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TMI Blog2022 (2) TMI 1295X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 ,IBC,2016 proceeding against the applicant. 2. The NCLT Kolkata admitted the petition for CIRP on 05.01.2018 and ordered liquidation of the corporate debtor on 6.12.2018. The 2nd respondent is appointed as liquidator. Consequent to constitution of the NCLT Cuttack Bench, the case was transferred from NCLT Kolkata and the liquidation proceedings against the corporate debtor is pending before this Tribunal. In the meantime, the 1" Respondent took possession of the immovable property of the applicant vide a order dated 03.08.2021 passed under Section 14, SARFAESI Act, 2002 by the ACMM, Bengaluru. The appeal preferred by the applicant before the DRT - Bangalore under Section 17, SARFAESI Act was dismissed on 04.10.2021. The 1st respondent further has taken steps to auction the mortgaged property under the SARFASESI Act 2002. 3. The case of the applicant is that the SARFAESI proceeding initiated against him by the financial creditor prior to the expiry of moratorium imposed in terms of liquidation order under Section 33, IBC, 2016, is erroneous. Further, the above attempt to recover the debt by the financial creditor is in contravention of Section 238, IBC,2016. Hence, the applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate debtor or corporate person; (b) any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and (c) any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code." 6. The 1st respondent financial creditor on its part questions the maintainability of this petition filed under Section 60 (5), since it is residuary in nature and available only to any of the parties to the proceedings under the IBC, 2016. The Apex court in Gujarat Urja Vikas Nigam Limited Vs. Amit Gupta, reported in (2021) 7 SCC 209 dealing with termination of a contract vis-a-vis the insolvency of the corporate debtor, wherein it is held as follows: - "We hold that the NCLT was empowered to restrain the appellant from terminating the PPA, However, our decision is premised upon a recognition of the centrality of the PPA in the present case to the success of the CIRP, in the factual matrix of this case, since it is the sole contract for the sale of electricity which was entered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor sustainable before this Tribunal. Point No.2: - 11. It is firstly contended by the applicant that initiation of the proceedings under the SARF'AESI Act, 2002, by the financial creditor against the applicant prior to the expiry of the moratorium imposed in terms of the liquidation order passed under Section 33, IBC, 2016, and further that non-compliance of the requirements under Section 52 thereof is an effoneous act. It is true that in accordance with Section 33(5), IBC, 2016, after a liquidation order is passed no legal proceeding shall be instituted against the corporate debtor without the prior approval of the Adjudicating Authority, but patently it is not extended to the personal guarantor of the corporate debtor. 12. It is secondly contended by the applicant that in view of Section 238, IBC, 2016, any proceeding against the personnel guarantor shall be initiated only under the IBC since Part III of IBC, 2016, was made applicable to the personal guarantors of the corporate debtors vide the notification S.O.4126(E) dated 15.11.2019 from the Ministry of Corporate Affairs, which reads as follows: - MINISTRY OF CORPORATE AFFAIRS NOTIFICATION New Delhi, the 15th Novem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Prior to the aforesaid notification, the Hon'ble Apex court in the State Bank of India Vs. V. Ramakrisltnan, reported in (2018) 17 SCC 394, rejected the contention of the respondents that in view of Section 2(e) and Section 60, IBC will apply to the personal guarantors of the corporate debtors. The Apex court held therein that in view of section 60(2) and (3) of IBC, 2016, the moment there is a proceeding against the corporate debtor pending under the 2016 code, any bankruptcy proceeding against the individual personal guarantor will, if already initiated before the proceeding against the corporate debtor, be transferred to the National Company Law Tribunal or if initiated after such proceedings had been commenced against the corporate debtor, be filed only in the National Company Law Tribunal. However, the Tribunal is to decide such proceeding only in accordance with the Presidency-Town Insolvency Act, 1909, or the Provincial Insolvency Act, 1920, as the case may be. 14. In fact, the respondent relies upon the V. Ramakrishnan case supra in support of its argument that pendency of liquidation proceeding against the corporate debtor under IBC, 2016, will not bar the proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersonal guarantors of corporate debtors it would be under the IBC, 2016, and not either under the PTA and PIA Acts, as the case may be. Hence, there is no prohibition against the financial creditor from proceeding against the personal guarantors to recover the debt, other than by insolvency proceedings, in a regular civil suit or under the provisions of the RDB Act, 1993, or the SARFAESI Act, 2002, or the Commercial Courts Act, 2015, based on the applicable pecuniary Jurisdictions. It is pertinent to state that if the converse argument of the applicant is accepted, then the aforesaid Acts become redundant. 19. And, last but not the least, the fundamental principle in civil jurisprudence is that institution of recovery suit/proceeding is the rule and institution of insolvency proceeding is an exception. The recovery suit is only in respect of the debt, but an insolvency proceeding is in respect of the debtor. The order in a recovery suit is in personam, but an order in an insolvency proceeding is in rem. The insolvency proceedings can be initiated only when the debtor is unable to pay the debt owing to financial crunch meaning insolvency, and when it does not have the money to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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