Registration of Insolvency Professional Cancelled for Misuse of Personal Guarantor Insolvency Mechanism

The Insolvency and Bankruptcy Board of India, acting through its Disciplinary Committee, has passed a stern order cancelling the registration of an Insolvency Professional for serious misconduct in handling an insolvency application under Section 94 of the Insolvency and Bankruptcy Code, 2016. The proceedings arose from the initiation of insolvency against an alleged personal guarantor, where it was ultimately found that no personal guarantee existed at all.

This order is a significant precedent on how insolvency provisions applicable to personal guarantors to corporate debtors are not to be used, especially as a last-minute device to interrupt legitimate recovery actions under SARFAESI.

Background of the Disciplinary Proceedings

The Disciplinary Committee considered a Show Cause Notice issued to Mr. Girish Krishna Hingorani, an Insolvency Professional registered with IBBI (Registration No. IBBI/IPA-002/IP-N00842/2019-2020/12695), who is a professional member of the ICSI Institute of Insolvency Professionals.

Assignment involving alleged personal guarantor

  • The matter arose in the context of insolvency resolution proceedings purportedly initiated against a “personal guarantor” Mr. Nitin Jamnadas Thakkar in relation to Maruti Koatsu Cylinders Limited, the Corporate Debtor.
  • A complaint was filed before IBBI regarding the conduct of Mr. Girish Krishna Hingorani in his role as Resolution Professional in the personal guarantor proceedings.
  • IBBI sought an explanation from him, examined his replies vis-à-vis the allegations, and concluded that there was a prima facie case of contravention of the Insolvency and Bankruptcy Code, 2016 and related regulations.

Show Cause Notice and hearing

  • The Show Cause Notice dated 01.01.2025 alleged violations of:
    • Section 94, Section 120 and Section 208(2)(a) of the Insolvency and Bankruptcy Code, 2016
    • IBBI (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019
    • IBBI (Insolvency Professionals) Regulations, 2016 and the Code of Conduct in the First Schedule.
  • Mr. Girish Krishna Hingorani submitted his written response and was also heard through virtual hearing on 03.10.2025.
  • The Disciplinary Committee thereafter examined:
    • The complaint and supporting material
    • The written replies
    • Oral submissions
    • Additional documents filed post-hearing

and proceeded to decide the matter.

Core Allegation: Lack of Due Diligence and Abuse of Insolvency Route

The Committee began by referring to the statutory scheme:

  • Section 5(22) of the Insolvency and Bankruptcy Code defines a “personal guarantor” as an individual who is a surety in a contract of guarantee to a corporate debtor.
  • Section 94 provides the mechanism for a debtor (including a personal guarantor) to move an application for initiation of an insolvency resolution process, either directly or through a resolution professional.
  • Rule 6 of the IBBI (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 mandates that such an application under Section 94(1) must be filed in Form A.
  • Form A explicitly requires that a copy of the personal guarantee contract be enclosed with the application.

Filing of Section 94 application without any guarantee deed

Despite this clear legal requirement, the Committee found:

  • An application dated 03.06.2023 under Section 94 was filed by Mr. Girish Krishna Hingorani in respect of Mr. Nitin Jamnadas Thakkar.
  • No personal guarantee agreement or deed of guarantee was attached to the application.
  • The Adjudicating Authority (NCLT) eventually dismissed the application as non-maintainable on 29.11.2023 for the specific reason that no guarantee agreement or deed of guarantee had ever been executed by Mr. Nitin Jamnadas Thakkar.
  • The Committee concluded that the Resolution Professional had filed the application without even verifying the existence of the fundamental document – the guarantee deed – indicating a complete failure of basic due diligence.

Context of SARFAESI recovery and timing of filing

Kotak Mahindra Bank, the concerned financial creditor, had already:

  • Stepped into the shoes of Bajaj Finance Limited through an assigned debt,
  • Initiated recovery under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act),
  • Obtained an order for possession of secured assets and had a fixed date (07.06.2023) for taking physical possession of the property Flat No. 501 & 502, 5th Floor, B-Wing, Skiffle Building, Pant Nagar, Shramsaphalya, Ghatkopar (East), Mumbai – 400077, Maharashtra.

The Committee noted: