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CS Professional · Insolvency and Bankruptcy - Law and Practice · Adjudication and Appeals for Corporate Persons

Bharat Steels Pvt Ltd is undergoing CIRP before the NCLT, Mumbai. Its promoter, Mr. Rakesh Mehta, is a personal guarantor for its debts. A bank wants to begin insolvency resolution against Mr. Mehta on that guarantee. Where must the application be filed?

The application must be filed before the NCLT, Mumbai, which is already handling the corporate debtor's CIRP. Section 60(2) requires applications concerning a personal or corporate guarantor of that debtor to go to the same Tribunal, so that related proceedings are handled together.

  1. ABefore the Debt Recovery Tribunal having jurisdiction over Mr. Mehta's residence
  2. BBefore the NCLT, Mumbai, which is dealing with the corporate debtor's CIRPCorrect
  3. CBefore the NCLAT, as the appellate forum for guarantor matters
  4. DBefore any NCLT bench the bank chooses

Explanation

Under section 60(2), where CIRP or liquidation of a corporate debtor is pending before an NCLT, an application relating to the insolvency resolution of its personal guarantor must be filed before that same NCLT. The DRT option ignores this rule, and the bank has no free choice of bench.

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