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CS Professional · Insolvency and Bankruptcy - Law and Practice · Cross Border Insolvency (Elective 7.5)

Veda Textiles Ltd has its registered office in Coimbatore, and a corporate insolvency resolution process against it is pending before an NCLT bench. A bank files an application for the insolvency resolution of Veda's corporate guarantor, Kaveri Mills Ltd. Under the Code, before which forum should this application be filed?

The application must be filed before the NCLT bench already dealing with Veda Textiles' insolvency process. Section 60(2) channels proceedings against the corporate guarantor of a corporate debtor to the same Tribunal, so the Debt Recovery Tribunal or High Court is not the proper forum.

  1. AThe NCLT bench where Veda Textiles' insolvency process is pendingCorrect
  2. BThe Debt Recovery Tribunal nearest to Kaveri Mills' office
  3. CThe High Court having jurisdiction over Kaveri Mills' registered office
  4. DThe NCLAT directly, as the matter involves two companies

Explanation

Section 60(2) says that where a CIRP or liquidation of a corporate debtor is pending before an NCLT, an application relating to the insolvency resolution or liquidation of its corporate guarantor or personal guarantor must be filed before that same NCLT. The DRT option is wrong because the NCLT only holds DRT powers for this purpose.

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