IN THE HIGH COURT OF MADHYA PRADESH

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AT JABALPUR

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BEFORE

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HON'BLE SHRI JUSTICE SANJEEV SACHDEVA,

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CHIEF JUSTICE

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&

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HON'BLE SHRI JUSTICE VINAY SARAF

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ON THE 12

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th

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OF FEBRUARY, 2026

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WRIT APPEAL No. 423 of 2026

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ADITYA BHATNAGAR AND OTHERS

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Versus

BANK OF BARODA AND OTHERS

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Appearance:

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Shri Aditya Khandekar - Advocate for the appellants.

Shri Shreyas Dubey - Advocate for the respondents.

ORDER

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Per

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: Hon'ble Shri Justice Vinay Saraf

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1. The appellants have challenged the order dated 14.11.2025 passed

by the learned single judge in W.P.No.43139/2025, whereby the petition

preferred by the appellants, seeking quashment of the notice issued on

17.10.2025 by the respondent/Bank under Rule 7(1) of the Insolvency and

Bankruptcy (Application to Adjudicating Authority for Insolvency

Resolution Process of Personal Guarantors to Corporate Debtors) Rules,

2019, was dismissed.

2. This case is having chequered history, however, the facts suffice for

disposal of the present appeal are that M/s Extol Industries availed the

financial assistance from respondent/Bank of Baroda, who sanctioned a term

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loan to the Company on 30.04.2011, which was restructured on 26.03.2013

and thereafter on 14.01.2015. The company paid the installments and no over

dues certificate was issued by the Bank on 16.01.2016 and earlier also a

certificate was issued to the appellants on 30.10.2015, despite that the Bank

issued the demand notice dated 28.04.2016 classifying the loan account as

Non Performing Asset w.e.f. 31.03.2016. In the notice, the amount of future

installments up to June, 2016 were also declared as outstanding amount. The

company preferred W.P.No.9178/2016 before this Court, wherein by order

dated 06.06.2016, the interim relief was granted and the petition was

disposed of by order dated 23.08.2017 directing the respondent/Bank to

consider and decide the objections raised by the Company. The Bank by

order dated 23.11.2017 rejected the objections/representation and the said

decision of Bank was also challenged by the Company in

W.P.No.8446/2018, which was withdrawn with liberty to raise all the

grounds in pending S.A.No.250.2018. Meanwhile, on 11.12.2017, a demand

notice was issued and a sum of Rs.24,83,28,080.00 was demanded from the

Company and guarantors. On receipt of the said notice, the objections were

filed under Section 13(3-A) of the SARFAESI Act, which were rejected on

14.03.2018. Bank issued possession notice, which was assailed in

S.A.No.250/2018, which was allowed by order dated 09.12.2024 and the

DRT set aside the demand notice 11.12.2017 as well as classification of loan

account as NPA w.e.f. 31.03.2016.

3. The Bank has preferred appeal against the order passed by the

DRT, which is pending before the DRAT Allahabad. Bank has also filed the

O.A.No.347/2018 before the DRT, which is also pending. The Bank moved

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an application under Section 7 of the Insolvency Bankruptcy Code, 2016

against the corporate debtor before the learned adjudicatory authority, who

by order dated 24.03.2025 admitted the petition. The company preferred an

application recalling the order, which was dismissed by the adjudicating

authority of NCLT Indore. The said order was challenged by the company

before the NCLAT, however, the appeal was dismissed by order dated

30.05.2025. The appellant no.1 was also party in the said proceedings and

SLP is still pending against the said order. By the impugned demand notice

dated 17.10.2025 issued under Rule 7 of Rules, 2019, the Bank has

demanded payment of due amount from the appellants, who had extended

their personal guarantee to the corporate loan.

4. The said notice was challenged by the appellants in the subject

writ petition mainly on the ground that the notice is time barred and once the

DRT has set aside the classification of account as NPA, the notice is without

jurisdiction. The appellants prayed for quashment of the notice. Learned

Single Judge after considering the facts and circumstances of the case and the

legal issues raised by the appellants, by impugned order dated 14.11.2025

dismissed the writ petition.

5. Heard Shri Aditya Khandekar, learned counsel for the appellants

and Shri Shreyas Dubey, learned counsel for the respondents.

6. With the consent of the parties, the arguments heard for the purpose

of final disposal of the case.

7. The undisputed facts of the case are that the appellants extended

their personal guarantees to the loan advanced by the Bank of Baroda to M/s

Extol Industries and even as per the appellants, no payment was made by the

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corporate debtor or guarantors to the Bank after March, 2016 and since then

the company and guarantors are in litigation with the Bank on technical

issues. The Bank classified the account as NPA, which was challenged by

the corporate debtor and the classification was turned down by DRT and the

issue is still pending before DRAT. Meanwhile, the Bank has initiated the

proceedings under Section 7 of the IBC, 2016 and instituted an application

for initiation of corporate insolvency resolution process against the corporate

debtor after issuance of demand notice. The adjudicating authority admitted

the application and appointed Interim Resolution Professional. The corporate

debtor as well as present appellant no.1 filed an application for recalling the

admission order before the NCLT Indore, which was dismissed by order

dated 24.03.2025. The said order was challenged by the corporate debtor as

well as the present appellant no.1 before the National Company Law

Appellate Tribunal, New Delhi, however, the appeal preferred by the

corporate debtor and appellant no.1 was dismissed by NCLAT vide order

dated 30.05.2025 and the matter is pending before the Supreme Court in

SLP.

8. The core issue involved in the present case is that whether once

classification of NPA is set aside by DRT, the corporate creditor is

prohibited from taking action under the provisions of Insolvency &

Bankruptcy Code, 2016. Learned Single Judge dismissed the petition after

noticing the findings of NCLT, Indore in its order dated 24.03.2025 that a

case before the DRT is not a bar to file a case before the adjudicating

authority under the IBC Code, learned Single Judge relied on the order

passed by the Supreme Court in Mohammad Enterprises (Tanzania) Ltd, Vs.

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Faraq Ali Khan & Ors. in Civil Appeal No.48 of 2025 decided on

03.01.2025 whereby the Supreme Court has held as under:-

“15, Apart from delay and laches. High Court should have noted

that Insolvency and Bankruptcy Code is a complete code in itself,

having sufficient checks and balances, remedial avenues — and

appeals. Adherence of protocols and procedures maintains legal

discipline and preserves the balance between the need for order

and the quest for justice. The supervisory and judicial review

powers vested in High Courts represent critical constitutional

safeguards, yet their exercise demands rigorous scrutiny and

judicious application. This is certainly not a case for the High

Court to interdict CIRP proceedings under the Insolvency and

Bankruptcy Code.”

9. As we have noted hereinabove that after March, 2016 the

corporate debtor and guarantors have stopped making payment to the Bank

and as per the Bank as on today Rs.58,18,79,064.00 is due against the

corporate debtor and the guarantors thus the Bank is entitled to take action

against the guarantors, who have extended their personal guarantee and

challenged the demand of said amount only on the ground that classification

of loan account as NPA under the provision of SARFAESI Act was turned

down by the DRT. The corporate debtor or the guarantors are not exempted

from making payment of due amount to the Bank as the guarantee is

permanent and continued. The arguments raised by the learned counsel for

the appellants that the demand is time barred cannot be accepted. Similarly,

as the IBC is completely independent code and provides the independent

procedure, the action initiated under the provisions of IBC, 2016 cannot be

quashed on the ground that issue of classification as NPA under the

provisions of SARFAESI Act is still pending.

10. The corporate debtor and the appellants have not come with a

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(SANJEEV SACHDEVA)

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CHIEF JUSTICE

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(VINAY SARAF)

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JUDGE

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case that they want to liquidate the due amount, but they are just trying to

avoid the payment of the due amount only on the technicalities. Learned

Single Judge has correctly noticed that there is no connection between the

action taken under the IBC, 2016 and SARFAESI Act and these are two

different and separate proceedings, which can continue simultaneously. It is

also correctly noted by learned single Judge that the petition is premature

because as on today the Bank has only also issued notice under Rule 7 of the

Rules, 2019 demanding payment of due amount and still no application has

been moved by the Bank under Section 95 of IBC, 2016 and the complete

procedure has been prescribed in IBC, 2016, which is a complete code to

challenge the action taken by corporate creditor and therefore, at this stage,

no case for interference is made out. We are in full agreement with the

findings recorded by the learned Single Judge, which are based on the facts,

circumstances and correct interpretation of law. The order passed by learned

Single Judge is just and proper. The appellants are not entitled for any relief.

11. Consequently, the appeal being sans merit stands dismissed.

There shall be no order as to costs.

P/-

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