Personal Guarantors Cannot Seek Disclosure Of Resolution Plan Details U/S 60(5) IBC Or Rule 11 Of NCLT Rules: NCLT Mumbai
The National Company Law Tribunal, Mumbai Bench, comprising Justice Sushil Mahadeorao Kochkey (Member-Judicial) and Prabhat Kumar (Member-Technical), has held that personal guarantors cannot seek disclosure of resolution plan details u/s 60(5) or Rule 11 of the NCLT Rules. The CIRP of the corporate debtor, Prabhat Technologies (India) Ltd., was initiated in furtherance of the section...
The National Company Law Tribunal, Mumbai Bench, comprising Justice Sushil Mahadeorao Kochkey (Member-Judicial) and Prabhat Kumar (Member-Technical), has held that personal guarantors cannot seek disclosure of resolution plan details u/s 60(5) or Rule 11 of the NCLT Rules.
The CIRP of the corporate debtor, Prabhat Technologies (India) Ltd., was initiated in furtherance of the section 7 IBC application. After the approval of the resolution plan by the CoC, it was pending before the adjudicating authority for its approval as per the mandate of section 31 of the IBC.
The appellants were the personal guarantors of the corporate debtor for a loan taken from the State Bank of Bikaner & Jaipur (now merged with SBI). The State Bank of India is also a part of the CoC.
The application was filed under section 60(5) of the IBC, 2016, read with rule 11 of the NCLT Rules, 2016, praying for reliefs, which include disclosure of the treatment of the guarantor in the resolution plan and the status of their guarantees and loans from the SBI.
Contention of the Parties
The personal guarantors contended that they made several inquiries with the corporate debtor and the resolution professional to access the information with regard to the loan and guarantees but didn't succeed in it.
They requested before the tribunal to exercise its inherent power under rule 11 to direct the resolution professional and the SBI to disclose the necessary details.
However, the resolution professional and the SBI opposed the contention by submitting that the IBC does not impose any obligation to share the contents of the resolution plan with the third party.
Observations of the NCLT
The adjudicating authority observed that there is no provision in the IBC that talks of sharing the resolution plan with anyone except the members of the CoC and the suspended Board of Directors.
Relying on the ruling of Glas Trust Company LLC v. Buju Raveendran, Civil Appeal No. 9986 of 2024, the bench discussed that the inherent power can be exercised in the absence of the express provisions, but it cannot be exercised to override or ignore the express provision of the law.
The bench also made it clear that the provision of section 60(5) of the IBC can only be invoked for the purpose of proceedings or claims made by or against the corporate debtor or to determine the question of law and facts related to the proceedings. And the subject matter of the present application doesn't fall within these grounds.
Lastly, it clarified that the inherent power under rule 11 of the NCLT Rules can only be exercised in the four corners of the substantive law.
Observing that the present facts don't necessitate the exercise of inherent power, the adjudicating authority dismissed the application.
Case Name: Paramount Consultant & Corporate Advisors Pvt. Ltd. v. Prabhat Telecom India Ltd.
Case No.: IA (I.B.C)/3132 (MB) 2025 In C.P. (IB)/1874 (MB) 2019
Bench: Justice Sushil Mahadeorao Kochkey (Member-Judicial) and Prabhat Kumar (Member-Technical),
Order Date: 12.08.2025