NCLAT New Delhi Holds Reasonable Time Must Be Granted After PIRP Plan Approval, Sets Aside NCLT Order

The New Delhi National Company Law Appellate Tribunal (NCLAT) on 19 August held that where a repayment plan submitted by personal guarantors has been approved in principle by the sole financial creditor, reasonable time must be granted to complete the Personal Insolvency Resolution Process (PIRP), as denying such time would defeat the purpose of the process.

A Bench comprising Judicial Member Justice Mohd Faiz Alam Khan and Technical Member Naresh Salecha set aside the Ahmedabad Bench of the National Company Law Tribunal (NCLT)'s orders rejecting applications filed by Dharmendra Shah and Sneha Dharmendra Shah for extension of the PIRP period and extended the process by 45 days to enable completion of the resolution process. It observed:

“The purpose of the PIRP is for repayment of loan to the financial creditor and when the repayment plans proposed by the guarantor were in principle approved by the financial creditor, after much deliberations and only approval of the appropriate authority of the financial creditor had remained, the Ld. Adjudicating Authority should have extended reasonable time for completion of the whole process.”

Indian Bank initiated PIRP proceedings under Section 95 of the Insolvency and Bankruptcy Code (IBC), which provides for insolvency resolution of personal guarantors, against personal guarantors Dharmendra Shah and Sneha Dharmendra Shah.

Following the appointment of a Resolution Professional (RP) and a public announcement, the claims were collated and the Committee of Creditors (CoC) was constituted. The guarantors submitted a combined repayment plan of Rs. 3.27 crore, along with the PIRP costs, to be paid within 90 days.

At the fifth meeting of the creditors, the RP proposed approval or rejection of the repayment plan submitted by the personal guarantors. The sole creditor resolved to extend the PIRP period by another 60 days beyond the 120-day period from 21 June 2026, which had expired on 20 June 2026.

The RP thereafter filed applications before the NCLT seeking extension of the PIRP period, stating that Indian Bank had approved the repayment plan in principle and that approval from its competent authority was still required. The RP also pointed out that the e-voting process could take some time. On 8 July 2026, the NCLT rejected the applications, prompting the appeals before the NCLAT.

Indian Bank submitted that the repayment plan had already been substantively accepted and that only procedural approvals remained. The bank sought an additional 60 days to complete the process.

Dharmendra Shah and Sneha Dharmendra Shah supported the bank's position, submitting that they had sincerely offered repayment and that the creditor had agreed to the plan in principle. They contended that the Adjudicating Authority should have facilitated completion of the process by granting an extension.

The RP submitted that he would abide by the order passed by the Appellate Tribunal.

The Tribunal noted that the purpose of the PIRP is to enable repayment of loans to financial creditors. In the present case, Dharmendra Shah, Sneha Dharmendra Shah and Indian Bank had already arrived at a settlement and the repayment plan had been approved in principle. Only formal approval by the bank's competent authority and completion of e-voting remained.

The Bench held that in such circumstances, the NCLT should have extended the time for completion of the process.

Accordingly, the NCLAT set aside the impugned orders and extended the PIRP period by 45 days to enable completion of the resolution process.

For Appellants: Advocate Ritesh D. Patadia

For Respondents: Advocate Sumit Parikh