Which forum has jurisdiction over insolvency proceedings against a personal guarantor to a corporate debtor?

Question

A bank has initiated insolvency proceedings against me as a personal guarantor to a company loan. Should this go before the NCLT or DRT? I would rather settle this without going to court if the law allows it, but I need to know my rights before I sign anything. Please tell me what to do first and what document to keep.

MyVakeel Legal Desk · Accepted Answer

Under Indian law, Insolvency and Bankruptcy Code 2016, Section 60 is the starting point for this banking law question. What follows is the position in substance, together with the steps that usually make the difference in practice.

Section 60(1) provides that the NCLT which has jurisdiction over the corporate debtor is also the adjudicating authority for insolvency proceedings against its personal guarantors.

Section 95 allows the creditor to file an application for initiating insolvency resolution against the personal guarantor, triggering an interim moratorium on other pending proceedings against the guarantor.

A Resolution Professional is appointed to examine the application and submit a report recommending admission or rejection within the statutory timeline.

The Supreme Court in Lalit Kumar Jain upheld the validity of these provisions, confirming that a guarantor's liability survives even after the corporate debtor's resolution plan is approved.

DRT retains jurisdiction only for the recovery suit against the guarantor's personal assets once the IBC process concludes or if IBC proceedings are not invoked.

Practical steps: 1) Verify whether the corporate debtor is undergoing or has completed a CIRP before the NCLT; 2) Respond to the Resolution Professional's notice with your objections regarding the guarantee amount; 3) Attend the NCLT proceedings and challenge admission if procedural requirements were not met; 4) Explore a repayment plan proposal to avoid the harsher consequences of a formal insolvency process.

If the other side has already issued a notice, filed a case or set a deadline, treat the matter as time-sensitive — remedies under Insolvency and Bankruptcy Code 2016, Section 60 carry limitation periods, and unexplained delay weakens an otherwise strong case. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in banking law.