NCLAT(2026.07.07) in Mukesh Kumar vs Baba Shri Chand Alloys and Ors. [(2026) ibclaw.in 851 NCLAT, Company Appeal (AT) (Insolvency) No. 1045 of 2026] held that;
Learned Counsel for the appellant submitted Section 4 comes under Part II, Chapter I of the IBC and it deals with “Insolvency Resolution and Liquidation for Corporate Persons”. The provision of the facts of the case is Part III, Section 78 wherein the threshold limit is only one thousand rupees and above.
In view of the same, we find merit in the submission of the learned Counsel for the appellant. The impugned Order dated 17.04.2026 is set aside and the matter is remanded back to the Adjudicating Authority to consider the matter afresh in the light of Section 78 of the Code and its implications conjoined with other facts of the case.
Blogger’s Comments; In another matter co-ordinate bench of NCLAT of same strength held as under;
NCLAT (2025.05.02) in Mudraksh Investfin Pvt. Ltd. Vs. Gursev Singh [(2025) ibclaw.in 323 NCLAT, Company Appeal (AT) (Insolvency) No. 9 of 2025] held that.
When NCLT is the Forum for initiating the CIRP against the Personal Guarantor and the process against the Personal Guarantor are to be taken by the same Forum before whom the insolvency resolution process of the CD is to be held, we are persuaded to accept the submission of the learned Counsel for the Respondent that threshold for the Application to be filed by against the Personal Guarantor before the NCLT shall be Rs.1 crore.
The threshold of Rs.1000/- has been provided for an Application under Section 78 with respect to matter relating to fresh start, insolvency and bankruptcy of individuals or partnership firms, with regard to whom the Adjudicating Authority is the Debt Recovery Tribunal.
When clear exception has been carved out in Section 78 by providing adjudicating authority as NCLT for Personal Guarantors of the CD, the threshold of Rs.1000/- as provided for filing an Application by individuals and partnership firms are not applicable, when Application is filed under Section 95(1) before the NCLT.
We have noticed above that personal insolvency of Personal Guarantor has been synchronized with insolvency of the CD. We, thus, are not persuaded to accept the submission of the Appellant that threshold for filing Section 95 Application against the Personal Guarantor is Rs.1000/- as provided in Section 78, only needs to be fulfilled.
The law by the Hon’ble Supreme Court in ‘Lalit Kumar Jain’ (Supra) is clear and categorically lays down that insolvency resolution process of personal guarantor have been integrated in with the insolvency resolution process of the corporate debtor and the forum being Section 60 i.e., NCLT, appeal against an order of NCLT shall lay to NCLAT.”
Accepting the submission that on default of a debt of Rs.1000/-, personal insolvency against the Personal Guarantor should be permitted to be initiated, shall lead to innumerable cases of insolvency against Personal Guarantors, which shall frustrate the purpose, for which exception was carved for Personal Guarantors of Corporate Debtors.
We, thus, reject the submission of the Appellant that for insolvency resolution against the Personal Guarantor, threshold of only Rs.1000/- needs to be fulfilled.
Excerpts of the Order;
07.07.2026: The appellant herein has moved a petition under Section 94 of the Insolvency & Bankruptcy Code, 2016 (for short the “IBC”) to commence personal insolvency on the ground that he was not in a position to perform his guarantee value of Rs.5 lakhs. This came to be dismissed by the Adjudicating Authority vide impugned Order dated 17.04.2026 essentially on the ground that since the amount is only Rs. 5 lakhs which is far below the threshold limit prescribed under Section 4 of the IBC.
# 2. Learned Counsel for the appellant submitted Section 4 comes under Part II, Chapter I of the IBC and it deals with “Insolvency Resolution and Liquidation for Corporate Persons”. The provision of the facts of the case is Part III, Section 78 wherein the threshold limit is only one thousand rupees and above.
# 3. We perused the papers.
# 4. The Adjudicating Authority in its impugned Order has captured his line of vision in paragraph 16, which is to the following effect:
“16. In view of the foregoing discussion and the material placed on record, this Adjudicating Authority is of the considered opinion that the present Petition is not maintainable. The admitted default under the Deed of Guarantee is Rs. 5,00,000/ -, which is below the statutory threshold prescribed under Section 4 of the Code. The attempt of the Petitioner to include other unrelated liabilities for the purpose of meeting the threshold cannot be accepted in law. Accordingly, the present Petition does not satisfy the requirement of pecuniary jurisdiction under Section 94 of the Code.”
# 5. Section 78 reads as below:
“78. Application.– This Part shall apply to matters relating to fresh start, insolvency and bankruptcy of individuals and partnership firms where the amount of the default is not less than one thousand rupees:
Provided that the Central Government may, by notification, specify the minimum amount of default of higher value which shall not be more than one lakh rupees.”
# 6. In view of the same, we find merit in the submission of the learned Counsel for the appellant. The impugned Order dated 17.04.2026 is set aside and the matter is remanded back to the Adjudicating Authority to consider the matter afresh in the light of Section 78 of the Code and its implications conjoined with other facts of the case.
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