Can NCLT Exercise Jurisdiction Over Personal Guarantors Of Foreign Corporate Debtors? NCLT Chennai Explains

The National Company Law Tribunal (NCLT) at Chennai has held that it cannot exercise extra-territorial jurisdiction over a personal guarantor where the underlying corporate debtors are foreign entities with no registered office in India.

“This Code being domestic legislation of limited territorial reach, confers no extra territorial jurisdiction upon the Adjudicating Authority to adjudicate obligations arising from entities situated beyond the sovereign and statutory framework of India. The Foreign Company though recognized for a certain limited Regulatory purposes under Chapter XXII of the Companies Act, 2013 do not become a Company within the meaning of Section 2(20) of the Companies Act, 2013 and cannot be brought within the fold of Section 3(7) of IBC without any express inclusion of a Foreign Company as a Corporate Debtor ” the tribunal observed.

The coram comprising Judicial Member Sanjiv Jain and Technical Member Venkataraman Subramaniam was hearing a Section 95 application filed by Punjab National Bank against Reji Abraham.

Abraham had furnished personal guarantees for credit facilities extended to Aban Holdings Pte. Ltd., Aban Abraham Pte. Ltd. and Aban International Norway AS.

The bank claimed that ₹896 crore was outstanding. It stated that January 7, 2026 was the date of default.

The bank had invoked the guarantee on June 30, 2018, following non-payment of dues by Aban Holdings. It also relied on a one-time settlement offer made by Aban Holdings on January 6, 2023, claiming that it acknowledged the subsisting debt and continuing liability of the borrower entities and personal guarantor.

Abraham opposed the application on jurisdictional grounds. He argued that the principal borrowers were foreign entities incorporated in Singapore and Norway and had no registered office in India.

The tribunal accepted the objection.

Section 95 of the Insolvency and Bankruptcy Code (IBC) allows a creditor to seek insolvency resolution proceedings against a personal guarantor for the debt of a corporate debtor.

Section 60(1) provides that such proceedings must be dealt with by the NCLT having territorial jurisdiction over the place where the registered office of the corporate person is located.

In practical terms, the guarantor's place of residence does not determine which NCLT has jurisdiction. The relevant territorial link is the registered office of the corporate debtor.

“The jurisdiction of NCLT as per the provisions of Section has to be conferred by virtue of the place where the registered office of a corporate person or a Corporate Debtor is located and not by virtue of the place where the Respondent / Personal Guarantor resides or works for gain or where the cause of action accrues,” the tribunal observed.

The tribunal noted that the principal borrowers were incorporated and registered outside India. Their registered offices were in Singapore and Norway, and not within the territorial jurisdiction of the Chennai NCLT.

It also clarified that a creditor can initiate insolvency proceedings against a personal guarantor even when no CIRP or liquidation proceedings are pending against the corporate debtor.

The absence of such proceedings, however, does not change the territorial jurisdiction prescribed under Section 60(1). The tribunal relied on the NCLAT's decision in State Bank of India, Stressed Asset Management Branch v. Mahendra Kumar Jajodia on this point.

The tribunal then considered whether the foreign borrowers could fall within the definitions of “corporate person” and “corporate debtor” under the IBC.

Section 3(7) defines a “corporate person” to include a company as defined under the Companies Act, an LLP and certain other entities incorporated with limited liability. Section 3(8) defines a “corporate debtor” as a corporate person that owes a debt.

The tribunal noted that a company incorporated outside India does not cease to have the character of a company merely because of its foreign incorporation. It nevertheless held that the foreign entities in the present case had no nexus or impact on India.

The tribunal also noted that the loans were allegedly used by the foreign entities for projects outside India.

Referring to the Supreme Court's ruling in GVK Industries Ltd. v. Income Tax Officer, the tribunal observed that Parliament's power to legislate on extra-territorial matters extends to matters having an impact, effect, or consequence in India or for Indians.

On the facts of the case, the tribunal held that Section 60(1) did not confer jurisdiction on the Chennai NCLT. The principal borrowers had no registered office in India, and the foreign entities had no nexus or impact on India.

It also relied on the NCLAT's decision in Ankit Miglani v. State Bank of India, which held that a Section 95 application has to be filed before the NCLT having jurisdiction over the registered office of the corporate debtor.

The tribunal consequently held that the place where Abraham resided did not confer territorial jurisdiction on the Chennai NCLT.

It dismissed Punjab National Bank's Section 95 application against Abraham, with no order as to costs.

For Applicant: Advocate Avinash Krishnan Ravi

For Respondent: Senior Advocate E Om Prakash and Advocate Pradeep Joy