Tribunal rejects jurisdiction and limitation objections, initiates insolvency resolution process against Mrs. Manju Saurabh Garg under IBC, 2016
In a significant judgment dated 10th September 2026, the National Company Law Tribunal (NCLT), Indore Bench, presided over by Mr. Brajendra Mani Tripathi (Judicial Member) and Mr. Man Mohan Gupta (Technical Member), admitted the insolvency petition filed by Tata Capital Limited against Mrs. Manju Saurabh Garg, a personal guarantor to M/s Excel Vehicles Private Limited.
Tata Capital Limited, a Non-Banking Financial Company (NBFC), had extended a channel finance facility to the corporate debtor, which was secured by a personal guarantee executed by Mrs. Garg. The corporate debtor defaulted on repayment, and Tata Capital invoked the personal guarantee by issuing a Loan Recall-cum-Arbitration Invocation Notice dated 14th February 2019. The petition for initiating insolvency proceedings was filed on 21st July 2022 under Section 95 of the Insolvency and Bankruptcy Code (IBC), 2016.
The respondent challenged the maintainability of the petition on multiple grounds: alleged lack of jurisdiction of the Indore Bench due to a contractual clause conferring exclusive jurisdiction to Mumbai courts; limitation barred petition; non-service of demand notice; insufficient stamping of guarantee documents; and procedural irregularities in the Resolution Professional's report.
Rejecting these objections, the Tribunal held that the statutory jurisdiction conferred under Section 60 of the IBC could not be ousted by any private contractual clause, affirming the Indore Bench's jurisdiction as the corporate debtor was registered in Madhya Pradesh and the guarantee was executed in Bhopal. On the limitation plea, the Tribunal applied the Supreme Court's directions in "In Re: Cognizance for Extension of Limitation" to exclude the period from 15th March 2020 to 28th February 2022 and observed that the petition was within limitation whether reckoned from the date of default or from the invocation of the guarantee.
The Tribunal further relied on the arbitral award dated 18th February 2022, which adjudicated the liability of the guarantor as jointly and severally liable with the corporate debtor. Acknowledgments of debt and revival letters also reinforced the existence of debt and default. The objections related to non-service of demand notice and insufficiency of stamping were dismissed as the demand notice was proved to have been served and insufficiency of stamp duty was considered a curable defect that did not invalidate the guarantee.
Regarding procedural objections on the Resolution Professional's report delay and verification, the Tribunal held the timelines under Section 99 to be directory and condoned the delay, noting that the affidavit's date preceding the report was a curable irregularity. The appointment of the Resolution Professional was confirmed valid.
Consequently, the Tribunal admitted the petition under Section 100 and ordered initiation of the insolvency resolution process against Mrs. Garg. A moratorium of 180 days was imposed, staying all legal proceedings against the personal guarantor. Mr. Rajesh Ramnani was appointed as the Resolution Professional to oversee the process. Public notice inviting claims from creditors will be published, and a repayment plan is to be prepared in consultation with the guarantor.
This judgment reinforces the scope of personal guarantor insolvency under the IBC framework and clarifies that private jurisdiction clauses cannot override statutory authority. It also elucidates the reckoning of limitation in such cases, highlighting the continuing nature of guarantees and the impact of the Supreme Court's extension of limitation period due to the COVID-19 pandemic.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Personal guarantor insolvency - Application under Section 95 by financial creditor held maintainable - Contractual clause conferring jurisdiction on Mumbai courts cannot override statutory jurisdiction under Section 60 read with Section 238 of IBC - Limitation against guarantor runs from invocation of guarantee; in present case petition also within limitation even reckoned from date of default, after exclusion of period directed by Supreme Court in In Re: Cognizance for Extension of Limitation - Arbitral award, acknowledgments and revival letters establish debt and default - Objections as to non-service, insufficiency of stamp, delayed RP report and defects in verification rejected - Petition admitted under Section 100 and insolvency resolution process initiated against personal guarantor.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Sections 60, 79(15), 95, 99, 100, 102, 103, 104, 105, 106, 107, 108, 109, 110, 111, 112, 128 of Indian Contract Act, 1872, Sections 18 and 19 of Limitation Act, 1963
Tata Capital Limited v. Manju Saurabh Garg, (NCLT)(Indore Bench) : Law Finder Doc Id # 3004137
