In re Keerthan Kumar Upadhya (NCLT Chennai)
The National Company Law Tribunal (NCLT) Chennai considered an application filed by Mr. Keerthan Kumar Upadhya, a personal guarantor to SKV United Hospitals Limited, seeking to initiate his own insolvency resolution process under Section 94(1) of the Insolvency & Bankruptcy Code, 2016 (IBC). SKV United Hospitals Limited had availed credit facilities from Shreem Hreem Shreem Holdings, for which Mr. Upadhya had provided a personal guarantee. Upon the corporate debtor’s failure to repay the debt, the personal guarantor filed the present application.
The NCLT observed that the loan amount for which the personal guarantee was invoked was ₹75,00,000/-, which is below the ₹1 crore threshold stipulated under Section 4 of the IBC for initiating insolvency proceedings against a corporate debtor. The tribunal noted that while the IBC classifies individuals into different categories for phased implementation of individual insolvency, the threshold limit for invoking Sections 94 and 95 of the IBC against a personal guarantor to a corporate debtor should be the same as that applicable to the corporate debtor itself, i.e., ₹1 crore. Since the defaulted amount in this case was less than this threshold, the applicant was deemed ineligible to maintain the application. Additionally, the NCLT pointed out that the applicant had failed to send notice of the application to all financial creditors and the corporate debtor, as required by Rule 6(2) of the relevant rules. Consequently, the NCLT dismissed the application due to the applicant’s failure to meet the mandatory ₹1 crore threshold and the procedural non-compliance regarding notice.
