Chennai, 05.12.2025 : The Chennai Bench of the National Company Law Tribunal has ruled that insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 can be initiated against a personal guarantor even if the guarantor is a foreign citizen and does not own any assets in India. The Tribunal made it clear that neither nationality nor the absence of property in India limits the applicability of the Code to a personal guarantor.
The ruling came in a petition filed by Central Bank of India under Section 95 of the IBC against A. Dominic Savio, who had stood as personal guarantor for Oceanic Edibles International Ltd., a company already under liquidation. The matter was decided by a Bench comprising Judicial Member Sanjiv Jain and Technical Member Venkataraman Subramaniam.
The bank, along with a consortium of lenders, had extended working capital facilities to the company. In support of these facilities, Dominic Savio executed deeds of personal guarantee in 2011 and 2014. After the company defaulted, its account was classified as a non-performing asset in September 2013. Recovery proceedings before the Debt Recovery Tribunal, Chennai resulted in a recovery certificate in June 2019 for more than ₹103 crore with interest, holding both the company and its guarantors jointly and severally liable.
While the corporate debtor entered liquidation in December 2018, the provisions relating to insolvency of personal guarantors came into effect from December 1, 2019. Following a demand notice and non-payment of dues, the bank approached the NCLT seeking initiation of insolvency proceedings against the personal guarantor.
The respondent opposed the petition, arguing that he was a United States citizen residing outside India, had no assets or business interests in India, and that the IBC applied only within Indian territory. He also claimed that in the absence of reciprocal arrangements between India and the US under the cross-border insolvency framework, proceedings against him were not maintainable.
Rejecting these objections, the Tribunal held that the IBC does not distinguish between Indian and foreign citizens when it comes to personal guarantors of corporate debtors. It observed that the absence of assets in India does not exclude the applicability of the Code. The Bench further clarified that Sections 234 and 235 of the IBC do not restrict the initiation of insolvency proceedings based on nationality or citizenship.
The Tribunal stressed that the guarantor had voluntarily executed deeds of guarantee and that his liability was co-extensive with that of the corporate debtor. Foreign citizenship or residence abroad, it held, does not absolve a guarantor from statutory obligations under the IBC.
On limitation, the Bench accepted the bank’s argument that the recovery certificate issued by the DRT in June 2019 created a fresh cause of action. Relying on Supreme Court precedent, it noted that non-payment of amounts crystallised under a decree or recovery certificate constitutes a financial debt capable of triggering insolvency proceedings.
Accordingly, the NCLT admitted the petition, initiated the insolvency resolution process against the personal guarantor, appointed Chandrasekhar Sagutoor as the Interim Resolution Professional, and declared a moratorium in terms of the Code.
Case Title: Central Bank of India v. A. Dominic Savio
Case Number: CP(IB)/217(CHE)/2021
