9911796707
TMI Blog2021 (10) TMI 706X X X X Extracts X X X X X X X X Extracts X X X X ..... incorporated under the erstwhile Companies Act, 1956. The Applicant/Creditor Company is in the business of Housing Finance. It is stated by the Applicant that a Loan Agreement dated 10.03.2017 was executed by and between the Applicant/Creditor and the Corporate Debtor herein along with its co-borrowers, namely, Sarv Realtors Private Limited and ASP Sarin Realty Private Limited. 3. It is stated by the Applicant that in order to secure the aforesaid loan amount, an irrevocable Deed of Guarantee dated 10.03.2017 was executed by the Personal Guarantor herein, in favour of the Financial Creditor, in terms of which the Guarantor unconditionally and absolutely agreed to pay, without demur, all the amounts payable by the Corporate Debtor under the Loan Agreement dated 10.03.2017. 4. It is further stated by the Applicant that the Corporate Debtor committed breach of the Loan Agreement dated 10.03.2017, inter alia, by making defaults in payments of the monthly instalments due and payable to the Financial Creditor on various dates including but not limited to 30.04.2019, 31.05.2019, 30.06.2019, 31.07.2019, 31.08.2019, 30.09.2019 and 31.10.2019. In the circumstances, it is added that the Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of the Code shall be applicable to "personal guarantors to corporate debtors" and "individuals, other than persons referred to in clause (e)", thereby meaning individuals other than personal guarantors. 3. The proceedings under the Code for these classes are also different in as much as Personal Guarantor to a Corporate Debtor proceedings are a part of Part - II proceedings whereas insolvency resolution of individuals other than personal guarantors to corporate debtors fall under Part - III. Section 179 envisages the Debt Recovery Tribunal to be the Adjudicating Authority to individuals however, this section, i.e., Section 179 is subject to the provisions of Section 60 which defines the National Company Law Tribunal as the Adjudicating Authority in case of personal guarantors to corporate debtors. The provisions of Section 60 of the Code are clear and unequivocal as the same clearly defines the process to be carried on for insolvency resolution of personal guarantors to corporate debtors while also specifying the Adjudicating Authority in case of Section 2(e) individuals depending on the stages of resolution for each distinct category. Part - II and Part - III of the Code ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 application for resolution process or bankruptcy of the personal guarantor to the corporate debtor shall be filed with the concerned NCLT seized of the resolution process or liquidation. Therefore, the Adjudicating Authority for personal guarantors will be the NCLT, if a parallel resolution process or liquidation process is pending in respect of a corporate debtor for whom the guarantee is given. The same logic prevails, under Section 60(3), when any insolvency or bankruptcy proceeding pending against the personal guarantor in a court or tribunal and a resolution process or liquidation is initiated against the corporate debtor. Thus if A, an individual is the subject of a resolution process before the DRT and he has furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ond Amendment) Act, 2018] [effective from 06.06.2018]. The Applicant has submitted that a bare perusal of Section 60 of the Code shows that this Section has following three limbs/situations, under which an Application can be entertained before this Adjudicating Authority: "A) Section 60(1) deals with the situation where the Adjudicating Authority will be NCLT having territorial jurisdiction over the place where the registered office of the corporate person is located. {fresh filing} B) Whereas Section 60(2) deals with a situation where, the Adjudicating Authority would be NCLT where CIRP or liquidation proceedings of a Corporate Debtor is pending. {pending CIRP against CD} C) Section 60 which deals with the situation where the Adjudicating Authority would be NCLT which has seized of the matter against the Corporate Debtor and the insolvency resolution process or liquidation or bankruptcy proceeding is already pending against the Corporate Guarantor or Personal Guarantor in any Court or Tribunal shall be transferred to such NCLT dealing with CIRP or liquidation process of such Corporate Debtor. {Transfer}" 16. It is further submitted by the Applicant that all the aforesaid th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kruptcy of personal guarantors of corporate debtors shall be filed before the NCLT, where proceedings relating to corporate debtors are pending.......". It is contended by the Applicant that it is clear from the aforesaid analysis that the Parliamentary intent was to treat the personal guarantor differently from other categories of individuals. 19. After hearing submissions of both the parties, perusing the documents placed on record and written submissions of the parties, this Bench is of the view that the issue which needs adjudication is that: "Whether initiation of the Corporate Insolvency Resolution Process of the Corporate Debtor is a prerequisite for maintainability of an application under Section 95 of the IBC, 2016 filed for initiating IR Process of the Personal Guarantor of that Corporate Debtor before the National Company Law Tribunal?" 20. That to decide this issue, it is necessary to check as to when the DRT can entertain an application under the IBC. Hence, we refer to the contents of Section 179(1) of IBC, 2016, which are reproduced below: "179. Adjudicating Authority for individuals and partnership firms.- (1) Subject to the provisions of section 60, the Adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess or Liquidation process has not been initiated. The same can be inferred from the words "in relation to" insolvency resolution and liquidation for corporate persons, which includes the Pre-CIRP Period. b) That Section 60(2) depicts a situation, where the Corporate Insolvency Resolution Process or Liquidation process is already initiated and pending. The same can be inferred from the words "is pending". Further, the Hon'ble Supreme Court in the matter of Lalit Kumar Jain Vs. Union of India & Ors., Transferred Case (Civil) No. 245/2020 dated 21.05.2021, has interpreted Section 60(2) as: "95. ......... Section 60(2) prescribes that in the event of an ongoing resolution process or liquidation process against a corporate debtor, an application for resolution process or bankruptcy of the personal guarantor to the corporate debtor shall be filed with the concerned NCLT seized of the resolution process or liquidation..." c) That Section 60(3) deals with the provision of transfer of proceedings from DRT to NCLT in case the CIR Process and Liquidation is pending against the Corporate Debtor. The same has been summarized by the Hon'ble Supreme Court in the matter of Lalit Kum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 2 of the Companies Act, 2013 (18 of 2013), a limited liability partnership, as defined in clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2019), or any other person incorporated with limited liability under any law for the time being in force but shall not include any financial service provider; 29. Now, we examine the case herein in the light of the aforesaid definitions given in the law. The Personal Guarantor herein has given the guarantee in respect of the loan availed by M/s. Supertech Ltd. to the Applicant/PNB Housing Finance Ltd. That the main argument of the Respondent/Personal Guarantor is that to initiate IR Process against the Personal Guarantor before this Adjudicating Authority (NCLT), it is necessary that the Corporate Debtor should be under CIR Process or Liquidation, which is not the case in the present matter. We observe that Rule 3(f) of the Personal Guarantor Rules 2019 (Supra), which defines the term 'Guarantor', nowhere stipulates that the Corporate Debtor shall be under CIR Process or Liquidation. Hence, the Personal Guarantor herein, is deemed to have been covered under the definition of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erequisite for maintainability of an application under Section 95 of the IBC, 2016 filed for initiating IR Process against the Personal Guarantor of that Corporate Debtor before the NCLT. 34. The Applicant has contended in its Application annexed with documents that the Personal guarantor/debtor has committed prima facie default in making repayment of the loan alongwith the interest to the Applicant, for which he has given the personal guarantee to the Applicant on behalf of the Corporate Debtor. Hence, we are inclined to proceed in the matter in accordance with the law. As regards, the issue of limited notice to the personal guarantor as held by the Hon'ble NCLAT in the matter of Ravi Ajit Kulkarni V. State Bank of India in Company Appeal (AT) (Insolvency) No. 316 of 2021 vide its judgment dated 12.08.2021, since the Personal Guarantor has already caused appearance on the advance notice, there is no need for issuing further notice. 35. It is, therefore, made known to everyone that on filing this Application by the Applicant/Creditor, the interim-moratorium commences as stipulated under Section 96(1)(a) in relation to all the debts of the personal guarantor and shall cease to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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