Calcutta High Court
Avishek Roy & Ors vs Indian Bank & Ors on 8 December, 2025
Author: Aniruddha Roy
Bench: Aniruddha Roy
OCD-7
In the High Court at Calcutta
Commercial Division
Original Side
IA No. GA-COM1/2025
In CS-COM/160/2025
AVISHEK ROY & ORS
VS
INDIAN BANK & ORS
BEFORE:
The Hon'ble JUSTICE ANIRUDDHA ROY
Date : December 8, 2025.
Appearance:
Mr. Rudraman Bhattacharyya, Sr. Adv.
Mr. Jishnu Chowdhury, Sr. Adv.
Mr. Satyaki Mukherjee, Adv.
Mr. Akash Munshi, Adv.
Mr. Harsh Tiwari, Adv.
Mr. Souvik Kundu, Adv.
... for the petitioners
Ms. Deblina Lahiri, Adv.
Mr. Mrinmoy Chatterjee, Adv.
... for the respondent no.1/Indian Bank
Mr. Sailendra Kr. Tiwari, Adv.
Mr. Shambu Mahato, Adv.
Ms. Muskan Jalan, Adv.
... for the respondent no.2/Punjab National Bank
Mr. Rajarshi Dutta, Adv. (V/C)
Mr. Sarbesh Chaudhury, Adv.
Mr. Pranay Agarwal, Adv.
Md. Dilawar Khan, Adv.
... for the respondent no.3
The Court : The petitioners are three individuals who claim to be
erstwhile Directors of one Reacon Engineers (India) Private Limited (for
short "Reacon"). Reacon had availed of loans and financial facilities from
a consortium of which the respondent nos.1 and 2 are the members and
the respondent no.1 was the lead banker. While availing of the financial
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facilities, the petitioners executed Deed of Guarantee, Annexure - 'D' at
page 113 to the petition whereunder the petitioners guaranteed the
payment of loan granted to Reacon, in the event of default. Reacon finally
defaulted and did not repay its loan. The respondent no.1, the lead banker
initiated an insolvency proceeding under Section 7 of the Insolvency and
Bankruptcy Code, 2016 (for short "IBC"). The proceeding had travelled
up to the liquidation stage of Reacon. Liquidator had been appointed by
the jurisdictional NCLT. Ultimately, Reacon being the corporate debtor
was sold as a going concern in favour of one purchaser in the liquidation
proceeding.
After the Liquidator was appointed, a meeting was held with the
members of the Stakeholders Consultation Committee (for short
"SCC"), of which the respondent nos.1 and 2 were also members.
Prior to the liquidation proceeding had commenced, Reacon had
filed a suit before the jurisdictional Civil Court at Andaman being Money
Suit No. 35 of 2019, inter alia, against Allahabad Bank, the predecessor
in interest of the respondent no.1 and its officials. The principal claims in
the Andaman suit was for a money decree along with interest on the basis
of the cause of action pleaded in paragraph 51 of the Andaman plaint.
In course of the liquidation process, in the meeting held with
SCC, the respondent no.1 voted for withdrawal of the suit and the
Liquidator also ultimately acted upon the said view though, the Liquidator
initially had a different view to proceed with the suit. Finally by an order
dated December 2, 2025 the Andaman suit has been withdrawn. Though
the order of withdrawal shows that the parties to the Andaman suit had
IA No. GA-COM/1/2025 in CS-COM/160/2025
A.R., J.
3 amicably settled the claim but in course of submissions, Mr. Rajarshi Dutta, learned Counsel (V/C) appearing for the respondent no.3/liquidator has submitted that there is some typographical mistake in the said order of withdrawal, for which the matter has been mentioned today but the outcome is not known to the parties till now.
Mr. Rudraman Bhattacharyya, learned Senior Advocate appearing for the petitioners referring to the various paragraphs from the petition and the prayers made therein submits that, in view of the withdrawal of the said Andaman suit which was a result of collusion and conspiracy between the liquidator and the banks, has foisted upon an alleged liability upon the petitioners as guarantors. Had the suit not been withdrawn, to which the liquidator initially was of the same opinion, the plaintiff being Reacon could have got a decree on its claim in the plaint which would have squarely taken care of the total defaulted amount and thereby the petitioners being the guarantors could have been discharged. Referring to pages 492 and 493 from the petition, which is the minute of the meeting with SCC, learned Senior Advocate Mr. Bhattacharyya submits that initially, the liquidator was of the opinion not to withdraw the suit and when he received the view from the respondent no.1 to withdraw the suit, he had acted thereupon, which is a result of collusion and conspiracy and of course a fraudulent steps on the part of the liquidator and the banks.
Mr. Bhattacharyya, learned Senior Advocate has referred to the provisions laid down under Regulation 31 and the sub-regulations thereunder from the Insolvency and Bankruptcy Board of India IA No. GA-COM/1/2025 in CS-COM/160/2025 A.R., J.
4(Liquidation Process) Regulations, 2016 (for short "Liquidation Process Regulations") and submits that it was never a mandate on the liquidator to accept the view of the defendant no.1, who expressed its view as a member of SCC. The liquidator may or may not accept the view of the members of the SCC but ultimately it has to apply its independent mind to take the final decision on the issue. He further submits that Section 35(1)(k) makes it incumbent upon the liquidator to institute or defend any suit on behalf of the corporate debtor.
Mr. Bhattacharyya, learned Senior Advocate then refers to Section 139 of the Contract Act, 1872 and submits that since the liquidator and Banks, in league with each other, by practicing conspiracy and fraud had withdrawn the said Andaman suit, the petitioners being the guarantors automatically by operation of law stand discharged from their respective guarantees. Even thereafter, if the guarantees are allowed to be continued and to be invoked by the respondent banks, in so far as the personal guarantees are concerned, the petitioners will suffer immense and irreversible prejudice even though they have already been discharged from their respective guarantees by virtue of operation of Section 139 of the Contract Act.
In his support, Mr. Bhattacharyya has relied upon two decisions which are:
(i) In the matter of: Sardar Kahn Singh vs. Tek Chand Nanda and Another reported at AIR 1968 J & K 93;
IA No. GA-COM/1/2025 in CS-COM/160/2025 A.R., J.
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(ii) In the matter of: State Bank of Saurashtra vs. Chitranjan Rangnath Raja and Another reported at (1980) 4 Supreme Court Cases 516.
In the light of the above, Mr. Bhattacharyya, learned Senior Advocate appearing for the petitioners prays for an ad interim order of injunction restraining the respondents from invoking the personal guarantees and not to exercise any right on the mortgaged securities, as prayed for, in the petition.
Ms. Deblina Lahiri, learned Advocate appearing for the respondent no.1, at the outset, refers to the Deed of Guarantee dated September 5, 2012 at page 113 from the petition. Referring to various clauses, inter alia, clauses 7, 9, 11, 13, 16 and 18 of the guarantee document, she submits that in any event, the petitioners as the guarantors have waived their right to claim any benefit under Section 139 of the Contract Act. In as much as, they have agreed, in the event of default, they as sureties shall be held liable jointly and severally with the borrower. She submits that once Reacon being the borrower has defaulted, the liability of the petitioners being the guarantors are co- extensive. The guarantors cannot escape from their liabilities to make the payment on account of the default committed by the borrower.
Ms. Lahiri, learned Advocate then refers to the provisions laid down under Sections 60 and 61 of IBC and submits that if the petitioners are aggrieved with the alleged act of the liquidator, they were at liberty to apply before the jurisdictional NCLT where the liquidation proceeding had IA No. GA-COM/1/2025 in CS-COM/160/2025 A.R., J.
6taken place, instead, they filed the instant suit seeking an order of injunction at this ad interim stage. Civil Court is not a forum.
With regard to the decision taken for withdrawal of the Andaman suit, she submits that the IBC empowers the liquidator to take steps for the best interest of the corporate debtor and accordingly, the liquidator thought it fit to withdraw the suit and the suit has been withdrawn.
Ms. Lahiri further submits that the defendant no.1 had a right of voting as SCC member and the defendant no.1 voted for withdrawal of the Andaman suit. The liquidator had considered the same and in his wisdom thought it fit to withdraw the Andaman Suit and the suit has been withdrawn. This was a mechanism adopted under the provisions of IBC, during the liquidation process.
Referring to the averments made in paragraph 29 of the petition Ms. Lahiri, learned Advocate submits that, it is a pleading for subrogation pleaded by the petitioners within the scope of the Contract Act. Had the suit been won by Reacon then the money received by Reacon which might cover the defaulted amount and could be paid by debtor. In effect, the guarantors would become free from liability.
Under Section 140 of the Contract Act, the sureties first have to discharge the entire debt and then only they can claim for subrogation, if any.
Learned Counsel appearing for the respondent no. 1 submits that the contentions raised by the petitioners for discharge of sureties in terms of Section 139 of the Contract Act is a mixed question of law and facts. The law has to be applied after facts are crystallized. The IA No. GA-COM/1/2025 in CS-COM/160/2025 A.R., J.
7crystallization of fact can only happen after the trial in the suit takes place and not at this ad interim stage.
Mr. Sailendra Tiwari, learned Advocate appearing for the respondent no.2 has adopted the submissions of Ms. Lahiri, learned Advocate.
Mr. Rajarshi Dutta, learned Counsel (V/C) along with Mr. Sarbesh Chowdhury, learned Advocate appearing for the respondent no.3 submits that if the petitioners have any grievance with regard to the withdrawal of the suit against the liquidator, the said grievance relates to the liquidation process of the corporate debtor for which, remedy is available under Section 60 of IBC before the jurisdictional NCLT and not before the Civil Court.
Mr. Dutta referring to the document at page 492 from the petition submits that the same is dated April 28, 2025 and much thereafter, the suit has been filed and the ad interim order has been pressed for. Referring to the put up application for withdrawal of Andaman suit at page 265 to the petition, he submits that the same is dated August 28, 2025 and much thereafter the present suit has been filed and the interlocutory application has been moved. He submits on the ground of delay itself no ad interim order should be passed.
Referring to the averments made in paragraphs 29 and 31 of the petition read with paragraph 27 thereto, Mr. Dutta submits that a contrary case has been made out by the petitioners. The petitioners cannot claim the protection under Section 139 of the Contract Act.
IA No. GA-COM/1/2025 in CS-COM/160/2025 A.R., J.
8Referring to the reliefs from the plaint and the interim application, Mr. Dutta submits if the ad interim order is granted, as prayed for, the same would amount to granting final relief in the suit, which is not permitted in law.
Referring to the judgments cited on behalf of the petitioners, Mr. Dutta submits that those are not relating to any insolvency proceeding and on facts they would not apply.
After considering the rival contentions of the parties and upon perusal of the materials on record, it appears to this Court that, the admitted facts are Reacon was a borrower who defaulted in paying loan advanced by the consortium comprised of the two banks herein. Default in repayment by Reacon, being the principal borrower, is also an admitted fact. The petitioners are the guarantors. On reading of the various clauses from the Guarantee Deed dated September 25, 2012 and applying the law of guarantee, it is also clear to this Court that, the liability of the petitioners, as guarantors, are co-extensive with that of Reacon, the principal borrower. The jurisdiction of NCLT under IBC is very limited only to ascertain whether default is there or not. In the event, NCLT is of the finding that default is there, then the further process for liquidation of the corporate debtor takes place. In the facts of this case, NCLT was of the view that default was there and it proceeded for the ultimate liquidation process of Reacon and appointed the respondent no.3 as the liquidator.
The respondent no.3/liquidator is the creature of IBC. The record shows that no allegation has been raised at any point of time by the IA No. GA-COM/1/2025 in CS-COM/160/2025 A.R., J.
9petitioners or by Reacon against the liquidator in the relevant IBC proceeding.
It is submitted by Ms. Deblina Lihiri, learned Advocate appearing for the respondent no.1 that as on November 21, 2025 the closing balance of the statement of accounts of the respondent no.1 showed, the total outstanding claim was allegedly for Rs.501.42 crores excluding the allied expenses. Once the default is admitted, the above liabilities are co- extensive for the petitioners/guarantors.
Admittedly, the petitioners herein were not the parties to the Andaman suit. So apparently, the petitioners did not have any opportunity to raise any objection against the liquidator in the Andaman suit. The petitioners for the first time through the instant suit have alleged the collusion, conspiracy and fraud practiced allegedly by and between the respondent no.3/liquidator and the banks, while withdrawing the Andaman suit. Since the petitioners were not parties to the Andaman suit, even if any decree would have been passed therein, the same would have no effect on the petitioners as the petitioners would not have been bound by the same.
Applying the facts allegedly leading to fraud and conspiracy, as pleaded by the petitioners herein, on the legal provisions laid down under Section 139 of the Contract Act, it appears to this Court that, those are mixed questions of law and facts. Unless the facts are ascertained and crystallized, the provision of law cannot be applied thereupon. On a close reading of the averments made in paragraphs 29, 31, 36 and 37 from the petition, this Court is also of the considered view that the facts stated IA No. GA-COM/1/2025 in CS-COM/160/2025 A.R., J.
10therein, unless proved through trial of the suit, this Court cannot come to a conclusive finding on it. The document at page 492 is a minute of SCC. The said minute cannot be taken as a conclusive evidence of fact even to arrive at a prima facie opinion that a collusion or conspiracy was hatched by and between respondent nos.1, 2 and 3, in so far as withdrawal of the Andaman suit is concerned or otherwise.
The judgments cited on behalf of the plaintiffs/petitioners In the matter of: Sardar Kahn Singh (supra) and State Bank of Saurashtra (supra) were rendered at a stage when the respective suits were already decreed and final adjudication had already been held therein. In the facts of the instant case, the parties are at the ad interim stage. Therefore, ratio held in those judgments would not apply in the facts and circumstances of this case. After the conditions mentioned under Section 139 of the Contract Act are satisfied at the time of trial of the instant suit, then only the legal provisions would not apply.
Section 35(1)(k) of IBC provides an authority to the liquidator to institute or defend any suit, prosecution or other legal proceedings, civil or criminal, in the name of and on behalf of the corporate debtor. The said provision does not impose any restriction on the liquidator not to withdraw the said Andaman suit. Whether the withdrawal of Andaman suit was just or lawful, the same can be decided at the time of trial of the suit and not at this ad interim stage.
In view of the foregoing reasons and discussions, this Court is of the firm and considered view that no prima facie case has been made out for passing an ad interim order of injunction. Once the liability of the IA No. GA-COM/1/2025 in CS-COM/160/2025 A.R., J.
11petitioners are undoubtedly co-extensive with that of the defaulted borrower, the balance of convenience and inconvenience also does not warrant passing of any ad interim order of injunction.
There shall be no order of ad interim injunction.
The respondents shall file affidavit in opposition on or before January 15, 2026.
Affidavit in reply, if any, shall be filed by January 30, 2026. The matter shall appear under the heading "Adjourned Motion"
on February 18, 2026.
(ANIRUDDHA ROY, J.) RS IA No. GA-COM/1/2025 in CS-COM/160/2025 A.R., J.