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TMI Blog2022 (5) TMI 1584X X X X Extracts X X X X X X X X Extracts X X X X ..... rate Insolvency Resolution Process (CIRP) under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 ("Code" for short). The Adjudicating Authority by the impugned order has rejected the Application holding that the principal borrower being not under the CIRP or under liquidation, the Application under Section 95(1) is not maintainable. 2. The facts and issues in all the Appeals being common, it is relevant to notice the facts in Company Appeal (AT) (Ins.) No.305 of 2022- "UCO Bank vs. Navin Kumar Jain". The Corporate Debtor- 'M/s. Sri Munisuvrata Agri International Limited' was advanced financial facility by the Appellant- Bank. Respondent No.1- Navin Kumar Jain, Director of the Corporate Debtor stood Personal Guarantor. For recovery of dues of Rs.97,76,57,936/- as on 31.03.2021, an Application under Section 95(1) as per Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 dated 22.04.2021 was filed by the Bank being CP (IB) No. 166(KB)2021. In the Application, both the parties appeared and were heard. The Application was rejected by following order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vil Appeal No. 1871-1872 of 2022 - "Mahendra Kumar Jojdia vs. State Bank of India". It is further submitted that the Application under Section 7 against the Principal Borrower has already been filed and pending before the Adjudicating Authority, hence, the above condition was also fulfilled. 6. Learned Counsel appearing for the Respondent refuting the submission of the Learned Counsel for the Appellant submits that the pendency of Corporate Insolvency Resolution Process or liquidation against the Principal Borrower or the Corporate Debtor is condition precedent for initiating any action against the Personal Guarantor under Section 95(1). Learned Counsel for the Respondent relied on the judgment of the Hon'ble Supreme Court in "Lalit Kumar Jain vs. Union of India & Ors.- (2021) 9 SCC 321" (Para 108). It is submitted that the Application filed under Section 7 against the Principal Borrower is not pending as on date since the Application has not yet been admitted by the Adjudicating Authority. 7. We have heard Learned Counsel for the parties and perused the record. 8. The only reason by which Applications under Section 95(1) of the Code filed by the Appellant against the Personal G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithstanding anything contained in the Limitation Act, 1963 or in any other law for the time being in force, in computing the period of limitation specified for any suit or application by or against a corporate debtor for which an order of moratorium has been made under this Part, the period during which such moratorium is in place shall be excluded." 10. Sub-section (1) of Section 60 provides that the Adjudicating Authority in relation to insolvency resolution and liquidation for corporate persons including corporate debtors and personal guarantors thereof shall be the National Company Law Tribunal having territorial jurisdiction over the place where the registered office of a corporate person is located. Who shall be the Adjudicating Authority with regard to Corporate persons including the Personal Guarantors is to be found from sub-section (1) of Section 60. The Adjudicating Authority relying on sub-section 60(2) has taken the view that since insolvency resolution process or liquidation proceedings against the Principal Borrower/ Corporate Debtor is not pending before the NCLT, hence, the Application filed by the Appellant-Bank is premature and consequently rejected. 11. The qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enerality of Section 60(1). Section 60(2) has been engrafted to cover the specific situation and the provision is an addition to and is supplemental to provision of Section 60(1). 14. This Tribunal had occasion to consider this very question in Company Appeal (AT) (Ins.) No.60 of 2022- "State Bank of India Stressed Asset Management Branch" (supra). In the above case also the Application under Section 95(1) filed by the Bank was rejected on the same very ground that no insolvency resolution process or the liquidation is pending against the Corporate Debtor before the NCLT. This Court after noticing sub-sections (1) and (2), in paragraphs 7 to 11 made observations to the following effect:- "7. Sub-Section 1 of Section 60 provides that Adjudicating Authority for the corporate persons including corporate debtors and personal guarantors shall be the NCLT. The Sub-Section 2 of Section 60 requires that where a CIRP or Liquidation Process of the Corporate Debtor is pending before 'a' National Company Law Tribunal the application relating to CIRP of the Corporate Guarantor or Personal Guarantor as the case may be of such Corporate Debtor shall be filed before 'such' National Company Law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Adjudicating Authority for application under Section 95(1) as referred in Section 60(1) being the NCLT, the Application filed by the Appellant was fully maintainable and could not have been rejected only on the ground that no CIRP or Liquidation Proceeding of the Corporate Debtor are pending before the NCLT. In result, we set aside the order dated 05th October, 2021 passed by the Adjudicating Authority. The Application filed by the Appellant under Section 95(1) of the Code is revived before the NCLT which may be proceeded in accordance with the law." 15. It is relevant to notice that against the judgment of this Tribunal dated 27.01.2022, Civil Appeal No. 1871-1872 of 2022 was filed in which initially an interim order was passed by the Hon'ble Supreme Court on 21.03.2020. However, Civil Appeal subsequently came to be dismissed on 06.05.2022. The order of the Hon'ble Supreme Court on 06.05.2022 is as follows:- "We have heard learned Solicitor General and learned senior counsel for the parties and perused the record. We do not see any cogent reason to entertain the Appeals. The judgment impugned does not warrant any interference. The Appeals are dismissed." 16. The dismi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lows: "(2) Without prejudice to sub-section (1) and notwithstanding anything to the contrary contained in this Code, where a corporate insolvency resolution process or liquidation proceeding of a corporate debtor is pending before a National Company Law Tribunal, an application relating to the insolvency resolution or liquidation or bankruptcy of a corporate guarantor or personal guarantor, as the case may be, of such corporate debtor shall be filed before the National Company Law Tribunal" 18. Paragraph 108 on which reliance was placed by the Counsel for the Respondent is to the following effect:- " 108. The impugned notification authorises the Central Government and the Board to frame rules and regulations on how to allow the pending actions against a personal guarantor to a corporate debtor before the Adjudicating Authority. The intent of the notification, facially, is to allow for pending proceedings to be adjudicated in terms of the Code. Section 243, which provides for the repeal of the personal insolvency laws has not as yet been notified. Section 60(2) prescribes that in the event of an ongoing resolution process or liquidation process against a corporate debtor, an ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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