarwal, Saloni Ayush Aggarwal and Sri Narayan Aggarwal, who had stood as personal guarantors for financial facilities extended by Equentia Financial Service Pvt. Ltd. to Prafful Overseas Private Limited.

Counsel for the personal guarantors relied on the NCLAT's decision in Sushant Chhabra v. Catalyst Trusteeship Ltd. & Anr., Comp. Appeal (AT) (Insolvency) No. 443/2026, and submitted that the applications were hit by the interim moratorium under Section 96. He submitted that, when the applications were filed, proceedings initiated by Canara Bank against the personal guarantors were already pending before the NCLT's Ahmedabad Bench.

The Tribunal relied on the Bombay High Court's judgment in Tata Capital Financial Services Ltd. v. Neel Motors LLP & Ors., wherein the High Court held that the 2026 amendment operates retroactively, applying to existing proceedings rather than retrospectively altering completed events.

Applying the amended provision and the Bombay High Court's ruling, the Bench held that the pending proceedings before the Ahmedabad Bench did not bar the applications against the personal guarantors.

Accordingly, the NCLT allowed the applications and admitted the insolvency resolution proceedings against the three personal guarantors.

For Financial Creditor: Advocates Harshvardhan Jha, Shruti Sharma Aman Pathak

For Respondent : Advocates Rahul Gupta, Rahul Dadhich, Garima Malhotra

For the RP : Advocates Ashutosh Gupta and Ajitesh Kumar