NCLAT dismissed the appeal, finding the Section 94 insolvency ...

Guarantor's Strategic Delay Tactics Backfire as Insolvency Petition Rejected Under Section 94 Debt Recovery Challenge

April 29, 2025

Case Laws     IBC     AT

NCLAT dismissed the appeal, finding the Section 94 insolvency petition was a deliberate attempt to obstruct lawful recovery proceedings. The Appellant, as a personal guarantor, had acknowledged outstanding debt since 2012, made partial payments, and consistently used judicial processes to delay creditor's recovery rights. The Tribunal concluded the petition was not filed for genuine insolvency resolution but to strategically prevent enforcement of secured residential premises, thus constituting an abuse of legal process. The appeal was rejected, upholding the lower tribunal's findings and maintaining the creditor's right to recover outstanding dues.

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