17 , April , 2025
In a significant setback, the National Company Law Appellate Tribunal (NCLAT) has rejected the petition filed by RK Arora, the former promoter of the debt-laden real estate firm Supertech against personal insolvency proceedings initiated against him. He had challenged an order by the Delhi bench of the National Company Law Tribunal, which, in February 2025, directed to initiate personal insolvency proceedings against Arora on the plea filed by IFCI and appointed an IRP.
A two-member bench of the appellate insolvency tribunal, NCLAT, stated that personal insolvency proceedings cannot be challenged merely because separate insolvency proceedings have been initiated against Supertech under Section 7 of the IBC. It is up to the lenders to pursue actions against both independently or concurrently.
Section 95 (1) of the Insolvency & Bankruptcy Code allows the creditors to file insolvency proceedings against the personal guarantors. Arora's counsel submitted the insolvency proceedings initiated against Supertech Ltd under Section 7 is currently sub-judice before the Supreme Court. In this matter, the apex court had, on February 21, 2025, asked the promoters of Supertech and third parties to submit a settlement plan, and the process is already pending before the Supreme Court.
Supertech promoters and other parties are in the process of submitting a plan for construction and settlement. Rejecting this argument, the NCLAT said: "Be that as it may, we are of the view that the personal insolvency proceedings are not defended on proceedings under Section 7, which are proceedings against the Corporate Debtor (Supertech), the liability of the personal guarantor and the Corporate Debtor to the lenders are co-extensive and it is open for the lenders to proceed against both simultaneously or separately".
Arora's counsel further submitted that the proposal has also been sent to IFCI Bank with an OTS (one-time settlement) Proposal, which is pending consideration. "We after hearing the Counsel for the Appellant (Supertech), are of the view in so far as the admission of the application under Section 95, that cannot be faulted on the ground of pendency of proceedings under Section 7 against CD," said a NCLAT bench comprising Chairperson Justice Ashok Bhushan and Barun Mitra. However, the NCLAT said it will be open for Arora to bring before the Resolution Professional settlement with IFCI Bank if any, or any proceedings or any settlement, entered into the proceedings under Section 7, which are pending consideration before the Supreme Court.
The appellate tribunal further said: "It goes without saying that all materials which are brought by the appellant be duly considered by the RP for proceeding further in the personal insolvency proceedings".
(WITH INPUTS TAKEN FROM PTI)
