NCLT Admits Insolvency Plea Against Guarantor Wadhera Over ₹285 Crore Default

Mumbai: The National Company Law Tribunal (NCLT) has admitted an insolvency petition filed by Indian Bank against personal guarantor Anoop Kumar Wadhera, initiating the insolvency resolution process in connection with a default of over Rs 285.77 crore.

The petition, filed under Section 95 of the Insolvency and Bankruptcy Code (IBC), pertains to Wadhera’s role as a personal guarantor to Frost International Limited, a Mumbai-based company that had availed substantial credit facilities from a consortium of banks led by Indian Bank. The tribunal noted that the total exposure under the consortium arrangement ran into thousands of crores, with Indian Bank’s share pegged at Rs 328 crore.

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The bench, comprising Member (Technical) Prabhat Kumar and Member (Judicial) Sushil Mahadeorao Kochey, held that the debt and default were clearly established. It observed that the borrower account had been classified as a non-performing asset (NPA) in June 2018 after failure to service the loan. Subsequently, multiple notices were issued under the SARFAESI Act and later through a legal notice in March 2019 invoking the personal guarantee.

Rejecting the guarantor’s defence that he was not actively involved in the company’s financial affairs and had signed the guarantee under pressure, the tribunal held that such claims do not absolve a personal guarantor of liability.

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“The financial or operational management of the Corporate Debtor, and that his role was limited to legal and liaison matters. He has contended that he signed the personal guarantee under pressure linked to family property, without fully understanding the nature or extent of liability, and has denied knowledge of sanction, enhancement, or restructuring of the Bank’s facilities. However, the Tribunal observes that mere ignorance of law or lack of involvement in company affairs does not absolve a personal guarantor of liability, and the allegations of mismanagement or fraudulent conduct against the Bank are not supported by any credible or admissible evidence. Accordingly, these submissions cannot, by themselves, provide a legally sustainable defence to the claims of the Financial Creditor,”the tribunal’s order reads.

In its order, the NCLT also dismissed a separate insolvency petition filed by Central Bank of India against the same guarantor, holding it to be non-maintainable due to the commencement of moratorium in the present case. However, it clarified that the dismissed petition may be revived if the current insolvency proceedings are set aside by an appellate authority.

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