NCLAT Principal Bench Sets Aside Transfer Refusal by NCLT New Delhi; Emphasizes Overriding Statutory Mandate of Section 60(2) IBC for Judicial Consistency and Consolidation
In a significant judgment delivered on September 9, 2026, the National Company Law Appellate Tribunal (NCLAT), Principal Bench at New Delhi, in the case of Kamlesh Rani Singla v. Praveen Kumar Garg, clarified the mandatory territorial jurisdiction provisions under Section 60(2) of the Insolvency and Bankruptcy Code, 2016 (IBC). The appellate tribunal set aside the refusal by the National Company Law Tribunal (NCLT), New Delhi Bench-II, to transfer insolvency proceedings initiated under Section 95 IBC against a personal guarantor to the NCLT Bench where the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor was pending.
Background:
The case arose from parallel insolvency proceedings initiated against M/s Laxmi Pipes Ltd., a corporate debtor undergoing CIRP before the NCLT Chandigarh Bench-II, and its personal guarantor, Kamlesh Rani Singla. The respondent, Praveen Kumar Garg, had filed a Section 95 application against the personal guarantor before the NCLT New Delhi Bench-II, despite the corporate debtor’s CIRP being admitted and pending at the Chandigarh Bench. The appellant challenged this, seeking transfer of the Section 95 proceedings to the Chandigarh Bench to comply with the jurisdictional mandate under Section 60(2) IBC.
Key Legal Issues:
1. Whether the NCLT New Delhi Bench-II had jurisdiction to entertain Section 95 proceedings against the personal guarantor when the CIRP of the corporate debtor was pending before the NCLT Chandigarh Bench-II.
2. Whether Rule 16(d) of the NCLT Rules, 2016, restricts the President’s power to transfer cases only within the same territorial jurisdiction or allows transfers across territorial jurisdictions to comply with statutory mandates.
3. Whether dismissal of the transfer application without a meaningful hearing violated principles of natural justice.
Judgment Highlights:
The NCLAT Principal Bench emphatically held that Section 60(2) IBC is mandatory and admits no discretion. It provides that when a CIRP or liquidation proceeding of a corporate debtor is pending before a particular NCLT Bench, all related insolvency applications—including those against personal guarantors—must be filed before the same Bench. This statutory mandate aims to ensure the consolidation of proceedings, judicial consistency, and avoidance of conflicting decisions.
The tribunal observed that the NCLT New Delhi Bench had no territorial or inherent jurisdiction to entertain the Section 95 application against the personal guarantor once the CIRP was pending at the Chandigarh Bench. Any proceedings conducted by the New Delhi Bench in such circumstances are void ab initio and unsustainable in law.
Further, the tribunal clarified the scope of Rule 16(d) of the NCLT Rules, 2016, which empowers the President of the NCLT to transfer cases between Benches when circumstances warrant. Contrary to the Gujarat High Court’s narrower administrative interpretation restricting transfers within the same territorial jurisdiction, the NCLAT held that the President’s power is not confined territorially and must be exercised in consonance with the overriding statutory provisions of Section 60(2) IBC.
The tribunal also found that the dismissal of the transfer application by the NCLT New Delhi Bench without an effective hearing on the jurisdictional issue violated principles of natural justice.
Outcome:
The NCLAT set aside the impugned order of the NCLT New Delhi Bench, quashed the proceedings pending before it under Section 95 IBC, and directed that the matter be re-filed before the NCLT Chandigarh Bench, which is the sole competent authority to adjudicate insolvency proceedings related to the corporate debtor and its personal guarantor. The decision reinforces the primacy of statutory mandates over administrative interpretations and highlights the necessity of judicial consistency in insolvency cases.
Significance:
This judgment reiterates the binding nature of Section 60(2) IBC and clarifies that insolvency proceedings against personal guarantors must follow the territorial jurisdiction of the corporate debtor’s insolvency proceedings. It prevents parallel proceedings before different Benches of the NCLT, thus safeguarding the interests of all parties and ensuring efficient resolution of insolvency matters. The ruling further empowers the President of the NCLT to transfer cases across territorial jurisdictions in compliance with statutory requirements, thereby preventing jurisdictional conflicts.
The judgment also underscores the importance of affording parties a meaningful opportunity of hearing before dismissing jurisdictional or transfer applications, upholding the fundamental principles of natural justice.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 Section 60(2) mandates that all insolvency proceedings of a Corporate Debtor and its Personal Guarantor must be heard by the same NCLT Bench where the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor is pending. Rule 16(d) of the NCLT Rules, 2016, does not restrict the President's power to transfer cases within the same territorial jurisdiction only.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 - Section 60(1), Section 60(2), Section 60(3), Section 95, Section 96; National Company Law Tribunal Rules, 2016 - Rule 16(d), Rule 2(7)
