NCLAT Chennai Dismisses Personal Guarantors Appeals Upholds 208-Day Exclusion In PGIRP

The Chennai Bench of the National Company Law Appellate Tribunal (NCLAT) on 27 April dismissed four connected appeals filed by personal guarantors B. Nirmal Kumar, B. Kamlesh Kumar, B. Anand Kumar, and N. Rekha, challenging orders of the National Company Law Tribunal (NCLT), Chennai, dated 10 March 2026.

A Bench comprising Judicial Member Justice Sharad Kumar Sharma and Technical Member Jatindranath Swain held that the NCLT correctly excluded a period of 208 days (16 April 2025 to 10 November 2025) from the statutory timeline of the Personal Guarantor Insolvency Resolution Process (PGIRP). It observed:

“Further, section 101 is titled as a 'moratorium' and any time stipulations as it has been given therein is not to be read for any purposes, other than the aspect of moratorium alone, because all other independent actions/processes, are required to be governed either by the limitations prescribed under the provisions itself or by the General Law of Limitations as applicable in the light of the provisions contained under Section 238(A) of the I & B Code, 2016.”

The appeals arose from insolvency proceedings initiated against the personal guarantors of corporate debtors. In November 2025, in a related batch of appeals (CA No. 195/2025 and connected matters involving Mr. Nirmal Kumar and LIC HFL Trustee Company Pvt. Ltd.), the NCLAT held that Optionally Fully Convertible Debentures (OFCDs) constitute hybrid instruments with both equity and debt characteristics, and directed the NCLT to determine in subsequent proceedings the extent to which they qualify as financial debt.

Pending that determination, the Resolution Professional (RP) filed interlocutory applications before the NCLT seeking exclusion of the 208-day period during which the NCLAT had reserved judgment. The RP submitted that he could not proceed with formulation of the repayment plan until the appellate decision was delivered, and that the delay remained beyond his control.

The guarantors opposed the exclusion, arguing that the Insolvency and Bankruptcy Code (IBC) does not permit extension of the statutory 180-day period prescribed for PGIRP. They relied on Sections 100 and 101(1) of the IBC and contended that the moratorium period operates strictly and cannot be extended through exclusion. They also argued that the RP's applications were filed without impleading them, thereby denying them an opportunity to object.

The Resolution Professional countered that the delay arose solely due to the appellate process, during which judgment remained reserved between April and November 2025. He invoked the principle of actus curiae neminem gravabit, submitting that no party should suffer prejudice due to delay attributable to the court.

The NCLAT examined the statutory scheme and the rival submissions. It held that Section 101(1) governs only the moratorium and cannot be interpreted as prohibiting exclusion of time for procedural purposes necessary for effective adjudication. It further observed:

“Hence, the manner in which Section 101(1) has been sought to be interpreted by the Ld. Counsel for the Appellants, that there are the restrictions on extension of the moratorium, may not be correct and it cannot be borrowed to applied to challenge the exclusion granted in the impugned order under the given circumstances.”

On the reliance placed on Regulation 19 of the PGIRP Regulations, 2019, the Tribunal held that it had no application to the issue in question. It also observed:

“Under the circumstances of the present case, the provisions contained under Section 100 (4), which contemplates the modalities for rejection of Application under Section 94 and 95 on the basis of the report of the RP will also have no applicability contrary to the submissions of the Appellant.”

The Bench held that exclusion of the 208-day period constituted a procedural facilitation to enable proper determination of repayment plans in light of its earlier judgment. It further held that the exclusion did not affect the substantive rights of the guarantors.

Accordingly, the NCLAT dismissed the appeals.

For Appellants: Advocate Vairava Subramanian,