Congress MLC Naseer Ahmed Declared Bankrupt: NCLT Holds Personal Guarantor Liable for ₹1,454 Cr Under IBC [Read Order]

In a recent ruling, the National Company Law Tribunal (NCLT), Bengaluru Bench, has declared Congress MLC Naseer Ahmed bankrupt after finding him liable as a personal guarantor for loans amounting to ₹1,454 crore extended to Scotts Garments Ltd. by a consortium of banks led by Canara Bank, State Bank of India, and IDBI Bank.

Appearing through counsel Akshay J. Simha, petitioner Ahmed argued that he had not executed any valid deed of guarantee in favour of the applicant banks, claiming the guarantee was issued to SBICAP Trustee Company Ltd. and not directly to the lenders.

He also alleged parallel recovery through proceedings before the Debt Recovery Tribunal (DRT) and questioned Canara Bank’s authority to file on behalf of other consortium members.

The tribunal noted that despite multiple opportunities, Ahmed failed to submit a repayment plan during the personal insolvency resolution process. Creditors treated the absence of such a plan as a “deemed repayment plan of nil value” and resolved to proceed with bankruptcy under Chapter IV of the Code.

Rejecting these objections, the tribunal held that the deed of guarantee dated April 26, 2017 expressly empowered lenders to act jointly or severally against the guarantor. It observed that the objections had already been settled in earlier orders admitting the personal insolvency process and authorising bankruptcy proceedings, which had attained finality.

Finding substantial compliance with Sections 121 and 123 of the Code, the bench declared Ahmed bankrupt and appointed Shri Ravindra Beleyur as the Bankruptcy Trustee to take charge of his assets and administer the estate. The trustee has been directed to issue public notices inviting creditor claims and submit a preliminary report within 90 days.

The bench comprising Judicial Member Sunil Kumar Aggarwal and Technical Member Radhakrishna Sreepada ordered that the bankruptcy shall remain effective until Ahmed is discharged under Section 138 of the IBC, and that he will be subject to disqualifications and restrictions under Sections 140 and 141.

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