Judgment Summaries (NCLAT) – State Bank of India v. Mahendra Kumar Jajodia

  February 7, 2022

CASE SUMMARY

In the matter of State Bank of India v. Mahendra Kumar Jajodia

{NCLAT, Principal Bench, New Delhi; January 27, 2022}

FACTS: The Appellant challenged the order passed by NCLT, Kolkata wherein an application under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 (“Code”) filed by the Appellant against the Personal Guarantor to initiate Corporate Insolvency Resolution Process (“CIRP”) was rejected. The NCLT, Kolkata rejected the application on the ground that no CIRP or Liquidation Process was pending against the Corporate Debtor. It observed that as per Section 60(2) of the Code, for initiating CIRP against a Personal Guarantor, there must be an ongoing CIRP or Liquidation Process pending before the NCLT against the related Corporate Debtor.

HELD: The NCLAT observed that as per the language of Section 60(1) of the Code, an application to initiate CIRP against a Personal Guarantor should be entertained by the NCLT which is dealing with CIRP or Liquidation Process of that respective Corporate Debtor. The intention of the provision is that both proceedings should be dealt by the same forum. The NCLAT held that the provisions of the Code do not bar filing of an application to initiate CIRP against a Personal Guarantor when no CIRP or Liquidation Process is pending against the Corporate Debtor.

Further, it was held that when a case is not covered under Section 60(2) of the Code, as per Section 60(1) of the Code, the application to initiate CIRP against a Personal Guarantor shall be filed before the NCLT having territorial jurisdiction over the place where the corporate person’s registered office is located.

The order passed by the NCLT, Kolkata was set aside and the application filed by the Appellant under Section 95(1) of the Code was revived before it.

Full text of the order accessible here.

 

 

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