REGULATORY · INDIA
NCLAT upholds initiation of personal insolvency proceedings against Videocon guarantors in SBI case
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India’s NCLAT dismissed petitions by Rajkumar and Pradeep Dhoot challenging the NCLT’s June 2024 orders initiating personal insolvency proceedings against them on SBI’s ₹5,353.78 crore demand as personal guarantors for Videocon Industries’ default.
Why Now
SBI issued a demand notice for ₹5,353.78 crore tied to defaults by Videocon Industries, for which the Dhoot brothers were personal guarantors. The Mumbai bench of NCLT, via orders dated June 4, 2024 and June 14, 2024, admitted SBI’s application under Section 95 of the Insolvency & Bankruptcy Code to initiate insolvency proceedings against a person. NCLT recorded satisfaction that Videocon (the corporate debtor) committed default in repayment and that the personal guarantors committed default in repayment of the loan facility. The brothers appealed these NCLT orders to NCLAT. NCLAT dismissed their petitions, upheld the NCLT orders, and rejected the argument that SBI’s petitions were barred by limitation.
Impact
- • Personal insolvency proceedings against the two guarantors remain in force under the upheld NCLT orders.
- • SBI’s Section 95 route to proceed against personal guarantors in this matter stands affirmed at the appellate level.
- • The limitation-bar challenge raised by the guarantors was rejected in this appeal.
Who Recalculates
- • Personal guarantors to corporate borrowers
- • Banks and other financial creditors initiating IBC Section 95 proceedings
- • Insolvency tribunals and insolvency professionals handling personal insolvency processes
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