National Company Law Appellate Tribunal judgments

NCLAT rules that a recovery certificate issued against a principal borrower triggers a fresh three-year limitation period for financial creditors to initiate CIRP against corporate guarantors. This holding clarifies the interplay between debt recovery mechanisms and IBC timelines, impacting asset reconstruction companies and lenders pursuing guarantor liability.

The NCLAT has ruled that a company’s statutory duty to repay matured deposits under Section 74 cannot be suspended due to succession disputes or pending probate proceedings. The obligation to return deposits is absolute and must be honored, with assets held in trust for the estate until legal succession is determined - protecting depositors’ rights regardless of the deceased’s estate complexities.

NCLAT rules that a promoter's restructuring proposal cannot be treated as a valid Resolution Plan under the Insolvency and Bankruptcy Code unless it complies with Section 30(2) and the formal Corporate Insolvency Resolution Process. The ruling reinforces that informal settlements bypassing statutory safeguards are inadmissible, impacting creditors' rights and insolvency proceedings.