NCLAT Dismisses Indian Bank's Appeal to Initiate Insolvency Proceedings Against MBL Infra Director [Read Order]

The Principal Bench, National Company Law Appellate Tribunal (NCLAT), New Delhi, has dismissed Indian Bank’s appeal challenging the NCLT’s rejection of its application filed under Section 95 of the Insolvency and Bankruptcy Code (IBC), seeking to initiate personal insolvency proceedings against Anjanee Kumar Lakhotia, former director of MBL Infrastructure Ltd.

The appeal arose from an order passed by the NCLT, New Delhi Bench. The case has its roots in the insolvency proceedings of MBL Infrastructure Ltd., which was admitted to the Corporate Insolvency Resolution Process (CIRP) in 2017. A resolution plan submitted by Anjanee Kumar Lakhotia, the then promoter and suspended director, was approved by the Committee of Creditors (CoC) with a 78.5% voting share. This plan was later approved by the NCLT Kolkata and upheld by both the NCLAT and the SupremeCourt.

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Indian Bank, one of the dissenting financial creditors, did not support the resolution plan but filed its claim and participated in the Committee of Creditors (CoC). Following the approval of the resolution plan, the debt owed to all lenders was restructured, and Lakhotia executed a fresh personal guarantee in favour of SBICAP Trustee Company Ltd.

Indian Bank filed an application under Section 95 of the IBC seeking to initiate personal insolvency against Lakhotia based on a 2016 guarantee executed in favour of the lead bank of the earlier consortium. The State Bank of India (SBI), representing the new working capital consortium, opposed the application. SBI submitted that a new inter-se agreement and personal guarantee had replaced the earlier obligations under the resolution plan, and that dissenting creditors were entitled only to liquidation value, not separate recovery through personal insolvency.

The NCLT rejected Indian Bank’s application, holding that the earlier personal guarantee had been extinguished upon execution of the new guarantee under the resolution plan. Aggrieved by this order, Indian Bank approached the NCLAT, arguing that the earlier guarantee remained enforceable and that the approval of the resolution plan did not impact its rights under that agreement.

The NCLAT, consisting of Justice Ashok Bhushan (Chairperson), Braun Mitra (Technical Member) and Arun Baroka (Technical Member), upheld the NCLT’s order. It observed that the personal guarantor, being the resolution applicant himself, had submitted the resolution plan, which accounted for all assets and liabilities, including those under the earlier guarantee. The tribunal noted that a fresh personal guarantee had been executed in line with the restructuring.

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The appellate tribunal further noted that the Supreme Court had upheld the resolution plan and directed its implementation in full, stating that dissenting creditors were protected by the payment of liquidation value.

The NCLAT concluded that Indian Bank could not proceed under Section 95 against a personal guarantor whose obligations had been modified through a court-approved resolution plan. As a result, the appeal was dismissed.

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