2022 (6) TMI 557 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - personal guarantors of the Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of its debt and dispute or not - HELD THAT - It can be seen that the deeds of guarantee dated 25.02.2013 and 12.10.2015, have been executed between the Applicant and Nathella Sampath Chetty Co., Respondent herein who is a partnership firm. It is clear that the Respondent who is a guarantor of the Corporate Debtor is a partnership firm and this application is not under the purview of this Adjudicating Authority. Further, the provisions relating to partnership firm is yet to come into force. Hence, the present is application filed by the Applicant is misconceived. The application stands dismissed.

Summary

Issues:
Application under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 against personal guarantor of Corporate Debtor.

Analysis:
1. The application was filed against the personal guarantor of a Corporate Debtor under CIRP. An order for liquidation of the Corporate Debtor was previously passed. The Financial Creditor, State Bank of India, filed the present application against the personal guarantors.
2. The date of default mentioned in the application was 04.02.2018. The Agreements of Guarantee executed by the Personal Guarantor were submitted with the application.
3. The Applicant had issued a Demand Notice under Section 13(2) of the SARFAESI Act to the Respondent. The application was filed to initiate proceedings under Section 95(1) of the IBC, 2016, against the Respondent.
4. The Respondent's counsel argued that the demand notice served was not proper under the IBC and only a notice under the SARFAESI Act was sent, which could not be considered for invoking the guarantee. It was contended that the properties offered were collateral security, not a guarantee.
5. The Adjudicating Authority noted that the Respondent was a partnership firm, not an individual personal guarantor. As per Section 60(5) and 5(22) of the IBC, an individual must be the personal guarantor. The application against a partnership firm was not within the Adjudicating Authority's purview.
6. The deeds of guarantee were executed between the Applicant and the Respondent, a partnership firm. The application against a partnership firm as a guarantor was deemed misconceived as the provisions related to partnership firms were not yet in force.
7. Consequently, the application was dismissed by the Adjudicating Authority due to the Respondent being a partnership firm, not an individual personal guarantor, and the application not falling under the Adjudicating Authority's jurisdiction.

This detailed analysis of the judgment highlights the key issues, arguments presented, and the reasoning behind the dismissal of the application against the partnership firm as the personal guarantor of the Corporate Debtor.