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TMI Blog2022 (5) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... Based on the judgment of Hon'ble Supreme Court in Lalit Kumar Jain vs. Union of India Ors. [ 2021 (5) TMI 743 - SUPREME COURT ], the Personal Guarantor cannot be discharged from his liability upon the approval of Resolution Plan under section 31 of IBC, 2016. Therefore, the liability of the Personal Guarantor continues and the Financial Creditor is in condition to realize the default amount from the Personal Guarantor. This is a fit case for admission and proceed against the Personal Guarantor/Respondent and initiate Corporate Insolvency Resolution Process - Petition admitted - moratorium declared. - CP (IB) No. 175 of 2021 - - - Dated:- 27-4-2022 - M.B. Gosavi, Member (J) And Kaushalendra Kumar Singh, Member (T) For the Appellant : Pratik Thakkar, Ld. Counsel For the Respondents : Ravi Pahwa, Ld. Counsel and Hiten Parikh, PCA ORDER 1. This Application has been filed under Section 95 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as IBC, 2016 ) read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... structuring Agreement dated 22.03.2014. 4. The Corporate Debtor availed further credit facilities and its Directors entered into Mortgage Deed dated 05.04.2014. PNB Investment Services Limited acted as Security Trustee as per the Security Trustee Agreement dated 22.03.2014. 5. Deed of Guarantee dated 25.04.2014 was executed by the Personal Guarantee in favour of SBI led Consortium banks. The Personal Guarantor also agreed and provided indemnity to restructure the financial liabilities to the extent of Rs. 1286.39 crores. The Personal Guarantor executed a Trust and Retention Account Agreement dated 27.06.2014 as per the terms of the Deed of Guarantee. 6. The Corporate Debtor and the Personal Guarantor executed Revival Letter dated 13.10.2016 in reference to loan amount of Rs. 50,92,61,047.92/- plus interest in favour of the Financial Creditor. 7. A legal notice dated 16.03.2017 was issued by one of the SBI led consortium members invoking the Personal Guarantee of the Respondent on default in repayment of dues by the Corporate Debtor to repay the debt. The Corporate Debtor submitted One Time Settlement proposal of Rs. 23 crore dated 29.08.2019 which was accepted by the Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,45,58,095.31/- includes the cash credit, term loans, working capital term loan, funded interest term loan and the interest overdue. As per section 78 of IBC, 2016, where the amount of default is not less than Rs. 1000, Part III, i.e. provisions relating to fresh start, insolvency and bankruptcy of individuals and partnership firms shall apply. The IRP concluded that there is a default amount of more than Rs. 1000 after reviewing the documents attached with the application. (iii) The RP has submitted that as per Rule 3(e) of the Personal Guarantor Insolvency Rules, the Guarantor means a debtor who is personal guarantor to a Corporate Debtor and in whose respect guarantee has been invoked by the Creditor which remains unpaid in full or part. (iv) The RP has also submitted that as per section 128 of the Indian Contract Act, 1872, a co-extensive liability will be created between the surety and the Debtor. (v) The application was presented in Form C along with a fee of Two Thousand rupees as prescribed under Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process of Personal Guarantors to Corporate Debtors) Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the Guarantors. Therefore, based on the above mentioned case law, CIRP can be proceeded against the Personal Guarantor as an irrevocable Deed of Guarantee has been signed between the SBI led Consortium and the Personal Guarantor. 14. Further, the Hon'ble Supreme Court in the matter of Lalit Kumar Jain vs. Union of India Ors. in the Transferred Case (Civil) No. 245/2020 has observed as under:- 108. It is therefore, clear that the sanction of a resolution plan and finality imparted to it by Section 31 does not per se operate as a discharge of the guarantor's liability. As to the nature and extent of the liability, much would depend on the terms of the guarantee itself. However, this court has indicated, time and again, that an involuntary act of the principal debtor leading to loss of security, would not absolve a guarantor of its liability. In Maharashtra State Electricity Board (supra) the liability of the guarantor (in a case where liability of the principal debtor was discharged under the insolvency law or the company law), was considered. It was held that in view of the unequivocal guarantee, such liability of the guarantor continues and the creditor can re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any debt; and c) The debtor shall not transfer, alienate, encumber, or dispose of any of his assets or his legal rights or beneficial interest therein; d) The provisions of this section shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. 2. The Resolution Professional viz., Mr. Sunil Kumar Agarwal, having Registration No: IBBI/IPA-001/IP-PO1390/2018-2019/12178, office at 603/6, Devnandan Heights, near Poddar School, New C.G. Road, Chandkheda, Ahmedabad-382424, Gujarat [e-mail id - [email protected]] who was appointed when the Section 97 application was allowed vide Order dated 20.10.2021, is directed to cause a public notice published on behalf of the Adjudicating Authority within 7 days of passing this Order on the website of the NCLT Ahmedabad Bench, inviting claims from all Creditors, within 21 days of such issue. The notice under Sub-Section (1) of Section 102(2) shall include:- a) details of the order admitting the application; b) particulars of the resolution professional with whom the claims are to be registered; and c) the last date for submission of claim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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