TMI Blog2017 (10) TMI 855X X X X Extracts X X X X X X X X Extracts X X X X ..... tors. It is clear that if the Financial Creditor during the Corporate Insolvency Resolution Process and declaration of the moratorium is permitted to proceed against the personal guarantor of the Corporate Debtor for recovery of the outstanding debt to the extent of the personal guarantee given, then, the security interest, if any, of the Financial Creditor shall get transferred to the guarantor which will be in violation of Section 14(1)(b) of the I&B Code, 2016. In the light of the above, Interlocutory Application of the personal guarantor is allowed. The 2nd Respondent, State Bank of India is restrained from proceeding against the personal guarantor till the period of moratorium is over. - IA NO. 5/2017 And CP NO. 510(IB)/CB/2017 - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the personal guarantor of M/s. Veesons Energy Systems Private Limited. 2. The guarantor contends that, in case his personal property is sold to realise the portion of the debt outstanding against M/s. Veesons Energy Systems Private Limited, the same shall create charge on the assets of the Corporate Debtor which shall amount encumbering the properties of the Corporate Debtor. 3. For the sake of better appreciation, the relevant portion of Sections 14 and 31 of the I B Code, 2016 is reproduced as follows:- 14. (1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:- (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... created on the property of the Corporate Debtor which is against the purpose and object of the moratorium declared. Thus will violate the provisions of Section 14(1)(b) of the I B Code, 2016. 4. In this connection, it will be appropriate to make a reference to the provisions of Section 140 of the Indian Contract Act, 1872, which reads as follows:- Rights of surety on payment or performance.- Where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety, upon payment or performance of all that he is liable for, is invested with all the rights which the creditor had against the principal debtor. -Where a guaranteed debt has become due, or default of the principal d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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