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CS Professional · Insolvency and Bankruptcy - Law and Practice · Insolvency Resolution of Individuals and Partnership Firms

A corporate insolvency resolution process of Zenith Steels Ltd is pending before the NCLT at Mumbai. Its director Anil Rao, a personal guarantor to the corporate debtor, faces a creditor who wishes to start insolvency proceedings against him. Where should the application be filed?

The application must be filed before the NCLT handling the corporate debtor's insolvency process. Section 60(2) requires matters concerning a personal guarantor of that debtor to go to the same NCLT, and section 179(1) is made subject to section 60, so the DRT does not have jurisdiction.

  1. ABefore the DRT having jurisdiction over Anil Rao's residence
  2. BBefore the NCLT dealing with the corporate debtor's insolvency processCorrect
  3. CBefore the DRAT, as the appellate authority
  4. DBefore the High Court, since two forums are involved

Explanation

Section 60(2) provides that where a CIRP of a corporate debtor is pending before an NCLT, an application relating to insolvency resolution or bankruptcy of its personal guarantor shall be filed before that same NCLT. Section 179(1) is expressly subject to section 60, so DRT jurisdiction gives way. Section 60(3) also transfers pending proceedings to that NCLT.

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