TMI Blog2021 (8) TMI 797X X X X Extracts X X X X X X X X Extracts X X X X ..... r as well as corporate guarantor. But however, in the instant case, section 60(2) contains a non-obstante clause which specifies that only where a CIRP process or liquidation process of a Corporate Debtor is pending before NCLT, an application initiating Insolvency Resolution Process against the Personal Guarantor, of such Corporate Debtor shall be filed before such NCLT - While Section 7 petition can be filed by the Financial Creditor against the Corporate Debtor and Corporate Guarantor, but under Section 95 of the Code can be filed by Financial Creditor only against personal guarantor of Corporate Debtor, which is already been undergoing CIRP or is in Liquidation. In view of the judgement of Hon ble NCLAT in State Bank of India Vs. Atheena Energy Ventures Limited [ 2020 (11) TMI 800 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , NEW DELHI ] and the law as entailed in section 60(2), this bench is of the considered view that an application for insolvency for resolution against the personal guarantor is not maintainable unless that CIRP/liquidation is ongoing against the Corporate Debtor. The petition is dismissed. - CP (IB)/ 1365/MB-IV/2020 - - - Dated:- 10-8-2021 - Mr. Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, 2019. 6. The Applicant/Petitioner filed Affidavit to produce Board Resolution dated 04.03.2019 and certain judgement on record. 7. The Financial Creditor relied upon the judgments of Hon ble Supreme Court and other courts and states that the rights of surety are coextensive with that of the principal debtor. In view of the above settled law, the guarantor cannot insist that the creditor must first exhaust all remedies against the principal debtor before recovering the debts from surety holders. The liability of principal debtor and the surety though coextensive are separate liabilities arising out of the same transaction. 8. The Ld. Counsel for the Financial Creditor had relied upon the judgment of Hon ble National Company Law Appellate Tribunal (hereinafter referred as NCLAT) in the case of State Bank of India Vs. Athena Energy Ventures Private Limited, in which it is held that Corporate Insolvency Resolution Process (hereinafter referred as CIRP) can be initiated against both the Corporate Debtor as well as personal guarantor simultaneously for the same set of debt and default. The Hon ble NCLAT relied upon the observations made by the Insolvency Law Committee at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der: - 19. It is clear that in the matter of guarantee, CIRP can proceed against principal Borrower as well as Guarantor. The law as laid down by the Hon ble High Courts for the respective jurisdictions, and law as laid down by the Hon ble Supreme Court for the whole country is binding. In the matter of Piramal, the Bench of this Appellate Tribunal interpreted the law. Ordinarily, we would respect and adopt the interpretation but for the reasons discussed above, we are unable to interpret the law in the manner it was interpreted in the matter of Piramal. For such reasons, we are unable to uphold the Judgment as passed by the Adjudicating Authority. 20. It is not shown that the application was otherwise incomplete. We thus, proceed to pass the following order :- ORDER The Appeal is allowed. Impugned order passed by the Adjudicating Authority dated 4th March, 2020 is quashed and set aside. CP(IB) No.466/7/HDB/2019 filed by the Appellant before Adjudicating Authority. The Adjudicating Authority is directed to admit the Application CP(IB)No.466/7/HDB/2019 and pass further necessary Orders as per provisions of IBC. The Adjudicating Authority is requested to appoint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 128 of the Contract Act, 1872, and the Creditor may proceed against the principal borrower or the guarantor simultaneously, however, the judgement of Hon ble NCLAT in the case of Dr. Vishnu Kumar Agarwal Vs. Piramal Enterprises Limited, it was laid down that there cannot be two CIRP proceedings, one against the borrower and one against the guarantor. 14. The judgment of Hon ble NCLAT in State Bank of India Vs. Athena Energy Ventures Private Limited, further clarified that CIRP can be initiated against the principal borrower and the guarantor. 15. The issue for consideration is whether a Financial Creditor can initiate CIRP against the personal guarantor in the absence of any resolution process/liquidation process against the corporate debtor. 16. It is pertinent to refer to section 60 of the code. Section 60 is reproduced as follows; Section 60 : Adjudicating Authority for Corporate Persons. 60(1) 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch specifies that only where a CIRP process or liquidation process of a Corporate Debtor is pending before NCLT, an application initiating Insolvency Resolution Process against the Personal Guarantor, of such Corporate Debtor shall be filed before such NCLT. Further, the code also provides the definition of personal guarantor which includes the surety in a contract of guarantee to a Corporate Debtor which means that Financial Creditor can initiate proceedings of CIRP against the personal guarantor of Corporate Debtor. While Section 7 petition can be filed by the Financial Creditor against the Corporate Debtor and Corporate Guarantor, but under Section 95 of the Code can be filed by Financial Creditor only against personal guarantor of Corporate Debtor, which is already been undergoing CIRP or is in Liquidation. 18. In view of the judgement of Hon ble NCLAT in State Bank of India Vs. Atheena Energy Ventures Limited and the law as entailed in section 60(2), this bench is of the considered view that an application for insolvency for resolution against the personal guarantor is not maintainable unless that CIRP/liquidation is ongoing against the Corporate Debtor. It is further obser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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