Merely Because Credit Facility Was Availed From Kerala, Delhi NCLT's Order Under IBC Can't Be Challenged Before It: Kerala High Court

The petitioner had filed the writ petition before the High Court challenging an order issued by the National Company Law Tribunal (NCLT), Delhi.

Referring to the provisions of the IBC, the Single Bench of Justice Harisankar V. Menon held, “There cannot be any dispute that the proceedings have to lie only before the NCLT having territorial jurisdiction over the place where the registered office of the corporate person is situated. Even from the pleadings in the writ petition, it is clear that, as regards the 3rd respondent herein, the registered office was not in Kerala and was at New Delhi. It is in such circumstances that the 1st respondent instituted the proceedings before the NCLT, Delhi. Therefore, merely for the reason that a credit facility has been availed from the State of Kerala, in my opinion, the part of the cause of action, with reference to the provisions of IBC, does not arise in the State of Kerala.”

Advocate Mariya Rajan represented the Petitioner, while Advocate C.K. Karunakaran represented the Respondent.

Factual Background

The case as set up by the petitioner was that the third respondent obtained some credit facilities from the first respondent bank, of which the petitioner was the personal guarantor. The bank initiated proceedings under Section 95 of the Insolvency and Bankruptcy Code, 2016 (IBC), before the NCLT, Delhi, read with the provisions of Section 60 of the IBC. The petitioner stated that the name of one Mathew George was shown as a personal guarantor, as against the petitioner. When the first respondent bank, came to realise this error/mistake, it sought to rectify the name of the personal guarantor in the application. The order was issued by the NCLT, permitting the bank a week to make the necessary changes.

As per the petitioner, it was only when the NCLT issued the order that the petitioner came into the picture, when the petitioner’s name was shown as the personal guarantor for the first time. By the impugned order, the NCLT permitted the initiation of the personal insolvency proceedings against the petitioner.The petitioner thus approached the High Court challenging the same.

Reasoning

Dealing with the issue of maintainability of writ petition, the Bench explained that Article 226(2) of the Constitution permits the petitioner to prefer a writ petition when a part of the cause of action has arisen within the State. The Bench noted that, as per the petitioner, the credit facility was obtained by the third respondent in the State of Kerala.

Referring to the pleadings in the writ petition, the Bench noted that the registered office of the third respondent was not in Kerala but in New Delhi. The Bench was of the view that merely because a credit facility had been availed from the State of Kerala, the part of the cause of action, with reference to the provisions of IBC, did not arise in the State of Kerala.

Dismissing the petition, the Bench clarified that the question of an alternate remedy would not arise.

Cause Title: K.N. Marzook v. Dhanlaxmi Bank Limited (Neutral Citation: 2026:KER:36249)

Appearance

Petitioner: Advocates Mariya Rajan, Shinu J. Pillai, S. Suja, Ann Mariya John

Respondent: Advocates C.K.Karunakaran, A.C. Venugopal, Akhil Suresh, K.V. Krishnakumar, Lekshmi P. Nair, Shifna Muhammed Shukkur, Krishna Suresh, Mekha Manoj, Vidhya. A.C., Kalliyani Krishna B., Amrith M.J., Isabell Manoj, Rahul T

Click here to read/download Order