# In the matter of Farooq Ali Khan vs. Bank of Baroda & Ors.

> HC judgment dated 2024-05-28. Citation: TCN-2024-HC-00083. The writ petition was filed by Farooq Ali Khan, a promoter and suspended director of Associate…

- **Court:** HC
- **Order date:** 28 May 2024
- **Citation:** TCN-2024-HC-00083
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/high-courts-new-delhi/farooq-ali-khan-vs-bank-of-baroda-ors-d95737f2

## Summary

### Background

The writ petition was filed by Farooq Ali Khan, a promoter and suspended director of Associate Decor Limited, seeking a writ of prohibition against the National Company Law Tribunal (NCLT), Bengaluru, from entertaining proceedings against him in C.P.(IB) 139/BB/2022. These proceedings were initiated by the 4th respondent, Ram Ratan Kanoongo, acting on behalf of the 1st respondent, Bank of Baroda. The petitioner argued that the NCLT lacked jurisdiction because his personal guarantee was no longer in effect due to a waiver. The petitioner had previously executed a deed of guarantee in 2014. The bank initiated proceedings under Section 7 of the Insolvency and Bankruptcy Code against the company, and subsequently, a notice was issued to the petitioner seeking to invoke the

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## Facts

Farooq Ali Khan, the petitioner, is a promoter and suspended director of Associate Decor Limited. The company entered into term loan agreements with a consortium of banks, including Bank of Baroda. The petitioner executed a deed of guarantee on 10-07-2014. The consortium of banks initiated legal proceedings against the company under the SARFAESI Act and Section 7 of the Insolvency and Bankruptcy Code. On 11-08-2020, Bank of Baroda issued a notice to the petitioner seeking to invoke his personal guarantee. The petitioner claims that his personal guarantee was waived. On 31-12-2021, Bank of Baroda filed an application under Section 95(1) of the Code through the Resolution Professional against the petitioner, numbered as CP (IB) 139/BB/2022. On 16-02-2024, the NCLT passed

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## Issues and analysis

### Issue 1: Whether the National Company Law Tribunal, Bengaluru, can entertain proceedings against the …

**Ratio:** The legal principle is that if a personal guarantee has been waived, the guarantor is no

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**Reasoning:** The court reasoned that if the petitioner's personal guarantee had indeed been waived, as

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**Interpretation:** The court interpreted Section 95 of the Insolvency and Bankruptcy Code in light

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**Application:** The court applied the ratio to the specific facts of the case, noting that the

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## Parties

- **Judges:** M. NAGAPR…
- **Appellants:** FAROOQ AL…
- **Respondents:** Associate Décor…; Bank of B…
- **Other parties:** Kohi…

## Timeline

- **2014-07-10 — Deed of Guarantee…**: The petitioner, Farooq Ali Khan,…
- **2020-08-11 — Notice to Invoke…**: Bank of Baroda issued a notice to the petitioner…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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