The case involves a garments company where Ahmed and his family served as directors and personal guarantors. After repeated defaults and failed repayment proposals, the Bengaluru bench of the NCLT rejected their arguments and appointed an insolvency trustee.

In a major setback for Congress MLC Naseer Ahmed, the National Company Law Tribunal (NCLT) has declared him insolvent over default on bank loans and interest totalling Rs 1,454.71 crore. The order puts his Legislative Council membership and voting rights at risk.

The case relates to a garments limited, where Naseer Ahmed was Managing Director and his wife Ayesha Naseer and son Avez Ahmed were directors. The company had taken loans from SBI, Canara Bank, and IDBI Bank, with Naseer, his wife, and son standing as personal guarantors. After the company incurred losses, it failed to repay dues. Despite recovery efforts, the banks were unable to recover the money and classified the loans as Non-Performing Assets (NPA).

They then initiated loan recovery proceedings before the NCLT. In 2019, resolution and recovery proceedings were initiated under the Insolvency and Bankruptcy Code (IBC), along with the process to attach the company’s assets.

Failed repayment proposal

During the resolution process, Naseer and his family submitted a proposal to pay Rs 791 crore to the banks. The NCLT had directed Naseer and the other guarantors to submit a repayment plan. The tribunal noted that even after several months, the guarantors failed to submit the plan, prompting banks to seek initiation of insolvency proceedings.

The Bengaluru bench of the NCLT, comprising Judicial Member Sunil Kumar Agarwal and Technical Member Radhakrishna Sripada, heard the case.Naseer and his family argued that they had not provided a direct guarantee to the banks, and insolvency proceedings could not be initiated against them. The bench rejected the contention and declared Naseer and his family members insolvent. For further proceedings, the NCLT has appointed Ravindra Beleyur as the insolvency trustee.

Legal consequences under insolvency law

As per Section 140 of the Insolvency Code, a person declared insolvent cannot continue in any government or elected post. Article 191(1)(c) of the Constitution also mandates disqualification. Accordingly, Naseer Ahmed faces disqualification from his Legislative Council membership and will be barred from contesting elections. He also stands to lose his voting rights.

Restrictions on assets and financial activity

Under Section 125 of the Insolvency Code, the bankruptcy trustee is empowered to attach the assets of Naseer and his family to recover the outstanding dues. Without the trustee’s permission, Naseer and the other guarantors cannot take fresh loans, sell assets, or enter into agreements with other companies. Even if he runs a partnership with prior approval, he must disclose his insolvent status to partners. Foreign travel will also require the trustee’s approval.

Following the NCLT order, legal and constitutional experts say Naseer Ahmed’s continuation as an MLC is untenable.

Published on June 13, 2026