In a firm, no-nonsense ruling, the Calcutta High Court has made one thing crystal clear: once the Insolvency and Bankruptcy Code (IBC) is set in motion against a personal guarantor, the High Court’s writ jurisdiction is not the emergency stop button.
The court underscored that the IBC isn’t a casual dispute-resolution pitstop—it’s a tightly engineered statutory pathway with its own gears, levers and appellate exits. And until a litigant has travelled that entire route, detouring into the constitutional lane is simply not an option.
The controversy began with personal guarantors who had backed credit facilities extended by Piramal Finance. They claimed the borrower had squared up dues, paid penalties, and even prepaid instalments for good measure. Only a sliver of the facility remained, they argued, and even that wasn’t “due or payable” under regulatory norms. If there was no default, they insisted, the lender’s move to trigger Section 95 of the IBC was nothing short of unlawful.
Piramal waved the contract in response: the agreement itself allowed initiation of insolvency action, and the real battleground—questions of default, recall, and regulatory compliance—lay squarely before the National Company Law Tribunal (NCLT). Besides, they pointed out, private lenders and security trustees do not morph into “State” merely because someone seeks a writ.
The High Court agreed. With a Section 95 proceeding already alive before the NCLT, and a Section 7 proceeding against the borrower running in parallel, the statutory forum was exactly where every factual and legal wrinkle needed to be ironed out.
The judge noted that the Tribunal is fully empowered to conduct the statutory drill: examine facts, consider the Resolution Professional’s report, and decide what the law requires. And if anyone feels wronged by the NCLT’s conclusions, the appellate door at the National Company Law Appellate Tribunal (NCLAT) stands wide open.
Against this backdrop, the plea for constitutional intervention simply didn’t fly. No breach of fundamental rights, no overreach by the lender, and—critically—a perfectly adequate remedy already waiting in the IBC framework.
In short: when the insolvency machinery is engaged, the High Court won’t step in to jam the gears. The specialised route must be travelled, and constitutional shortcuts are off the map.
