NCLT Kochi: Absence of Repayment Plan Bars Creditors’ Meeting, Triggers Bankruptcy Consequences

April 13, 2026 : The Kochi Bench of the National Company Law Tribunal has held that where a personal guarantor fails to submit a repayment plan, the Resolution Professional cannot convene a meeting of creditors and must instead file a report recording such non-submission. The Tribunal further clarified that such failure carries the same legal consequence as rejection of a repayment plan under the Insolvency and Bankruptcy Code, 2016, thereby enabling initiation of bankruptcy proceedings.

The ruling was delivered on 13 April 2026 in State Bank of India v. Ms. Sanam Basheer (IA(IBC)/136/KOB/2026 in CP(IB)/26/KOB/2025) by a Bench comprising Shri Vinay Goel (Member Judicial). The proceedings arose from an application filed by the Resolution Professional under Regulation 17B of the IBBI (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019, seeking directions in light of the personal guarantor’s failure to submit a repayment plan.

The insolvency resolution process against Ms. Sanam Basheer, personal guarantor to Furnace Fabrica (India) Ltd., had been initiated under Section 95 of the Code. Following the public announcement, claims were received from State Bank of India and Exim Bank, which were duly verified and admitted. The Resolution Professional subsequently issued communications dated 22 January 2026 calling upon the guarantor to furnish financial disclosures and submit a repayment plan as required under Section 107(3)(b). Despite repeated opportunities, the guarantor neither submitted the statement of affairs nor proposed any repayment plan, demonstrating continued non-cooperation.

Upon consideration of the statutory scheme under Sections 105, 106, 112 and 114 of the Code, the Tribunal held that the entire process of creditor consultation is premised on the existence of a repayment plan. In its absence, the statutory mechanism cannot be set in motion. The Bench observed that where no repayment plan is submitted, the Resolution Professional has no option but to refrain from convening a meeting of creditors and instead file a report indicating that there is no justification for summoning such a meeting.

Importantly, the Tribunal held that failure to submit a repayment plan, despite sufficient opportunity, must be treated as equivalent to rejection of a repayment plan under Section 114. Relying on its earlier decision in Tata Capital Ltd. v. Molly G., it reiterated that such deemed rejection attracts the consequences under Section 115(2), permitting creditors or the debtor to initiate bankruptcy proceedings under Chapter IV of Part III of the Code.

In light of these findings, the Tribunal concluded that the insolvency resolution process could not proceed further. It discharged the Resolution Professional, directed that the moratorium shall cease to have effect, and granted liberty to the parties to initiate bankruptcy proceedings in accordance with law. The application filed by the Resolution Professional was accordingly allowed and disposed of.