Karnataka: Cong MLC declared bankrupt by NCLT; disqualification cloud looms
Bengaluru, June 12 (IANS) The National Company Law Tribunal (NCLT), Bengaluru Bench, has declared Congress MLC Naseer Ahmed bankrupt in connection with the default of loans amounting to Rs 1,454.71 crore owed by Bengaluru-based M/s Scotts Garments Limited, for which he had stood as a personal guarantor.
The order has cast uncertainty over Ahmed’s continuation as a member of the Karnataka Legislative Council, with legal experts indicating that the bankruptcy declaration could attract disqualification proceedings under the applicable provisions of law.
It may be noted that under Section 140 of the Insolvency and Bankruptcy Code (IBC) and Article 191(1)(c) of the Constitution of India, the bankruptcy declaration could expose Ahmed to disqualification as an MLC as an “undischarged insolvent”, subject to the operation and application of the relevant legal provisions.
The NCLT passed the order on Friday while hearing a petition filed by the State Bank of India (SBI), Canara Bank and IDBI Bank under the Insolvency and Bankruptcy Code, 2016.
According to the tribunal’s order, the lenders had approached the NCLT under Section 121(b) of the Insolvency and Bankruptcy Code, 2016, read with Rule 7 of the Insolvency and Bankruptcy Rules, 2019, seeking initiation of bankruptcy proceedings against Naseer Ahmed in his capacity as the personal guarantor to the corporate debtor, M/s Scotts Garments Limited.
The banks claimed a default amount of Rs 1,454,71,57,019 (Rs 1,454.71 crore).
The loan accounts of the company had earlier been classified as non-performing assets (NPAs) by Canara Bank, SBI and IDBI Bank.
Allowing the petition, the tribunal observed that the application met the requirements under the Insolvency and Bankruptcy Code and ordered the commencement of bankruptcy proceedings against the personal guarantor.
“The petition filed by SBI is allowed and disposed of. Accordingly, bankruptcy proceedings are initiated against the personal guarantor,” the order stated.
The NCLT has also appointed a bankruptcy trustee and listed the matter for further proceedings on August 6, when the trustee is expected to submit a report.
Scotts Garments Limited had availed loans from the consortium of banks, with Naseer Ahmed providing a personal guarantee for the borrowings.
Following the company’s failure to repay the dues, the lenders initiated insolvency proceedings against him.
The bankruptcy declaration could have significant political implications, as it may affect Ahmed’s eligibility to continue as a member of the Legislative Council, subject to the interpretation and application of the relevant legal provisions.
It may be recalled that Congress MLC Naseer Ahmed was removed from his position as Political Secretary to then Chief Minister Siddaramaiah.
His removal followed allegations of anti-party activities during the Davanagere South Assembly by-election.
On April 13, 2026, the Department of Personnel and Administrative Reforms issued a formal notification relieving Ahmed of his duties.
The action was taken at the behest of the Congress high command after Ahmed reportedly refused to step down voluntarily.
The party alleged that Ahmed, along with other leaders, worked against the official Congress candidate during the April 9, 2026, Davanagere South bypoll.
–IANS
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