NCLAT Delhi Upholds Rejection of Personal Guarantor's IBC Applications Filed After Confirmed SARFAESI Auction

Overview of the Dispute

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, dismissed two appeals arising from orders passed by the NCLT Chandigarh Bench in the matter of Ashwani Kumar Oberoi Vs State Bank of India & Ors., Company Appeal (AT) (Insolvency) Nos. 741 & 742 of 2026. The central question before the Tribunal was whether a personal guarantor's application under Section 94 of the Insolvency and Bankruptcy Code, 2016 (IBC), filed after the conclusion and confirmation of a SARFAESI auction, could be used to invalidate a subsequently issued sale certificate or prevent physical possession proceedings.

The NCLAT answered in the negative, finding that the personal guarantor had not invoked Section 94 for the genuine purpose of insolvency resolution, but rather as a tactical device to obstruct a recovery process that had already substantially reached its conclusion. The appeals were accordingly dismissed, and the NCLT's orders rejecting the two interlocutory applications were upheld.

Background and Factual Matrix

Credit Facilities and Personal Guarantee

State Bank of India sanctioned various credit facilities — comprising a Cash Credit Limit, SLC, Term Loan – I, and Term Loan – II — to Kirtiman Cements & Packaging Industries Limited (the corporate debtor) on 28.01.2019, aggregating to Rs. 29,23,00,000/-. On the same date, the appellant, Ashwani Kumar Oberoi, executed a personal guarantee to secure these facilities and also mortgaged his immovable property as collateral.

NPA Classification and Demand Notice

The corporate debtor's loan account was classified as a Non-Performing Asset (NPA) on 27.07.2019. Subsequently, on 31.12.2019, SBI issued a notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), demanding repayment of Rs. 29,00,25,067/- within sixty days. No payment was forthcoming.

Auction and Confirmation of Sale

Following non-payment, the bank proceeded under Section 13(4) of the SARFAESI Act, took symbolic possession of the secured assets, and issued an auction notice on 19.03.2024, which was published in newspapers on 25.03.2024. The notice specifically concerned Plot No. M-31, Industrial Area, Yamunanagar, and called for payment before an e-auction scheduled for 11.04.2024.

The e-auction was conducted on 11.04.2024, and the secured asset was sold in favour of auction purchasers (Respondents No. 3 & 4). The auction purchasers deposited 25% of the bid amount, and SBI confirmed the sale on 12.04.2024. A formal sale confirmation was issued on the same date.

Filing of the Section 94 Application

On 27.04.2024 — fifteen days after the auction and its confirmation — the appellant filed an application under Section 94 of the IBC, registered as C.P. (IB) No. 148/CHD/2024, seeking initiation of personal insolvency resolution proceedings. This application was returned with defects and subsequently refiled on 04.06.2024.

Meanwhile, the sale certificate was issued in favour of the auction purchasers on 31.05.2024 — prior to the refiling of the Section 94 application.

Parallel DRT Proceedings

The appellant had also separately challenged the auction by filing Securitization Application No. 340/2024 before the Debt Recovery Tribunal (DRT) on 20.05.2024. The DRT declined to grant interim relief by order dated 09.08.2024, observing that the bank's action could not prima facie be regarded as erroneous.

Applications Before the NCLT and Their Rejection

Within the Section 94 proceedings, the appellant filed two interlocutory applications:

  • I.A. No. 1743 of 2024 (dated 04.08.2024): Seeking a direction restraining SBI and the District Magistrate, Jagadhri, from proceeding to take physical possession of the mortgaged property, on the ground that the Section 94 application had been filed on 27.04.2024, prior to the issuance of the sale certificate on 31.05.2024.

  • I.A. No. 1924 of 2024 (dated 18.08.2024): Seeking cancellation of the sale certificate for Plot No. M-31, Industrial Area, Yamunanagar, on the basis that it was issued after the filing of the personal insolvency petition.

Both applications were opposed by SBI, which brought to the NCLT's attention that the appellant had already sought similar relief before the DRT, which had been declined.

The NCLT, by its orders dated 25.03.2026, rejected both applications. In paragraphs 20 and 21 of the impugned order, the adjudicating authority held: