Pankaj Chhabildas Sheth vs Abhyudaya Co-Operative Bank Ltd

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NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI

Comp. App. (AT) (Ins) No. 1335 of 2026

IN THE MATTER OF:
Pankaj Chhabildas Sheth …Appellant(s)

Versus
Abhyudaya Co-Operative Bank Ltd. …Respondent(s)
Present:
For Appellant : Ms. Eshna Kumar, Ms. Sabari Kirubakaran & Ms.
Artha Agrawal, Advocates
For Respondents : Appearance not marked

O R D E R
(Hybrid Mode)
[Per: Justice Mohd. Faiz Alam Khan, Member (Judicial)]
Instant appeal has been preferred by the appellant, who is the personal
guarantor of the CD under Section 61 of the Insolvency and Bankruptcy Code,
2016 (Code), challenging the order dated 11/5/2026 (impugned order passed by
the National Company Law Tribunal, Mumbai Bench-I, Adjudicating Authority in
CP (IB) No. 185/2026), whereby the petition filed by the appellant under Section 94
of the Code has been dismissed.
2. Brief facts necessary for the disposal of this appeal are that:
- Appellant is a director of the corporate debtor, M/s Veer Wires Private Limited,
which has availed credit facilities from the financial creditor, namely Abhayudya
Cooperative Bank Limited, Buriwali Branch, Mumbai.
- The financial creditor sanctioned term loan facilities, namely TL1, TL2, and TL3,
amounting to ₹ 18,90,000/-, ₹ 5,50,000/-, and ₹ 24,00,000/-, respectively, vide
sanction letter dated 04/01/2020.
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3. It is further reflected that, in consideration of the aforesaid credit facilities,
the appellant executed a personal guarantee deed dated 31/1/2020 in favour of the
financial creditor, undertaking joint and several liabilities for the repayment of the
dues of the corporate debtor.
4. It is further reflected that the corporate debtor subsequently availed
additional credit facilities from the financial creditor in the nature of a cash credit
facility bearing account number CC/383, amounting to ₹ 3,50,000,00/- sanctioned
vide sanction letter dated 02/03/2021.
5. It is also reflected that the corporate debtor failed to discharge its financial
obligations, and the loan accounts of the corporate debtor were classified as a non-
performing asset (NPA) on 31/7/2021. Thereafter, the financial creditor issued a
demand notice dated 31/12/2021 under Section 13(2) of the SARFAESI Act, 2002,
calling upon the corporate debtor to repay outstanding dues of ₹ 3,84,87,979.73/-
and the guarantee against the appellant’s personal guarantor was also invoked by
the same notice.
6. It is also evident that upon the failure of the corporate debtor to regularize
the loan account, pursuant to the demand notice issued under Section 13(2) of the
SARFAESI Act, 2002 financial creditor proceeded to initiate measures for
enforcement of its security interest. It issued a notice dated 11 March 2022 calling
upon the CD to hand over vacant and peaceful possession of the secured assets.
The said notice also recorded that an amount of ₹ 3,96,86,417.73/- is outstanding
against the appellant, and the appellant was directed to deliver the possession on
25/3/2022.
7. It is further reflected that the financial creditor issued three recall notices
upon the appellant dated 20/04/2022, calling upon the personal guarantor to
repay the outstanding dues. It also initiated arbitration proceedings under Section
84 of the Multi-State Cooperative Societies Act, 2002, against the corporate debtor
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and its guarantors, including the appellant. In the award dated 23/6/2023, the
arbitrator held the CD and the guarantors jointly and severally liable to pay a sum
of ₹ 4,20,94,708.73/- as on 31/7/2022, together with interest at the rate of 14.50%
per annum from 01/08/2022 till its realization.
8. It is also reflected that the appellant filed an application under Section 94(1)
of the Code on 01/11/2023, bearing CP (IB) No. 1054 (MB) 2023, before the
Learned Adjudicating Authority, however, the same was dismissed as withdrawn on
13/10/2025, as the deed of guarantee was not annexed with the petition.
9. It is also reflected that after the withdrawal of the earlier petition moved by
the appellant under Section 94 of the Code and the lapse of the moratorium on
13/10/2025, the court commissioner issued the possession notice dated
10/1/2026, fixing the date of physical possession of flat number 304 on
6/02/2026.
10. The appellant again filed a petition under Section 94 of the Code on
01.02.2026 and the Learned Adjudicating Authority appointed Shri Kamal Kumar
Jadwani as the RP, who, after examining the application, sought additional
information from the financial creditor and personal guarantor and filed his report
under Section 99(1) of the Code (through IA No. 1399 of 2026), recommending the
admission of the petition for initiation of the insolvency resolution process against
the personal guarantor.
11. The financial creditor appears to have filed objections with regard to this
report. The adjudicating authority, by passing the impugned order dated
11/5/2026, rejected the application filed by the appellant under Section 100 of the
Code, holding that the appellant’s intent is not for genuine insolvency resolution,
but to frustrate the process of possession initiated by the financial creditor. The
appellant, feeling aggrieved by the said order, has filed instant appeal.
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12. We have heard learned counsel for the appellant and have perused the
record.
13. Ld. Counsel for the Appellant submits that Appellant’s earlier application,
being CP (IB) No. 1054 of 2023, filed on 1/11/2023, was a genuine and bona fide
application filed with the intent of initiating the PIRP and proposing a repayment
plan, however, the same was compelled to be withdrawn on 13/10/2025 solely
because the original guarantee deed could not be annexed, despite the Appellant’s
sincere efforts.
14. It is further submitted that thereafter, the applicant filed this second
application under Section 94 of the Code, and the same is not barred by res
judicata, as in the earlier application no issue was framed and decided. Reliance in
this regard has been placed on Ebix Singapore Private Limited versus
Committee of Creditors of Educomp Solutions Limited and another, Civil
Appeal No. 3224 of 2020 .
15. It is further submitted that the principle of res judicata would also not apply
in the facts of this case, on the ground that the earlier petition was withdrawn
purely on technical ground (i.e., non-production of the guarantee deed), and there
was no adjudication on merits.
16. It is further submitted that the learned adjudicating authority has relied on
the law laid down in Sirajis Salikin Khadri versus Edelweiss Asset
Reconstruction Company Limited and another, Company Appeal (Insolvency)
No. 455 of 2025 , in order to brand the application as an abuse of process ,
however, the said law is not applicable to the facts of the instant case and the said
law itself distinguishes Getz Cables Private Limited versus State Bank of India
and another Company Appeal (AT) (Insolvency) (No.) 1953 of 2024.
17. It is further submitted that in Sayyad Siraj’s case, the SARAFAESI
proceedings were pending since 2012, and the Section 94 application was filed after
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13 years thereafter. However, no such gap exists here, as the guarantee against the
appellant was invoked on 31/12/2021, and the first Section 94 application was
moved on 1/11/2023, well within limitation. Shortly after the possession notice
was moved and the appellant was compelled to file the second application under
Section 94 of the Code after obtaining the guarantee deed.
18. It is further submitted that the bona fide of the appellant is reflected in the
fact that he undertakes to satisfy the debt to the extent of ₹ 3 Crore, as against the
aggregate of Rs. 19,74,97,585.95 /- outstanding across the corporate debtor and
related group entities (for which 5 to 7 co-guarantors, including the Appellant,
stand jointly and severally liable).
19. It is further submitted that no prejudice is being caused to the financial
creditor, as keeping in view Section 110(2)(3) and (5) of the Code, the financial
creditor preserve the right to decline the repayment plan and can independently
enforce its security.
20. It is further submitted that the application of the appellant has been
dismissed on hyper-technical ground by the Ld. Adjudicating Authority. Therefore,
the impugned order passed by the Ld. Adjudicating Authority be set aside.
21. We have heard learned counsel for the appellant and have perused the
record and notice that the Learned Adjudicating Authority in the impugned
judgment has recalled the principle laid down by this Appellate Tribunal in the case
of Syed Sirajis Salikin Khadri (supra) , wherein the order passed by the Ld.
Adjudicating Authority dismissing the application filed by the personal guarantor
under Section 94 of the Code was upheld on the ground of misuse of interim
moratorium provisions to stall the proceedings under the SARFAESI Act. It has also
distinguished its earlier decision passed in the case of Getz Cables Private
Limited (supra) .
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22. This Appellate Tribunal, in Ashwani Kumar Oberoi v. State Bank of India &
Ors., CA (AT) (Ins) No. 741 & 742 of 2026, held that where an application under
Section 94 is instituted after recovery proceedings have substantially
progressed, particularly after the auction has been concluded and third
party rights have been created, the timing of the application and the
conduct of the personal guarantor are relevant considerations in
determining whether the insolvency process has been invoked for its
intended purpose of resolution or merely to stall lawful recovery
proceedings. Relevant paragraphs 14-17 of the said judgment are extracted

below:
“14. Reverting to the facts of the present case, it is seen
that notice under Section 13(2) was issued on 31.12.2019
and thereafter Bank also enforced its rights under Section
13(4) by issuing possession notice. Notice for sale of the
assets dated 19.03.2024 was issued fixing 11.04.2024 for
the sale of the assets by e-auction. E-auction was held on
11.04.2024 and auction was also confirmed by the Bank
on 12.04.2024. It was thereafter on 27.04.2024 Section 94
application was filed by the appellant. Appellant also filed
Securitization Application 340/2024 before the DRT
challenging the auction which was the appropriate remedy
availed by the appellant. Securitization Application was
dismissed on 09.08.2024, when appellant could not get
any relief from the DRT who refuse to grant relief by order
dated 09.08.2024, applications have been filed under
Section 94 giving rise to this appeal. In the facts of the
case as noticed above, we are of the view that initiation of
proceeding under Section 94 by the personal guarantor
was not with object of resolution of insolvency of the
personal guarantor rather it was only with the intent to
somehow create hurdles in the conclusion of the
proceedings initiated by the Bank for recovery of its debts
when auction was already held Comp. App. (AT) (Ins.) Nos.
741 & 742 of 2026 17 of 18 on 11.04.2024 which was
confirmed on 12.04.2024, filing of the application on
27.04.2024 clearly was not bona fide application and the
application was an abuse of process of Court and we are
not inclined to interfere with the impugned order passed
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by the adjudicating authority rejecting the application filed
by the appellant in facts of the present case.

15. Learned counsel for the appellant as well as learned
counsel for the respondent have made submissions relying
on various judgments of the Hon’ble Supreme Court and
this Tribunal, according to the appellant unless the Sale
Certificate is issued, the rights of the personal guarantors
are not extinguished, whereas as per learned counsel for
the respondent where auction notice is published on
25.03.2024, the right of redemption of mortgage comes to
an end and no right is left in the personal guarantor
thereafter. Learned counsel for the appellant has relied on
the judgment of the Bombay High Court in ‘Arrow
Business Development Consultants Private Limited’ (supra)
in support of his submissions.

16. We however having already found that filing of
application under Section 94 by the appellant was clearly
abuse of process of the Court, the appellant cannot be
allowed to scuttle auction proceedings which have already
concluded on 11.04.2024 and were confirmed on
12.04.2024. The Sale Certificate have already been issued
in favour of the auction purchaser on 31.05.2024 which
was already challenged by the appellant before the DRT in
Securitization Application No.340/2024, it is open for the
appellant to pursue his remedy before the DRT, where
auction held on 11.04.2024 is challenged.

17. We thus are of the view that adjudicating authority
has not committed any error in rejecting the two
applications filed by the appellant in Section 94
application. Rejection of applications cannot be faulted in
the facts and sequence of the events of the present case as
noted above. 18. We thus do not find any merit in the
appeals. Appeals are dismissed.”


23. This Appellate Tribunal, in Syed Sirajis Salikin Khadri vs. Edelweiss
Asset Reconstruction Company Ltd. & Anr., CA (AT) (Ins) No. 455 of 2025 , the
case referred to by Appellant in para no. 14, 15 and 16 held as under:
“14. This now brings us to the filing of the Section 94
application on 03.12.2022 and its timing. We notice that
Section 94 application was filed by the Appellant within
weeks after the issue of a possession notice upon them on
11.11.2022 by the Respondent No.1. When after the 4th
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SA was disposed of, the Appellant realised that it had
failed to secure any further relief from the DRT and that
dispossession from the subject residential premises was
imminent that the present Section 94 petition was filed on
03.12.2022 and a communication sent on 06.12.2022 to
the Respondent No.1 to hold its hand from taking over
possession of the residential premises on account of 14.
This now brings us to the filing of the Section 94
application on 03.12.2022 and its timing. We notice that
Section 94 application was filed by the Appellant within
weeks after the issue of a possession notice upon them on
11.11.2022 by the Respondent No.1. When after the 4th
SA was disposed of, the Appellant realised that it had
failed to secure any further relief from the DRT and that
dispossession from the subject residential premises was
imminent that the present Section 94 petition was filed on
03.12.2022 and a communication sent on 06.12.2022 to
the Respondent No.1 to hold its hand from taking over
possession of the residential premises on account of 14.
This now brings us to the filing of the Section 94
application on 03.12.2022 and its timing. We notice that
Section 94 application was filed by the Appellant within
weeks after the issue of a possession notice upon them on
11.11.2022 by the Respondent No.1. When after the 4th
SA was disposed of, the Appellant realised that it had
failed to secure any further relief from the DRT and that
dispossession from the subject residential premises was
imminent that the present Section 94 petition was filed on
03.12.2022 and a communication sent on 06.12.2022 to
the Respondent No.1 to hold its hand from taking over
possession of the residential premises on account of
moratorium. This letter of 06.12.2022 clearly reveals the
intention of the Appellant to stall the recovery proceedings
by taking undue benefit of the moratorium provisions.
Filing of the Section 94 application at this juncture leaves
no room for doubt in our mind that these proceedings were
not initiated with the intent of genuine insolvency
resolution but as a tool to obstruct lawful recovery of
enforcement with the manifest intent of the Appellant being
to seek refuge under the moratorium provision under
Section 96 of the IBC in an effort to prevent enforcement of
possession of the secured residential premises.

15. At this stage we advert our attention to the Getz Cable
judgment supra on which the Appellant has placed their
reliance. We have no quarrel with the proposition of law
laid down in Getz Cable judgment supra that the right
under Section 94 given to a personal guarantor/individual
cannot be taken away only on the ground that SARFAESI
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proceedings have been initiated prior to filing of Section 94
application. Be that as it may, it is pertinent to notice that
the said judgement has also observed that the
Adjudicating Authority has to decide each case depending
on the specific and individual facts of each case.

16. This is a case clearly where the Appellant on one
excuse the other has all along tried to delay the handing
over of the security to the Respondent No.1. We find that
steps under SARFAESI Act have been pending since 2012.
The Appellant has consistently misused the benevolent
indulgence afforded by various adjudicatory forums to the
Appellant in the past to resolve the matter. Each time the
Appellant got relief from the court it slept over its
commitment to either handover the subject residential
premises to the Respondent No.1 or to make payment by
selling the said property to clear the outstanding debt. The
present Section 94 proceedings have been filed 13 years
after symbolic possession had been taken by the Bank of
India on 10.12.2012. We notice that when the SARFAESI
proceedings were on the verge of completion and all
manoeuvres adopted by the Appellant to stall and delay
the recovery proceedings having come to a naught, the
Appellant now sought to wriggle out of this situation by
resorting to filing of the Section 94 application. In view of
the persistent lack of good faith displayed by the
Appellant, the Adjudicating Authority cannot be said to be
wrong in concluding that the Appellant on having received
the possession notice once again from the Respondent
No.1 has again tried to dodge the said notice by filing a
Section 94 application. Hence, the reliance placed by the
Appellant on the judgment in Getz Cables judgment
supra is misplaced. The facts of the present case and that
of Getz Cables supra are distinguishable. In the matter of
Getz Cables supra, the insolvency proceedings under
Section 94 of IBC was instituted immediately after
initiation of SARFAESI proceedings. In comparison to the
close proximity between the SARFAESI proceedings and
filing of Section 94 petition in Getz Cables judgment
supra , in the present case there is a yawning time-gap of
more than a decade between the SARFAESI and Section
94 proceedings. In the present case, the SARFAESI
proceedings have been going on since 2012 and the
Appellant has unleashed a chain of litigations which have
been doggedly and relentlessly pursued in various courts
of law to derail the recovery proceedings. Section 94
proceedings have been initiated by the Appellant more or
less coinciding with the issue of possession notice dated
11.11.2022 by Respondent No.1. The present Section 94
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application is clearly yet another salvo on the part of the
Appellant to stall the recovery by taking advantage of
moratorium. This clearly shows that the Appellant has
been ceaselessly orchestrating litigative proceedings and
embroiled the Respondent No.1 in these proceedings
clearly to subvert the recovery proceedings initiated
against them and not for the purpose of the insolvency
resolution. In the given fact situation, we are inclined to
agree with the findings returned by the Adjudicating
Authority that the Appellant had approached the
Adjudicating Authority by filing the Section 94 application
with an intent other than insolvency resolution”.

24. We notice that the notice under Section 13 of the SARAFAESI Act was issued
on 31 December 2021 (after the credit facilities advanced to the principal borrower)
were classified as NPA on 31/7/2021.
25. It is also evident that in the arbitration proceedings initiated by the financial
creditor, an award was passed on 23 June 2023 against the principal borrowers
and the guarantors to pay the outstanding dues jointly and severally.
26. We also notice that it is stated by learned adjudicating authority that the
financial creditor issued the possession notice for taking over the physical
possession of the secured assets owned by the appellant in terms of the order dated
24/5/2023 under Section 14 of the SARFAESI Act.

27. It appears that the first application under Section 94 of the Code was filed
by the appellant on 01/11/2023, bearing CP (IB) No. 1054 of 2023, which was
admittedly dismissed as withdrawn on 13/10/2025 for want of guarantee deed.
Thus, it is evident that the appellant enjoyed the benefit of interim moratorium
under Section 96 of the Code for about two years.
28. It also appears to be admitted to the appellant that, consequent to the
withdrawal of the application filed by the appellant under Section 94 of the Code
and after the lifting of the moratorium on 13.10.2025, the court commissioner
issued a possession notice on 10.1.2026, fixing the date of physical possession of
flat number 304 as 06.02.2026 and immediately thereafter, on 01/02/2026, the
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appellant filed a second petition under Section 94 of the Code, whereon the
impugned order has been passed “and on 02/02/2026 an email” was also sent
by the appellant to the financial creditor intimating the commencement of interim
moratorium in terms of Section 96 of the Code.
29. We also notice that the Learned Adjudicating Authority in its impugned
judgment has stated, which has not been denied by the appellant, that the court
commissioner appointed in case number 1768/SA/2022, on 24/5/2023, was
authorized by Ld. CMM to take possession of the secured assets. The court
commissioner had also issued a possession notice on 30/10/2023 to the
Commissioner of Police and the principal borrowers and guarantors, informing
them of the fixation of the date for taking possession as 21/11/2023. The appellant
filed an application, namely 1054 of 2023, on 1/11/2023 apparently for initiation
of interim moratorium under Section 96 of the Code and frustrating the possession
taking process of its property by the financial creditor.
30. An application under Section 94 of the IBC enables a personal Guarantor in
default to initiate insolvency resolution and to place a repayment plan before the
Adjudicating Authority, providing a structured measure to resolve liabilities instead
of facing creditor enforcement.
31. The Appellant/Personal Guarantor has not attempted repayment in the two
years after the demand notice sent by financial creditor, nor in the proceedings of
first PIRP and It was only upon receipt of the possession notice, he rushed to file
the Section 94 petitions on both occasions. This clearly shows that the petitions are
not a bona fide attempt of resolution but an attempt to misuse the interim
moratorium under Section 96 to stall SARFAESI proceedings and shield the
secured asset.
32. Therefore, in our considered opinion, it has been rightly held by the learned
adjudicating authority that the purpose of filing both the petitions under Section
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94 of the Code by the applicant was not for repayment of the loan, rather, the same
was for obtaining an interim moratorium to frustrate the possession-taking process
initiated by the financial creditor and the Learned Adjudicating Authority has
rightly held that the ratio of Syed Sirajis Salikin Khadari (supra) is squarely
applicable to the facts of this case.
33. We recall that section 94 of the Code has been enacted for the benefit of
those personal guarantors who are genuinely interested in the PIRP and in
submitting repayment plan. However, the said process may not be allowed to be
misused by those personal guarantors who are using the same only as a shield to
frustrate the recovery proceedings initiated by the financial creditors for
enforcement of their security interest.
34. In view of above, we do not find any good ground to interfere in the judgment
passed by the learned adjudicating authority. Resultantly, the appeal filed by the
appellant appears to be without merits and is dismissed as such.
35. There is no order as to costs.
36. Pending IA’s are also disposed of.


[Justice Mohammad Faiz Alam Khan]
Member (Judicial)



[Naresh Salecha]
Member (Technical)
New Delhi
07.09.2026
sr



CA (AT) (Ins) No. 1335 of 2026