Section 94 IBC Plea Not Barred by SARFAESI Notice | NCLAT

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section 94 IBC personal guarantor

Case Details: Naseema Bano Personal Guarantor SRS Meditech Ltd. vs. State Bank of India – [2026] 183 taxmann.com 716 (NCLAT-New Delhi)

Judiciary and Counsel Details

  • N. Seshasayee, Judicial Member & Arun Baroka, Technical Member
  • Ms Kritika, Rajat K. Mittal & Ms Heena Khatun, Advs. for the Appellant.
  • Harshit Gupta & Shaun Jomon, Advs. for the Respondent.

Facts of the Case

In the instant case, the appellants stood as personal guarantors to a loan advanced to the corporate debtor. The corporate debtor defaulted on the loan, and it was eventually classified as a Non-Performing Asset (NPA).

The financial creditor issued a notice under section 13(2) of the SARFAESI Act, and, pursuant to the same notice, it also invoked the personal guarantee furnished by the appellants. In the aforesaid circumstances, the appellants invoked section 94 of the IBC.

The Adjudicating Authority (NCLT) dismissed the petition filed by the appellants under section 94 of the IBC, on a solitary ground that the petition was filed only after the financial creditor had invoked the SARFAESI Act for the realisation of debt. Then, an appeal was made before the NCLAT against the order passed by the NCLT.

NCLAT Held

The NCLAT held that the dismissal of the Section 94 application solely on the ground that the financial creditor had initiated proceedings by issuing a notice under Section 13(2) of the SARFAESI Act was not legally sustainable.

Therefore, the matter was to be remanded back to the Adjudicating Authority for its consideration, other than that which formed the line of its reasoning in the impugned order.

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied