NCLAT Lifts 'Impossible Condition' Of ₹40-Crore Security Imposed On Bankrupt Guarantor For US Travel

The National Company Law Appellate Tribunal (NCLAT) has set aside a condition imposed by the NCLT Ahmedabad requiring a bankrupt personal guarantor to deposit Rs. 40 crore as security for travelling to the United States. The tribunal held that a person already declared bankrupt cannot be expected to arrange such funds.

A bench led by Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra held that imposing an “impossible condition” amounts to denial of permission to travel.

“When the Appellant has already become a bankrupt, it follows therefrom that the Appellant cannot be expected to have any source available with him which he could tap for the purpose of provisioning this Security Deposit amount,” the bench observed.

The Appellant, Zankarsinh Kishorsinh Solanki, is a personal guarantor to Torque Automotive Private Limited, which was admitted into insolvency in February 2021. He was declared bankrupt in October 2025 after creditors rejected his repayment plan offering Rs. 50 lakh against admitted claims exceeding Rs. 142 crore. A bankruptcy trustee was appointed thereafter.

Solanki sought permission to travel to the United States, stating that his Green Card status, and consequently his minor children's residency status, would lapse without periodic visits. In its order dated December 2, 2025, the NCLT Ahmedabad took a “lenient view,” considering the children's immigration needs. At the same time, it recorded serious creditor concerns regarding non-disclosure of assets and the risk of flight.

To safeguard creditor interests, the NCLT granted permission to travel subject to strict conditions. It directed Solanki to deposit Rs. 40 crore as cash security in a special bankruptcy interest-bearing account. It also required him to execute bonds by two solvent sureties of Rs. 50 crore each.

Before the appellate tribunal, Solanki argued that as a bankrupt individual, he lacked the financial capacity to comply with the cash deposit condition. The NCLAT accepted this submission.

It observed, “We are inclined to agree with the Appellant that imposition of such an impossible condition which by its very nature cannot be practically fulfilled tantamount to blocking any possibility of the Appellant to travel abroad.”

Accordingly, the appellate tribunal set aside the requirement to deposit Rs. 40 crore. However, it upheld the condition requiring two solvent sureties of Rs. 50 crore each, finding it reasonable in view of the magnitude of the debt and the risk of flight.

The appeal was allowed in part. The permission to travel remains subject to approvals from other forums, including the Gujarat High Court and the CBI court.

For Appellant: Senior Advocate I.H. Syed with Advocates Saurabh Agrawal and Laxita Upadhyay

For Respondent: Advocates Aryan Pudhiyar, Nalini Lodha, and Rohan Talwar