The National Company Law Appellate Tribunal has reaffirmed that Section 60(2) of the Insolvency and Bankruptcy Code, 2016 operates as a mandatory, non-discretionary jurisdictional command requiring all insolvency proceedings against a personal guarantor to be instituted before the same NCLT bench where the corporate debtor's CIRP is pending. The Tribunal set aside an order of the NCLT President dismissing a transfer application, holding that the New Delhi bench lacked jurisdiction to entertain Section 95 proceedings against a guarantor when the corporate debtor's CIRP was already underway in Chandigarh.
Background & Facts
The Dispute
The appellant, Kamlesh Rani Singla, is the suspended director and personal guarantor of M/s. Laxmi Pipes Ltd. (the Corporate Debtor), a company incorporated under the Companies Act with its registered office at Bhiwani Road, Hansi, District Hisar, Haryana. The respondent, Praveen Kumar Garg (Proprietor of M/s GSV Products), is an operational creditor who initiated parallel insolvency proceedings against both the Corporate Debtor and its personal guarantor before two different NCLT benches.
Key Facts
- 17.05.2023: The Hon'ble NCLT, Chandigarh Bench-II admitted CP (IB) No. 107/Chd/Hry/2023 (Praveen Kumar Garg v. Laxmi Pipes Ltd.) under Section 9 IBC, initiating CIRP of the Corporate Debtor. Mr. Deepak Thukral was appointed as Interim Resolution Professional, a moratorium under Section 14 IBC was declared, and the Corporate Debtor admitted an operational debt of ₹1,14,27,112/- payable to Respondent No.1.
- 28.05.2024: Respondent No.1 filed CP(IB) No. 419/ND/2023 under Section 95 IBC against the Appellant (Personal Guarantor/Suspended Director) before the Hon'ble NCLT, New Delhi, Bench-II. The same bench admitted the application, appointed Mr. Gautam Singhal (IBBI/IPA-001/IP-P01437/2018-2019/12240) as Resolution Professional, and triggered an interim moratorium under Section 96 IBC.
- 08.07.2024: The Appellant filed Transfer Application No. T.A. (IBC)-50 (PB) of 2024 before the Hon'ble NCLT, Principal Bench, New Delhi, seeking transfer of CP(IB) No. 419/ND/2023 to the Hon'ble NCLT, Chandigarh Bench-II under Section 60(1) and (2) IBC read with Rule 16(d) of the NCLT Rules, 2016.
- 16.10.2025: The Hon'ble Gujarat High Court delivered judgment in R/Special Civil Application No. 11679 of 2024 (Arcelor Mittal Nippon Steel India Limited v. NCLT & Ors.), holding that Rule 16(d) only permits intra-territorial transfers.
- 05.12.2025: The NCLT Principal Bench dismissed the Transfer Application (Impugned Order), relying on the Gujarat High Court judgment and holding that Rule 16(d) does not empower inter-territorial transfers.
Procedural History
- 17.05.2023: CIRP of Laxmi Pipes Ltd. admitted by NCLT Chandigarh Bench-II (CP (IB) No. 107/Chd/Hry/2023)
- 28.05.2024: Section 95 application against Personal Guarantor admitted by NCLT New Delhi Bench-II (CP(IB) No. 419/ND/2023)
- 08.07.2024: Transfer Application filed before NCLT Principal Bench (TA(IBC)-50(PB)/2024)
- 16.10.2025: Gujarat High Court judgment in R/SCA No. 11679/2024 (administrative transfer context)
- 05.12.2025: Impugned Order dismissing Transfer Application
- 09.09.2026: NCLAT judgment in Company Appeal (AT) (Insolvency) No. 275 of 2026
The Parties' Positions
Appellant: Contended that Section 60(2) IBC crystallised exclusive territorial and subject-matter jurisdiction in the Chandigarh bench once the Corporate Debtor's CIRP was admitted. The New Delhi bench lacked jurisdiction; proceedings were void ab initio. The Gujarat HC judgment concerned administrative transfers, not judicial transfers under the statutory mandate of Section 60(2). The Transfer Application raised a threshold jurisdictional objection that required a meaningful hearing.
Respondent: Relied on the Gujarat High Court judgment to argue that Rule 16(d) of the NCLT Rules restricts the President's transfer power to benches within the same territorial jurisdiction. The NCLT President correctly dismissed the transfer application.
Relief Sought
The Appellant prayed for: (a) setting aside the Impugned Order dated 05.12.2025; (b) allowing the Transfer Application and transferring CP(IB) No. 419/ND/2023 from NCLT New Delhi Bench-II to NCLT Chandigarh Bench-II; (c) quashing all proceedings in CP(IB) No. 419/ND/2023 subsequent to the admission order dated 28.05.2024; and (d) directing that proceedings remain in abeyance and stand transferred to the competent jurisdictional authority.
The Legal Issue
The central questions were: (1) Whether the NCLT, New Delhi Bench-II could exercise jurisdiction over Section 95 proceedings against a Personal Guarantor when the CIRP of the Corporate Debtor was already pending before the NCLT, Chandigarh Bench-II; (2) Whether the dismissal of the Transfer Application without an effective hearing on the jurisdictional objection violated principles of natural justice; (3) Whether the Gujarat High Court's judgment on administrative transfers under Rule 16(d) governs judicial transfer applications seeking correction of a statutory jurisdictional defect under Section 60(2) IBC.
Arguments Presented
For the Appellant
The Appellant submitted that Section 60(2) IBC contains a non-obstante clause giving it overriding effect over Section 60(1). Where a CIRP is pending before a particular NCLT bench, any application relating to the insolvency of a personal guarantor must be filed before that same bench. The legislative intent is consolidation, judicial consistency, and avoidance of conflicting decisions. The Appellant relied on the binding precedent of this Tribunal in Ankit Miglani v. State Bank of India (Company Appeal (AT) (Insolvency) No. 58 of 2023, decided 19.04.2023), which categorically held that Section 60(2) is mandatory and admits of no discretion. The Gujarat High Court judgment in Arcelor Mittal concerned administrative transfers by the President under Rule 16(d) and did not address the statutory jurisdictional command of Section 60(2). The Transfer Application raised a fundamental jurisdictional defect rendering proceedings coram non judice, which the President was bound to correct.
For the Respondent
The Respondent contended that Rule 16(d) of the NCLT Rules, 2016 defines the President's transfer powers and, as interpreted by the Gujarat High Court, does not confer authority to transfer cases beyond the territorial jurisdiction of a particular bench. The President's administrative decision to dismiss the transfer application was therefore correct. The Respondent maintained that the New Delhi bench had territorial jurisdiction under Section 60(1) based on the guarantor's location.
The Court's Analysis
The Tribunal began by extracting Section 60(2) IBC, which provides: "Without prejudice to sub-section (1) and notwithstanding anything to the contrary contained in this Code, where a corporate insolvency resolution process or liquidation proceeding of a corporate debtor is pending before a National Company Law Tribunal, an application relating to the insolvency resolution or liquidation or bankruptcy of a corporate guarantor or personal guarantor, as the case may be, of such corporate debtor shall be filed before such National Company Law Tribunal."
The Court held that the non-obstante clause in Section 60(2) gives it overriding effect over Section 60(1) as far as territorial jurisdiction for cognizance of proceedings against guarantors is concerned. This is an overriding statutory mandate. Consequently, once the CIRP of Laxmi Pipes Ltd. was admittedly pending before the Chandigarh bench, the New Delhi bench lacked both territorial and inherent jurisdiction to entertain the Section 95 application. Any continuation of such proceedings would be void ab initio, coram non judice, and wholly unsustainable in law.
The Tribunal relied on its own precedent in Ankit Miglani v. State Bank of India (decided 19.04.2023), where it was "unequivocally laid down that where a Corporate Insolvency Resolution Process of the Corporate Debtor is pending before a particular Bench of the National Company Law Tribunal, any application relating to the insolvency resolution or bankruptcy of the Personal Guarantor of such Corporate Debtor must necessarily be instituted before the very same Ld. Adjudicating Authority (Bench), and not before any other Bench." The Court also referenced State Bank of India v. Mahendra Kumar Jajodia (Company Appeal (AT) (Insolvency) No. 60 of 2022), which clarified that Section 60(2) applies only when a CIRP or liquidation proceeding of the Corporate Debtor is pending - the object being to avoid two different NCLTs taking up CIRP of the Corporate Debtor and its guarantor.
Addressing the Gujarat High Court judgment, the Tribunal distinguished it on the ground that it dealt with administrative transfers by the President under Rule 16(d), not judicial transfer applications invoking the statutory mandate of Section 60(2). The Gujarat HC had quashed administrative orders transferring cases from Ahmedabad to Mumbai, holding the President lacked power to alter territorial jurisdiction administratively. However, the present case involved a judicial transfer application filed by a party raising a threshold jurisdictional objection under Section 60(2) - a fundamentally different context.
The Tribunal then analysed Rule 16(d) of the NCLT Rules, 2016 read with Rule 2(7) (defining "bench" to include circuit benches constituted by the President with Central Government approval). A combined reading shows the President is empowered to transfer any case from one bench to another "having regard to requirements." Section 60(2) provides the criteria for such transfer - when CIRP against the Corporate Debtor is pending in one bench, proceedings against the personal guarantor must be transferred to that bench. A narrow interpretation restricting Rule 16(d) to intra-territorial transfers would create anomalous situations and render Section 60(2) otiose.
"We note that the insolvency proceedings against the Corporate Debtor are going on in the NCLT bench in Chandigarh and the insolvency proceedings against the personal guarantor have been initiated in another bench in another territorial location at New Delhi. Even the transfer application has been dismissed by the President NCLT, ignoring the provisions in Section 60(2) of the Code but on a very narrow interpretation of Rule 16(d) that the proceedings cannot be transferred from one territorial jurisdiction to another territorial jurisdiction."
The Court concluded that the Impugned Order ran directly contrary to settled law and warranted interference.
The Verdict
The Appellant succeeded. The NCLAT set aside the Impugned Order dated 05.12.2025 passed by the NCLT Principal Bench in TA(IBC)-50(PB)/2024. It quashed all proceedings in CP(IB) No. 419/ND/2023 (the Section 95 application against the Personal Guarantor before NCLT New Delhi Bench-II). The Respondents were granted liberty to file fresh proceedings under Section 95 before the NCLT having appropriate jurisdiction - i.e., the NCLT, Chandigarh Bench-II where the Corporate Debtor's CIRP is pending. No costs were awarded.
What This Means For Similar Cases
Section 60(2) Is a Mandatory Jurisdictional Command, Not a Directory Provision
The judgment reinforces that Section 60(2) IBC admits of no discretion. Once a CIRP or liquidation proceeding of a corporate debtor is pending before a particular NCLT bench, any application relating to the insolvency of its personal or corporate guarantor must be filed before that same bench. Practitioners must verify the status of the corporate debtor's CIRP before choosing the forum for guarantor proceedings. Filing in the wrong bench renders proceedings void ab initio.
Rule 16(d) Enables Inter-Territorial Transfers to Give Effect to Section 60(2)
The Tribunal's interpretation of Rule 16(d) read with Rule 2(7) and Section 60(2) confirms that the President's transfer power is not territorially confined. The President can and must transfer guarantor proceedings across territorial boundaries to the bench hearing the corporate debtor's CIRP. This resolves the anomaly where administrative rigidity would defeat the Code's consolidation objective.
- Actionable takeaway: When a guarantor faces Section 95 proceedings in a bench different from the corporate debtor's CIRP bench, file a transfer application under Section 60(2) read with Rule 16(d) before the NCLT President immediately upon admission.
- Actionable takeaway: Raise the jurisdictional objection at the admission stage itself - the Court observed the Section 95 application "should have been dismissed as non-maintainable at the stage of admission itself."
Administrative Precedents Do Not Govern Statutory Jurisdictional Defects
The Gujarat High Court's Arcelor Mittal judgment, which restricted Rule 16(d) to intra-territorial transfers, was confined to administrative transfers initiated by the President suo motu. It does not bind judicial transfer applications where a party invokes the overriding statutory mandate of Section 60(2). Practitioners should distinguish administrative from judicial transfer contexts when citing precedents.
- Actionable takeaway: In transfer applications under Section 60(2), argue that the statutory mandate prevails over administrative interpretations of Rule 16(d); the President's power under Rule 16(d) must be read harmoniously with Section 60(2).
Consolidation Objective: Avoid Parallel Proceedings and Conflicting Decisions
The legislative scheme aims to ensure one bench, one CIRP ecosystem. Parallel proceedings in different benches over the same debt (₹1.14 crore here) risk conflicting moratoriums, competing RPs, and inconsistent findings. The Tribunal's direction to quash the New Delhi proceedings and remit the creditor to Chandigarh gives effect to this consolidation principle.
- Actionable takeaway: Operational creditors should file against guarantors only in the bench where the corporate debtor's CIRP is pending, or risk having proceedings quashed and incurring delay.
Natural Justice Requires Hearing on Threshold Jurisdictional Objections
The Tribunal noted the Transfer Application "specifically raised a threshold and incurable objection of jurisdiction" but was dismissed "without granting the Appellant an effective opportunity of hearing." This procedural failure independently vitiated the Impugned Order.
- Actionable takeaway: Insist on a hearing for jurisdictional objections at the transfer application stage; a dismissal without hearing is vulnerable on natural justice grounds.
