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

CIRP of Orion Steels Ltd is pending before the NCLT, Mumbai. Mr. Rao, who gave a personal guarantee for Orion's loan, faces a bankruptcy proceeding pending before another tribunal. The lender also wants to file a fresh application on Rao's insolvency. What is the correct position?

The fresh application must go to the NCLT, Mumbai, which is hearing Orion's CIRP, and the pending proceeding against Rao stands transferred there. The Code centralises guarantor proceedings before the same Adjudicating Authority as the corporate debtor, and nothing abates them.

  1. AThe fresh application must be filed before the NCLT, Mumbai, and the pending proceeding against Rao stands transferred to itCorrect
  2. BThe fresh application may be filed before any court with jurisdiction over Rao's residence, and the pending proceeding continues there
  3. CThe pending proceeding is abated until Orion's CIRP ends
  4. DOnly the Debt Recovery Tribunal may hear Rao's matter while CIRP is pending

Explanation

Under section 60(2), when CIRP or liquidation of a corporate debtor is pending before an NCLT, applications on the insolvency of its personal guarantor are filed before that NCLT. Section 60(3) transfers pending proceedings against the guarantor to that Adjudicating Authority. Nothing abates the proceeding.

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