Adjudicating Authority has inherent power to determine locus standi and jurisdictional facts before entertaining Section 94 IBC applications.

The Petitioner, a director/associate of a company (Respondent No. 2), filed an application under Section 94(1) of the Insolvency and Bankruptcy Code, 2016 (IBC) before the NCLT, Bengaluru, seeking to initiate the insolvency resolution process in his capacity as a "personal guarantor".

He claimed his guarantee was invoked via a SARFAESI notice issued by Respondent No. 1.

The NCLT dismissed the application on 30.03.2026, ruling that the Petitioner lacked locus standi because transaction documents (Sanction Letter and Facility Agreement) described him as a "co-borrower," not a "personal guarantor".

The Petitioner challenged this via a writ petition, bypassing the statutory appellate remedy (NCLAT), arguing that the NCLT exceeded its jurisdiction by adjudicating his status at the threshold stage rather than appointing a Resolution Professional (RP).

1. Whether the NCLT is empowered to determine the locus standi of an applicant at the threshold stage under Section 94 of the IBC, or if it must mechanically appoint a Resolution Professional.

2. Whether the determination of a jurisdictional fact (status as a guarantor) constitutes an impermissible adjudication on the merits of the insolvency application.

Section 94 of the IBC, which restricts the right to initiate insolvency processes to a "debtor" who satisfies specific statutory conditions and is not hit by disqualifications under sub-sections (2) to (6).

Principle of "Jurisdictional Facts," holding that a court or tribunal must satisfy itself of foundational facts before assuming jurisdiction.

Distinction between a threshold jurisdictional inquiry (maintainability) and adjudication on merits (substantive rights).

Standard for writ jurisdiction under Articles 226/227 of the Constitution of India when an alternative efficacious remedy exists.

The Court rejected the Petitioner's argument that the NCLT must function as a "post office" and automatically appoint an RP under Section 97 upon the mere filing of an application.

The Court reasoned that since Section 94 triggers an interim moratorium under Section 96—which impacts third-party creditor rights—the Tribunal must ensure the applicant is legally entitled to invoke such protection.

The Court found that the Petitioner’s status as a "personal guarantor" was a jurisdictional fact.

Upon reviewing the evidence, the Court observed that the Facility Agreement and Sanction Letter consistently labeled the Petitioner a "co-borrower," and no deed of guarantee was produced despite opportunities.

A demand notice describing him as a guarantor was held insufficient to override the absence of a contractual guarantee instrument.

The NCLT’s inquiry was a valid exercise of its gatekeeping function to prevent abuse of the process.

The Court held that the Petitioner failed to establish his status as a personal guarantor.

The Writ Petition was dismissed, and the NCLT's order was upheld.

Due to the Petitioner's insistence on bypassing the statutory appellate remedy and the lack of foundational facts, the Court imposed exemplary costs of ₹1,00,000/- to be paid to the Karnataka State Legal Services Authority.