Non-Compliance With RBI MSME Restructuring Norms Doesn’t Bar IBC Proceedings: NCLT Guwahati

Dispur, Dec 31 (KNN) The National Company Law Tribunal (NCLT), Guwahati, has held that a lender’s failure to adhere to RBI circulars on restructuring stressed MSME accounts does not automatically render an insolvency petition under the Insolvency and Bankruptcy Code (IBC) non-maintainable.

Case Background

The December 4, 2025 order arose from a petition filed by Eduvanz Financing Pvt Ltd against Abutani Mercantile Pvt Ltd, an Assam-based MSME. Eduvanz had extended a Rs 3 crore loan in January 2023, repayable in 91 days, but the borrower defaulted, leading to its classification as a non-performing asset in August 2023. 

A partial repayment of Rs 22 lakh was made, leaving an outstanding balance of Rs 1.41 crore. During the proceedings, Abutani Mercantile contended that Eduvanz was legally required to follow the RBI’s MSME restructuring framework before initiating insolvency proceedings.

Tribunal's Observations

A bench led by Judicial Member Rammurti Kushwaha held, “While the RBI circulars do mandate a structured framework for resolution of MSME distress, the non-compliance with such circulars cannot render a petition under Section 7 non-maintainable per se. Moreover, the IBC is a self-contained code, and where a financial debt and default are established, procedural non-compliance with RBI guidelines does not defeat the statutory remedy.”

Citing Supreme Court precedents, the tribunal noted that authorities cannot scrutinise procedural non-compliance by the creditor once debt and default are proven. The tribunal accordingly rejected the argument that ignoring RBI guidelines renders the petition invalid.

Order

The petition was admitted under the IBC, and a moratorium was declared to prevent the creditor from taking any recovery action outside the CIRP. 

Kamal Agarwal was appointed as the Interim Resolution Professional (IRP), and the creditor was directed to deposit Rs 2 lakh towards the initial CIRP costs.

Key Takeaways

The RBI’s restructuring guidelines for MSMEs do not supersede statutory rights under the IBC. Creditors may initiate insolvency proceedings once a default is established, regardless of any procedural lapses in implementing RBI circulars. 

This decision reinforces the principle that the IBC operates as a self-contained framework for resolving financial distress, ensuring timely recovery for creditors.

(KNN Bureau)