In a recent decision, the Principal Bench of the National Company Law Appellate Tribunal (NCLAT), New Delhi held that the initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) is not maintainable if the corporate guarantee expressly caps the liability below the statutory threshold of ₹1 crore as prescribed under Section 4.
The appeal was preferred against the order of the NCLT, Indore Bench, which had admitted a Section 7 application filed by Bank of Baroda against C-Net Infotech Pvt. Ltd.the corporate guarantor.
The suspended director had challenged the admission of the Section 7 application on the ground that the invoked guarantee was…