Canara Bank Vs Uma Kumari Singh (NCLAT Delhi)
The National Company Law Appellate Tribunal (NCLAT), Delhi, delivered a key judgment in Canara Bank vs. Uma Kumari Singh, addressing the proper procedural framework for initiating Corporate Insolvency Resolution Process (CIRP) against personal guarantors under Section 95 of the Insolvency and Bankruptcy Code, 2016 (IBC). The appeals arose from three separate orders in which the NCLT, acting on Canara Bank’s applications against personal guarantors of M/s Barmendra Agrotech Pvt. Ltd., had dismissed the petitions at the first hearing on the ground of limitation.
The facts reveal that Canara Bank had advanced loans to the corporate debtor, secured through personal guarantees provided by the respondents. After the corporate debtor’s Section 7 application was admitted on 14.10.2022, the bank sought initiation of CIRP against the personal guarantors under Section 95. However, the NCLT dismissed the applications, citing limitation, without considering the procedural role of the resolution professional.
On appeal, the bank argued that under the IBC, the adjudicatory authority cannot exercise judicial functions at the early stages of Sections 95 to 99. The tribunal’s role at this stage is limited to appointing a resolution professional, whose function is facilitative and recommendatory, and no adjudicatory determination occurs until the authority examines the resolution professional’s report under Section 100.
