Adjudicating Authority Can Pass Order U/S 114 Of IBC Based On Resolution Professional's Report If No Repayment Plan Is Submitted: NCLT New Delhi

The National Company Law Tribunal (NCLT) New Delhi bench of Sh. Ashok Kumar Bhardwaj (Hon'ble Member (Judicial) and Sh. Man Mohan Gupta (Hon'ble Member Technical) has held that a meeting of the Committee of Creditors is not required to be summoned under Regulation 17A of the Personal Guarantors Regulations when no repayment is submitted by the Personal Guarantor. The Adjudicating Authority can pass an order based on the report submitted by the Resolution Professional under section 112 or section 106 even in the absence of creditors' meeting. In the present case, a Resolution Professional (RP) was appointed by the Adjudicating Authority. The RP submitted its report under section 99 of the Insolvency Bankruptcy Code, 2016 (IBC) recommending the admission of the Application against the personal guarantor of the corporate debtor. The Applicant filed an Interlocutory Application (IA) in which it was stated that the personal guarantor failed to respond or cooperate with the communications sent by the RP. Thereafter, the RP filed an application under section 106 of the IBC seeking to take the report on record. It was also stated that till date repayment plan has not been submitted by the Personal Guarantor. The Tribunal observed that on a conjoint reading of provisos to sections 112 and 106(2) of the IBC, it becomes crystal clear that the Adjudicating Authority may pass an order either based on a report under section 112 or section 106(2) of the IBC. However, Regulation 17A of the Personal Guarantors Regulations mandates that a creditors' meeting should be summoned even in the absence of the repayment plan. However, the Tribunal held that the purpose of such a meeting is only to notify the non availability of the repayment plan. Furthermore, in case of conflict, the IBC being a parliamentary legislation shall prevail over the Regulations made thereunder. It concluded that since no repayment plan was filed and the RP also filed a report indicating the same, non-submission of the repayment plan amounts to rejection of the repayment plan. Therefore, the Adjudicating Authority directed the closure of the Insolvency Resolution Process as per proviso to section 114(1) of the IBC and granted liberty to the creditors to proceed under sections 114, 115(2), 121 and 123 of the IBC. Case Title:Karur Vyasa Bank Versus Vishnoo Mittal Case Number:IB-313/ND/2022 IA-1261/2025, IA-1210/2025 Order Date: 02/07/2025 Click Here To Download Order/Judgement

Adjudicating Authority Can Pass Order U/S 114 Of IBC Based On Resolution Professional's Report If No Repayment Plan Is Submitted: NCLT New Delhi

Mohd Malik Chauhan

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