Mere Pendency Of Appeal Does Not Stall Bankruptcy Proceedings: NCLT Kochi
The National Company Law Tribunal (NCLT), Kochi Bench, on 14 January held that the mere pendency of an appeal does not operate as a stay on proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC), in the absence of a specific interim order from the appellate forum.
A Bench presided over by Judicial Member Vinay Goel was dealing with a batch of applications filed by Tata Capital Limited seeking initiation of bankruptcy proceedings against five personal guarantors of Simtel Trading Corporation Private Limited.
The Tribunal observed that the IBC is a complete code in itself, providing for a time-bound mechanism for insolvency and bankruptcy processes, and held:
“The IBC, 2016, is a comprehensive code in itself and prescribes specific timelines for the progression and completion of processes in a time-bound manner.”
In the case at hand, Simtel Trading Corporation had, in 2019, availed a term loan of Rs. 36 crore and a working capital facility of Rs. 3.60 crore from Tata Capital, aggregating to Rs. 39.60 crore. The credit facilities were secured by personal guarantees executed by the five respondents, along with a corporate guarantee from the company.
Upon default in repayment, Tata Capital issued a loan recall notice dated 13 February 2019 demanding Rs. 35.59 crore. A statutory demand notice was subsequently issued to the personal guarantors on 2 May 2022 and was delivered on 14 May 2022. Insolvency proceedings were thereafter initiated against the guarantors under Section 95 of the IBC.
On 26 September 2024, the NCLT appointed Mr. Jasin Jose as the Resolution Professional to examine the applications and submit a report under Section 99 of the Code. Based on the Resolution Professional's recommendations filed in December 2024, the Tribunal admitted the Section 95 applications on 6 May 2025.
Aggrieved by the admission order, some of the guarantors preferred appeals before the National Company Law Appellate Tribunal (NCLAT), which are pending and listed for hearing on 21 January 2026. The Tribunal noted that no interim protection or stay has been granted by the NCLAT.
Reiterating that the pendency of an appeal in a higher forum does not automatically halt proceedings under the IBC, the Tribunal observed:
“The mere pendency of an appeal cannot be construed as a stay on the proceedings under the IBC, 2016, unless there is a specific stay order or interim protection granted by the higher forum.”
The Tribunal further recorded that none of the personal guarantors had submitted a viable repayment plan during the insolvency resolution process.
Accordingly, the NCLT allowed the applications and declared the personal guarantors as bankrupt. It also appointed Mr. Jasin Jose as the Bankruptcy Trustee.
Case Title: Tata Capital Limited v. Bobby Abraham
Case Number: IA(IBC) /488 /KOB/2025 in CP (IBC)/ 42//KOB/2024 & IA(IBC) /490 / KOB/2025 in CP(IBC)/ 44/ KOB/ 2024 & IA(IBC)/ 491/KOB/2025 in CP(IBC)/ 51/KOB/2024 & IA(IBC)/ 489/ KOB/2025 in CP(IBC)/ 52/KOB/ 2024 & CP(IBC)/ 492/KOB/ 2025 in CP(IBC)/ 53/ KOB/2024
Citation: 2026 LLBiz NCLT (KOC) 60
For Applicant: Advocate Chandapillai Abraham