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NCLAT Sets Aside Admission of Section 95 Proceedings Against Personal Guarantor; Holds Prior Invocation of Guarantee Mandatory
23 Mar 2026
- DMD Advocates
- Matter Reporting
By judgment dated March 20, 2026, the NCLAT set aside the NCLT’s order admitting the Section 95 application and dismissed the personal guarantee proceedings against Ms. Panda.
The appeal raised an important issue under the Insolvency and Bankruptcy Code, 2016, whether a personal guarantee must first be validly invoked before proceedings under Section 95 can be initiated. The NCLAT answered that issue in the affirmative and held that a demand notice in Form B cannot, by itself, be treated as an invocation of the guarantee.
The NCLAT also declined to entertain the Financial Creditor’s attempt to rely on an alleged invocation letter at a belated stage, particularly where no such case had been set up in the original Section 95 application and where it had already been stated before the Adjudicating Authority that reliance would not be placed on that document.
Anuj Shah, Counsel, appeared and argued for the Appellant, Jagi Mangat Panda.
