Repayment Plan Can Be Rejected If Guarantor Fails to Submit Revised Plan | NCLAT

Case Details: Reena Paul vs. CA Francis Mathew - [2025] 180 taxmann.com 70 (NCLAT-Chennai)

Judiciary and Counsel Details

• Sharad Kumar Sharma, Judicial Member & Jatindranath Swain, Technical Member
• K. Jagannathan & Anil Relwani, Advs. for the Appellant.
• E. Om Prakash, Senior Advocate, Ashwin Shanbhag & Ms Nandhini Ramalingam, Advs. for the Respondent.

Facts of the Case

In the instant case, the appellants were personal guarantors against the financial assistance extended to the corporate debtor by the financial creditor. The financial creditor initiated proceedings under Section 95 of the IBC against the appellants.

As a consequence of the admission of Section 95 application, the appellants had been put to face the personal insolvency process by an order passed by the National Company Law Tribunal (NCLT).

The appellants submitted a repayment plan, as per Section 105 of the IBC, to the Resolution Professional (RP). The RP summoned a meeting of the creditors in accordance with the provisions of section 107 of the IBC to consider the repayment plan submitted by the appellants.

Further, the Committee of creditors (COC) met and on ground that the appellants could not come up with a modified repayment plan as specified, decided to reject repayment plan with 100% voting and directed the RP to file report under section 112 for order of the NCLT. The NCLT passed an order rejecting the repayment plan submitted under Section 106 of the IBC.

It was noted that, after the submission of the repayment plan under Section 105 of the IBC, the RP held a number of meetings under Section 106 of the IBC for the individual consideration of plans. Further, during the course of various proceedings that were held before the RP, plans of each of the appellants/personal guarantors were independently and individually considered and deliberated upon, where the personal guarantors themselves had assured to give a modified proposal of the repayment plan, which they failed to comply with, given the assured time.

Additionally, it was noted that, according to the records, despite the assurances extended, a modified repayment plan was never submitted by the appellants.

NCLAT Held

The NCLAT observed that, since there was an apparent failure on part of the appellants to furnish modified repayment plan within the time period, as it was prayed for by them in light of discussions held and since there was an apparent default on part of the appellants, by not submitting the repayment plan as it was sought by them, ground taken by the appellants as contended in the instant appeals was not available to them.

The NCLAT held that the rejection of the repayment plan submitted by the appellants without availing an opportunity of its revision in light of the provision contained under section 115 of the Act did not suffer from any apparent error calling for interference.

List of Cases Reviewed

• Order of NCLT (Kochi) in IA(IBC)114/KOB/2023, IA(IBC)116/KOB/2023, IA(IBC)115/KOB/2023, IA(IBC)118/KOB/2023 and IA(IBC)119/KOB/2023, dated 28.06.2023 (para 15) affirmed
• Vijay Kumar Jain v. Standard Chartered Bank [2019] 102 taxmann.com 14/152 SCL 56 (SC) (para 11) followed

List of Cases Referred to

• Vijay Kumar Jain v. Standard Chartered Bank [2019] 102 taxmann.com 14/152 SCL 56 (SC) (para 11).