NCLT Indore Admits Insolvency Plea Against Sagar Autotech's Personal Guarantor Over ₹3.95 Crore Debt

The National Company Law Tribunal (NCLT), Indore, on 5 October initiated insolvency resolution proceedings against Pratik Jain, a personal guarantor of Sagar Autotech (Jabalpur) Private Limited, over a default of Rs. 3.95 crore arising from credit facilities extended to the company by Volkswagen Finance Private Limited.

A Division Bench comprising Judicial Member Brajendra Mani Tripathi and Technical Member Man Mohan Gupta admitted an application filed by ASREC (India) Limited under Section 95 of the Insolvency and Bankruptcy Code, 2016 (IBC), under Section 100 of the Code. It held:

“The remaining objections, about the stamp on the affidavit, the certification of the copies, and the wrong name of the Corporate Debtor as 'Sagar Auto Tech Jabalpur Rise Private Limited', are only technical. They do not go to the merits and are not a good reason to reject the application. The wrong name is clearly a clerical error, the correct name being evident from the e-stamp and the other documents. The objection that the Addendum is a rejoinder is also not correct, because the Addendum was filed under the liberty given by this Tribunal on 18.03.2025.”

Volkswagen Finance Private Limited extended inventory stock funding facilities to Sagar Autotech (Jabalpur) Private Limited under two agreements executed in January 2018. Jain, a director of the company, furnished personal guarantees securing repayment of the facilities.

After the company defaulted, Volkswagen Finance issued a loan recall notice on 11 November 2019 and invoked the personal guarantee through a demand notice dated 4 October 2021. The lender subsequently assigned the debt to ASREC, which claimed Rs. 3,95,53,280 from Jain.

Jain challenged the application on the ground that the Power of Attorney authorising the original applicant's representative had expired before the representative signed the application on 29 March 2022.

The Tribunal rejected the objection, relying on the Supreme Court's decision in United Bank of India v. Naresh Kumar, which recognised that defects in authority could be cured. It also rejected Jain's limitation objection, relying on Syndicate Bank v. Channaveerappa Beleri, and held that ASREC had filed the application within the prescribed period.

Accordingly, the NCLT admitted the application under Section 100 of the IBC and imposed a 180-day moratorium restricting debt-related proceedings and the disposal of Jain's assets.