Kotak Mahindra Bank Ltd Vs State of Maharashtra thr. Government Pleader & Ors (Bombay High Court)
The Bombay High Court disposed of a batch of writ petitions raising a common issue on jurisdiction over insolvency proceedings against personal guarantors when a Corporate Insolvency Resolution Process (CIRP) of the principal borrower is pending. The petitioners, secured creditors, challenged insolvency proceedings initiated before the Debt Recovery Tribunal (DRT) under Section 95 of the Insolvency and Bankruptcy Code, 2016 (IBC) against personal guarantors, contending that such proceedings were not maintainable once CIRP proceedings of the corporate debtor were pending before the National Company Law Tribunal (NCLT).
The Court noted that the controversy was squarely covered by the Supreme Court’s decision in Lalit Kumar Jain v. Union of India, which clarified the scheme of Sections 60 and 179 of the IBC. Relying extensively on that judgment, the High Court reiterated that personal guarantors constitute a distinct class, and where insolvency or liquidation proceedings of the corporate debtor are pending, the NCLT alone has jurisdiction over insolvency or bankruptcy proceedings relating to such personal guarantors. The legislative intent, as recognised by the Supreme Court, was to avoid parallel proceedings in different fora and to enable a holistic view of the assets of both the corporate debtor and the personal guarantor.
