IBC Leading Cases III: Liquidation, Guarantors, Other Laws

The third revision note on leading cases covers the remaining areas: recovery of assets through avoidance, liquidation and the waterfall, the liability of personal guarantors and directors, the Code's relationship with other laws, and appeals. Read with the first two notes, it gives a complete list of the decisions most often tested in judiciary examinations, with the 2026 changes noted where they affect a holding.

Figure 1: The cases in this note, by year

1. Avoidance and Fraud

• Anuj Jain v Axis Bank, 2020. Decided on 26 February 2020, it held that mortgages given by Jaypee Infratech to secure its holding company's debts were preferential transactions, read the ordinary course exception as requiring the ordinary course of both the debtor and the transferee, and held that lenders secured only by such mortgages were not financial creditors of the mortgagor (Topic 48)
• Piramal Capital v 63 Moons Technologies, 2025. In the DHFL insolvency, it held that section 66 applications are distinct from avoidance applications under Chapter III, and set aside the NCLAT's interference with a plan term allocating section 66 recoveries to the resolution applicant (Topic 47)

Figure 2: The cases grouped by theme

2. Liquidation and Priorities

• Sunil Kumar Jain v Sundaresh Bhatt, 2022. Decided on 19 April 2022, it held that provident fund, pension and gratuity dues are outside the liquidation estate, and that salaries for the CIRP period are process costs only if the company was actually run as a going concern (Topic 55)
• Moser Baer Karamchari Union v Union of India, 2023. Decided on 2 May 2023, it upheld the ranking of workmen's dues in section 53, rejecting the argument that it was unconstitutional to depart from the Companies Act priorities (Topic 34)
• Paschimanchal Vidyut Vitran Nigam v Raman Ispat, 2023. In liquidation, the order of priority in section 53, read with section 238, prevails over claims to priority under other statutes (Topic 57)
• SBI v Murari Lal Jalan (Jet Airways), 2024. Decided on 7 November 2024, the Supreme Court used Article 142 to order liquidation of Jet Airways after five years of non-implementation of the approved plan, and directed forfeiture of the performance guarantee (Topic 45)

3. Guarantors and Directors

Figure 3: Principles of the leading cases

• SBI v V. Ramakrishnan, 2018. The section 14 moratorium does not protect personal guarantors of the corporate debtor (Topic 66)
• Lalit Kumar Jain v Union of India, 2021. Decided on 21 May 2021, it upheld the notification applying Part III to personal guarantors and held that approval of the company's plan does not discharge the guarantor.
• Dilip B Jiwrajka v Union of India, 2023. Decided on 9 November 2023, it upheld sections 95 to 100, treating the resolution professional as a facilitator and the interim moratorium as protective; personal guarantors lost the interim moratorium in 2026 (Topic 68)
• P. Mohanraj v Shah Brothers Ispat, 2021. The moratorium bars section 138 proceedings against the corporate debtor but not against its directors (Topic 78)
• Ajay Kumar Radheyshyam Goenka v Tourism Finance Corporation, 2023. Decided on 15 March 2023, it held that resolution or dissolution of the company does not free its directors from section 138 liability.
• Vishnoo Mittal v Shakti Trading, 2025. A suspended director is not liable under section 138 where the cause of action arose after the interim resolution professional took control.

4. Other Laws and Appeals

• Sundaresh Bhatt v CBIC, 2022. Customs authorities cannot sell the goods of a corporate debtor during the moratorium and can only file a claim, as the Code overrides the Customs Act (Topic 77)
• Action Ispat and Power v Shyam Metalics, 2020. Decided on 15 December 2020, it held that winding up proceedings may be transferred to the NCLT even after a winding up order, unless they have reached an irreversible stage (Topic 61)
• V. Nagarajan v SKS Ispat and Power, 2021. Limitation for an appeal under section 61 runs from the date of pronouncement of the order (Topic 73)
• Sanjay Pandurang Kalate v Vistra ITCL, 2023. Decided on 4 December 2023, it held that where no order was pronounced at the hearing, limitation began on upload of the order.

5. Frequently Asked Questions

Which case held that a resolution plan does not discharge a personal guarantor?

Lalit Kumar Jain v Union of India (2021), building on SBI v V. Ramakrishnan (2018) on the moratorium.

Which case allowed the Supreme Court to order liquidation directly after a plan failed?

SBI v Murari Lal Jalan, the Jet Airways case (2024), in which the Court used Article 142.

Which case decides whether provident fund dues form part of the liquidation estate?

Sunil Kumar Jain v Sundaresh Bhatt (2022), which held that they do not.

6. Related Topics

• Topic 91: Leading Cases I. Validity, initiation and limitation.
• Topic 92: Leading Cases II. Process and resolution plans.
• Topic 96: Revision Chart. The Code at a glance.