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TMI Blog2020 (3) TMI 1132X X X X Extracts X X X X X X X X Extracts X X X X ..... a Financial Debtor includes Debt owed to the Creditor by both the Principal and the Guarantor. Section 3(11) of I B Code refers to a sum that it is due from any person including Corporate Debtor . A mere failure of the Guarantor to pay the Financial Creditor when the principal sum is demanded will come within the purview of default u/s 3(12) of the Code. A Financial Creditor who has a Guarantee on the Debt due can commence proceedings u/s 7 of I B Code against the Guarantor for failure to repay the sum borrowed by the Principal Borrower. It is to be remembered that if the Contract of Guarantee itself mentions that the liability of a Guarantor will be independent and separate than that of Principal Debtor s liability, then an application against the Guarantor as per Section 7 is maintainable. The only rider will be that a Creditor is not permitted to do the same, sue the principal Debtor and claim in the Guarantor s Insolvency at the same time. The Learned Adjudicating Authority had admitted the application u/s 7 of the I B filed by the Principal Borrower on 02.08.2019 in CP(IB)No.353/KB/2018. Also, on 02.08.2019 itself, the Learned Adjudicating Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,923.50 as on 7th April, 2014 which is also reflected in the CIBIL Report. Since the accounts of the Principal Borrower was classified as an NPA, the Financial Creditor had to file O.A. No. 493/2015 before the DRT, which was never objected to by the Principal Borrower and the liability of the Corporate Guarantor is coextensive with the Principal Debtor and even the Financial Creditor is free to sue and proceed against the Principal Debtor or the Guarantor or both, as per its choice and discretion. The Corporate Debtor has no defence at all in this matter as the amount of ₹ 162,62,23,609.63 is admitted and acknowledged by the Principal Borrower, thereby making the Guarantor/the present Corporate Debtor equally liable. 35. In view of all the arguments advanced by the parties and documents placed on record, we are of the considered view that the Corporate Debtor/Guarantor has no case and the judgement cited in Dharam Sugars and Chemicals limited Vs. Union of India and others, reported in (2019) 5 Supreme Court Cases 480 cited above or the Circular dated 12th February, 2018 of Reserve Bank of India cited above or the Circular dated 12th February, 2018 of Reser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n it is observed that the IBC is not a Recovery proceeding. 6. The Learned Counsel for the Appellant cites the decision Dr. Vishnu Kumar Agarwal Vs. M/s. Piramal Enterprises Ltd. in Company Appeal (AT)(Ins.) No. 346 and 347 of 2018 (reported in MANU/NL/0003/2019) wherein at para 32 and 33 observed as under:- 32. There is no bar in the I B Code for filing simultaneously two applications under Section 7 against the Principal Borrower as well as the Corporate Guarantor(s) or against both the Guarantors . However, once for same set of claim application under Section 7 filed by the Financial Creditor is admitted against one of the Corporate Debtor ( Principal Borrower or Corporate Guarantor(s) , second application by the same Financial Creditor for same set of claim and default cannot be admitted against the other Corporate Debtor (the Corporate Guarantor(s) or the Principal Borrower ). Further, though there is a provision to file joint application under Section 7 by the Financial Creditors , no application can be filed by the Financial Creditor against two or more Corporate Debtors on the ground of joint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it would only apply to suits. The present case being an application which is filed under Section 7, would fall only within the residuary article 137. As rightly pointed out by learned counsel appearing on behalf of the appellant, time, therefore, begins to run on 21.07.2011, as a result of which the application filed under Section 7 would clearly be time-barred. So far as Mr. Banerjee s reliance on para 7 of B.K. Educational Services Private Limited (supra), suffice it to say that the Report of the Insolvency Law Committee itself stated that the intent of the Code could not have been to give a new lease of life to debts which are already time barred. 9. Contending contra it is the submission of Learned Counsel for the 1st Respondent/Bank/Financial Creditor that the liability of the Principal Debtor and Guarantor is co-extensive as per Section 128 of Indian Contract Act, 1872 and relies on the decision of Hon ble Supreme Court in the matter of Ram Kishun Vs. State of U.P. (2012) 11 SCC, 511 wherein at para 23 it is observed as under:- 23 .the law can be summarised to the effect that the recovery of the public dues must be made s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as under:- 10. A notice was issued on 20.03.1997 to the respondent invoking the personal guarantee given by him and calling upon him to pay the sum of ₹ 5.40 crores together with further interest and liquidated damages from 1.1.1997 till repayment. 14. The Learned Counsel for the 1st Respondent relies on the order dated 06.09.2017 Sanjeev Shaye Ors. V. State Bank of India Ors. reported in MANU/UP/2243/2017 wherein it is reiterated that the rights of the surety is coextensive with that of Principal Debtor. 15. A perusal of the application by the 1st Respondent/Bank/Financial Creditor (filed u/s 7 of I B Code read with Rule 4 of I B application to Adjudicating Authority Rules, 2016) part IV points out that the principal sum due as on 31.01.2018 was ₹ 81,92,38,508.50/-. The facility cc(AUCA) sanctioned was ₹ 320000000(Rupees thirty two crores) and IBD, sanctioned was of ₹ 500000000(Rupees fifty crores). The total sanctioned amount was ₹ 820000000(Rupees Eighty two crores). The Principal outstanding was ₹ 81,92,38,508.50. A sum of ₹ 80,69,85,101.13 was due towards interest. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is not in dispute that the Corporate Debtor (Being Corporate Guarantor of the Principal Borrower Gee Pee Infotech Pvt. Ltd.) had executed the Guarantee Deed on 05.10.2011 in respect of overall Limit and sanctioned in favour of the Financial Creditor . Also that a supplementary Guarantee Deed was executed between Corporate Guarantor and the Financial Creditor . 19. As per Section 145 of the Indian Contract Act, 1872 in every contract of Guarantee , there is an implied promise by the Principal Debtor to indemnify the Surety . This court pertinently points out that a Financial Debtor includes Debt owed to the Creditor by both the Principal and the Guarantor. Section 3(11) of I B Code refers to a sum that it is due from any person including Corporate Debtor . A mere failure of the Guarantor to pay the Financial Creditor when the principal sum is demanded will come within the purview of default u/s 3(12) of the Code. A Financial Creditor who has a Guarantee on the Debt due can commence proceedings u/s 7 of I B Code against the Guarantor for failure to repay the sum borrowed by the Principal Borrower. 20. It is to be reme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent/Bank/ Financial Creditor against the Corporate Debtor Gengrow Commercial Pvt. Ltd. is not maintainable in law and the same is accordingly dismissed but without costs. 24. The order passed by the Adjudicating Authority in appointing the Interim Resolution Professional , declaring moratorium etc. and actions, if any, taken by the Interim Resolution Professional against the present Appellant/ Corporate Debtor namely M/s. Gengrow Commercial Pvt. Ltd. are declared illegal and they are set aside. The Resolution Professional is directed to hand over the Records and Assets of the Corporate Debtor to the Promoter / Directors of the Corporate Debtor immediately. 25. The Learned Adjudicating Authority namely National Company Law Tribunal , Kolkata will now close the proceeding of the case in CP (IB) No. 353/KB/2018 and that the Corporate Debtor M/s. Genegrow Commercial Pvt. Ltd. is released from all the rigour of law and is permitted to function independently. The Adjudicating Authority will determine the fee of Interim Resolution Professional and that the 1st Respondent/Bank/Applicant will pay the fees of the Interim Resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X
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