NCLT Chennai (2026.10.07) in Samunnati Finance Pvt. Ltd. vs Renukadevi Anguraj [(2026) ibclaw.in 3860 NCLT, CP(IB)/251(CHE)/2025 along with IA(IBC)/1587(CHE)/2025 in CP(IB)/251(CHE)/2025] held that;
We fully endorse with the view taken by the Principal Bench, NCLT, New Delhi in the case of Alchemist Asset Reconstruction supra, in the order dated 25.01.2022 that Personal Guarantor is an individual who has stood as Guarantee to the Corporate Debtor. Section 95 petition is for initiating insolvency resolution process against the Personal Guarantor and it is not the case for recovery of any amount because that will go contrary to the scheme of IBC, 2016. In such a situation, on the demise of the Personal Guarantor the proceedings under Section 95 of IBC against an individual who has given his guarantee in favour of Corporate Debtor after her death, would abate and the petition under Section 95 has to be closed.
It was rightly observed in the case of Bank of Baroda supra that the assets of the Personal Guarantor are hit by moratorium and if the legal heirs of the deceased guarantor are put into the shoes of the Personal Guarantor, their personal assets will also get automatically hit by the moratorium which will cause grave prejudice to the rights of the third party. Further, there is no provision in the Code envisaging the concept of legal heirs stepping into the shoes of the deceased Personal Guarantor.
Excerpts of the order;
# 1. This Petition has been filed u/s. 95 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC, 2016″) r/w Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 by Samunnati Finance Private Limited (“Financial Creditor”) for initiating insolvency resolution process against Ms. Renukadevi Anguraj (“Personal Guarantor”) in respect of default amount of Rs. 5,35,96,045 /- together with interest and penalties. The Date of Default, as specified in Part-III of the Petition, is 25.03.2024. The Petitioner has placed Deed of Guarantee dated 27.02.2019 and 05.01.2023 and Demand Notice under Form B dated 29.04.2025. This Petition has been filed on 02.08.2025.
# 2. Part -1 of the petition provides the details of the Financial Creditor i.e. Samunnati Finance Private Limited. Part – II of the petition provides the details of the Personal Guarantor i.e. Renukadevi Anguraj. She was the resident of 3/5 Nagar, Dindigul Main Road, Dindigul, Tamilnadu – 624619. She was Director in the Corporate Debtor Srinithi Enterprises Private Limited which has its registered office at Sarada Nagar, Virugambakkam, Chennai within the jurisdiction of this Tribunal. Part – III of the petition sets out the particulars of the debt being Rs. 5,35,96,045/- as on 29.04.2025 and the date of default as 25.03.2024.
# 3. As per the averments made in the petition, the Corporate Debtor engaged in the trading of dairy products had availed short term loan of Rs. 3.0 Crore from the Financial Creditor Samunnati Financial Intermediation and Services Private Limited, NBFC registered with RBI which was transferred with Samunnati Finance Private Limited by the order of NCLT Chennai Bench vide dated 23.12.2022. The short term loan was renewed / modified / enhanced from time to time and the last renewal was made vide sanction letter dated 30.12.2022 enhancing the credit facility limit to Rs. 4.0 Crore. The Corporate Debtor executed various documents favouring the Financial Creditor. The Respondent / Director of the Corporate Debtor along with three others executed a deed of personal guarantee dated 05.01.2023 where they including the Respondent irrevocably, absolutely and unconditionally agreed to guarantee the repayment of loan obligations in the event of default by the Corporate Debtor. It is stated that despite multiple demand notices and reminder letters, the Corporate Debtor failed to make any payments towards the outstanding dues on the due dates. Accordingly, the Financial Creditor issued a recall notice dated 14.05.2024 to the Corporate Debtor and the Guarantors demanding repayment of a sum of Rs. 4,23,11,085/- overdue from the Corporate Debtor along with interest and penalty. However, they did not comply with the said demand and failed to discharge their liability arising out of the loan agreement and the deed of personal guarantee. The Financial Creditor then on 29.04.2025 issued a demand notice under Form B of Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 to the Personal Guarantors including the Respondent which was delivered on 02.05.2025, but the Respondent / Personal Guarantor neither responded to the notice nor filed any reply which made the Petitioner file the petition.
# 4. The Petitioner has placed the documents as detailed in the annexures to the petition at page 20 to 153.
# 5. On this petition, report from the IRP was called. He filed the report in IA(IBC)/1587(CHE)/2025 under Section 99 of IBC whereby she recommended for initiation of insolvency proceedings against the Respondent / Personal Guarantor Ms. Renukadevi Anguraj. The report is taken on record and the application IA(IBC)/1587(CHE)/2025 is disposed of.
# 6. Notice of the petition and the report was sent to the Respondent / Personal Guarantor. Shri. Prannit Stefano, Counsel appeared for the Personal Guarantor and submitted that the Personal Guarantor Ms. Renukadevi Anguraj has died in an accident. He filed the death certificate. On perusal, we find that she died on 19.04.2026 in an accident. This fact is also confirmed by the Counsel appeared on behalf of the Petitioner.
# 7. It is submitted on behalf of the Respondent that the proceedings against the Personal Guarantor have to be closed as the proceedings will abate consequent to the death of the Personal Guarantor. Reference has been made to the definition of Personal Guarantor given in Section 5(22) of IBC which means an individual who is the surety in a contract of guarantee to a Corporate Debtor. It is submitted that the Personal Guarantor is an individual who stood as a Guarantee to the Corporate Debtor and therefore on her demise, the proceedings against the Personal Guarantor would abate. It is submitted that the proceedings under IBC are not in the nature of recovery.
# 8. The case of Alchemist Asset Reconstruction Company vs. Deepak Puri in IB/438(PB)(2021) is referred where the Principal Bench of NCLT, New Delhi in its order dated 25.01.2022, held that in the case of proceedings under Section 95 of IBC which is not a case for recovery of any amount, after the demise of the Personal Guarantor as an individual who has given a guarantee in favour of the Corporate Debtor, there is no question of continuing the proceedings against such a dead person and the proceedings have to be closed. The case of Bank of Baroda, SAMB vs. Divya Jalan, CP(IB) No.363/2021 is also referred where NCLT, Kolkata Bench took a similar view in its order dated 11.02.2022. Following provisions / regulations were cited which are reproduced as under:
# 9. In the order, it was held that in a petition under Section 95 of IBC, the assets of the Personal Guarantor are hit by moratorium and if legal heirs of the deceased Personal Guarantor are put into the shoes of the Personal Guarantor, then their personal assets will also get automatically hit by moratorium which will cause grave prejudice to the rights of the third party. There is no provision in the Code which envisages the concept of legal heirs stepping into the shoes of the deceased Personal Guarantor. It was held that the petition cannot be maintained against the legal heirs of the deceased Personal Guarantor. However, liberty was given to the creditor to pursue other recovery measures available under the law.
# 10. Ld. Counsel for the Petitioner per contra argued that as per section 169 of IBC, 2016 proceedings can be continued against the legal heirs of the bankrupt and also the said provision is in pari-materia to section 17 of the Provincial Insolvency Act, 1920 and section 93 of the Presidency Town Insolvency Act, 1909.
# 11. Ld. Counsel referred the case of State Bank of India SAMB v. Vijay Pal Garg IB 112(ND)/2022 where the case of IB/438/PB of 2021 titled Alchemist Asset Reconstruction Company supra, was discussed where it was observed that in the instant case, no death certificate has been produced regarding the death of the Personal Guarantor. In the absence of any document, it cannot be presumed that the person has expired. Order 22 Rule 4 and Rule 4A CPC, 1908 were referred which provide that if the sole defendant dies, right to sue survives against the legal representatives of the deceased defendant. It was observed that the Ld. Principal Bench did not consider Order 22 Rule 4 and Rue 4A while passing the order. The Tribunal thereafter directed the person appearing on behalf of the Personal Guarantor to file an affidavit whether personal guarantor is still alive or not. Ld. Counsel also referred the case of Reliance Capital AF Trustee Company Pvt. Ltd. v. S. Sailesh & Anr. CP(IB) No.132 of 2020 decided on 08.06.2022. Ld., Counsel submits that this issue is pending consideration before the Hon’ble NCLAT.
# 12. Ld. Counsel has also referred the case of Invent Assests Securitization and reconstruction Private Limited vs. Popatlal K Jain (Legal heir of late Smt Sakuben K Jain Personal Guarantor of Shree Daksh Jyot Silk Mills Private Limited) CP(IB)-203(MB)/2023 to contend that legal heirs can be substituted in place of the deceased personal guarantor.
# 13. Ld. Counsel argued that under the old insolvency laws, like the Presidency Towns Insolvency Act, 1909, proceedings could continue against the estate of a deceased debtor by substituting legal heirs, and therefore a similar approach should be taken under the IBC.
# 14. We have given our thoughtful consideration to contentions of both the parties.
# 15. Ld. Counsel for the Petitioner contends that, in the Presidency Towns Insolvency Act, 1909, proceedings could continue against the estate of a deceased debtor by substituting legal heirs, and therefore a similar approach should be taken under the IBC. This Tribunal is of the view that, this contention of the Petitioner does not hold any merit as those enactments have been repealed by Section 243 of the Code and creditors are free to proceed against the estate of the deceased guarantor under other laws, such as the Indian Contract Act and the CPC, but not under the IBC framework.
# 16. It is not in dispute that the Respondent/Personal Guarantor expired on 19.04.2026. Death Certificate in this respect has been placed on record.
# 17. We fully endorse with the view taken by the Principal Bench, NCLT, New Delhi in the case of Alchemist Asset Reconstruction supra, in the order dated 25.01.2022 that Personal Guarantor is an individual who has stood as Guarantee to the Corporate Debtor. Section 95 petition is for initiating insolvency resolution process against the Personal Guarantor and it is not the case for recovery of any amount because that will go contrary to the scheme of IBC, 2016. In such a situation, on the demise of the Personal Guarantor the proceedings under Section 95 of IBC against an individual who has given his guarantee in favour of Corporate Debtor after her death, would abate and the petition under Section 95 has to be closed. The similar view was taken by the other NCLTs in the cases referred supra.
# 18. The case of State Bank of India SAMB v. Vijay Pal Garg IB 112(ND)/2022 is distinguishable on facts. The Order 22, Rule 4 & Rule 4A of Civil Procedure Code, 1908 are applicable for substituting the legal heirs of the deceased defendant representing the estate of the deceased. The IBC proceeding is not a recovery proceeding or the proceedings where the legal heirs have inherited the estate of the deceased. It only relates to insolvency of the Personal Guarantor. It was rightly observed in the case of Bank of Baroda supra that the assets of the Personal Guarantor are hit by moratorium and if the legal heirs of the deceased guarantor are put into the shoes of the Personal Guarantor, their personal assets will also get automatically hit by the moratorium which will cause grave prejudice to the rights of the third party. Further, there is no provision in the Code envisaging the concept of legal heirs stepping into the shoes of the deceased Personal Guarantor.
# 19. In the light of what has been stated above, we decide the issue in favour of the Respondent holding that the proceedings against the Personal Guarantor will abate after the death of the Personal Guarantor. The insolvency proceedings against the Personal Guarantor are accordingly closed.
# 20 The Petition CP(IB)/251(CHE)/2025 is dismissed with no orders as to costs.
# 21. File be consigned to records.
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