TMI Blog2021 (10) TMI 706X X X X Extracts X X X X X X X X Extracts X X X X ..... isdiction over the place where the registered office of a corporate person is located. Hence, in the case herein, there is a situation where various IB applications for initiation of CIR process against the Corporate Debtor are pending - the moment the IB application in relation to Insolvency resolution of the Corporate Debtor is pending before this Adjudicating Authority, the provisions of Section 60(1) get attracted and the jurisdiction to entertain insolvency process against the personal guarantor would, therefore, lie with the NCLT. Thus, in a situation where Application(s) in relation to the Corporate Debtor for initiation of CIRP is pending at National Company Law Tribunal (NCLT) then, initiation of CIRP of the Corporate Debtor is not a prerequisite 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 - List the matter on 11.10.2021. - Company Petition No. (IB)-395(ND)2021 - - - Dated:- 29-9-2021 - Abni Ranjan Kumar Sinha, Member (J) And L.N. Gupta, Member (T) For the Appellant : Astha For the Respondents : Alok Dhir, Varsha Banerjee, Kan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly it had issued a Demand Notice through Speed Post in Form-B on 09.07.2021 to the Personal Guarantor/Respondent, seeking payment of the outstanding/unpaid debt of ₹ 3,58,91,09,333.74/-. The Tracking Report depicting successful delivery of the Demand Notice is annexed on page no. 130-131 of the Petition. The scanned copy of the same is reproduced overleaf: 7. It is submitted by the Applicant that there are multiple IBC proceedings pending against the Corporate Debtor before this Tribunal viz.: IB/360/2020; IB/98/2021; CP(IB)-30/2021; IB/1044/2020; IB/2187/2019; IB/647/2020 and IB/2396/2019. 8. That during the course of final hearing on 03.08.2021, the Ld. Counsel for the Personal Guarantor appeared on the advance notice and opposed the prayer made by the Applicant on the ground of maintainability of the present Application. Both the parties have also filed their written submissions as regards to maintainability of the present petition. 9. It is averred by the Respondent in its written submissions: 1. That the instant written synopsis is being filed on behalf of the Personal Guarantor/Respondent pursuant to Order of this Hon'ble Tribunal dated 03.08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Adjudicating Authority for such personal guarantors to corporate debtors as against the DRT Further, if CIRP/Liquidation is not pending in terms of pendency of a CIRP pursuant to an admission order, then, by virtue of the provisions of Section 179, such personal guarantors being individuals, the jurisdiction to entertain an application for insolvency resolution of such personal guarantors shall lie with the DRT. 10. That further, the Personal Guarantor has placed a diagrammatic chart in his written submissions to convey his understanding regarding jurisdiction, the scanned copy of the which is reproduced below: 11. Thus, the Personal Guarantor has submitted that if the CIRP/Liquidation proceedings against the Corporate Debtor have not commenced, which is the case in the present proceedings, the jurisdiction to entertain an application against the Personal Guarantor shall lie with the DRT, where the Personal Guarantor resides/works for gain. 12. The Personal Guarantor has placed reliance on the decision of Mumbai Bench of NCLT dated 09.07.2021 passed in the matter of Altico Capital India Ltd. Vs. Rajesh Patel Ors. in I.A. No. 1062/2021 in C.P. No. 293/2020. The Ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intimate connection between such individuals and corporate entities to whom they stood guarantee, as well as the possibility of two separate processes being carried on in different forums, with its attendant uncertain outcomes, led to carving out personal guarantors as a separate species of individuals, for whom the Adjudicating authority was common with the corporate debtor to whom they had stood guarantee. The fact that the process of insolvency in Part III is to be applied to individuals, whereas the process in relation to corporate debtors, set out in Part II is to be applied to such corporate persons, does not lead to incongruity. On the other hand, there appear to be sound reasons why the forum for adjudicating insolvency processes - the provisions of which are disparate-is to be common, i.e. through the NCLT. As was emphasized during the hearing, the NCLT would be able to consider the whole picture, as it were, about the nature of the assets available, either during the corporate debtor's insolvency process, or even later; this would facilitate the CoC in framing realistic plans, keeping in mind the prospect of realizing some part of the creditors' dues from persona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 60 can also be drawn from a bare perusal of the judgment passed by the Hon'ble NCLAT on 08.01.2019 in the matter of Ferro Alloys Corporation Limited vs. Rural Electrification Corporation Limited, [Company Appeal (AT) (Insolvency) No. 92 of 2017) which was upheld by the Hon'ble Supreme Court vide order dated 11.02.2019, wherein the Hon'ble NCLAT has categorically held that it is not necessary to initiate CIRP process against the principal borrower before initiating CIRP against the Corporate Guarantor. 17. It is added by the Applicant that the Hon'ble NCLAT, while passing the aforesaid Judgment relied upon the landmark judgment in the matter of Bank of Bihar Limited vs. Dr. Damodar Prasad Anr. (1969) 1 SCR 620, wherein the Hon'ble Supreme Court held that under Section 128 of the Indian Contract Act, save as provided in the contract, the liability of the surety is co-extensive with that of the principal debtor. The surety became thus liable to pay the entire amount. His liability is immediate. It cannot be deferred until the creditor exhausted his remedies against the principal debtor. Further the Hon'ble Supreme Court held that the Financial Creditor h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n . 21. From the plain reading of Section 179(1) of IBC, 2016, it is amply clear that the provision is subject to Section 60 of the IBC, 2016, which implies that whenever Section 60 is attracted, the provision of Section 179(1) of IBC, 2016 shall not be applicable and the jurisdiction shall vest with NCLT. 22. Now, in order to see when the provision of Section 179(1) is not applicable, it is necessary to visit Section 60(2) and (3) of IBC, 2016- (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 registered office of a corporate person is located. (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Thus if A, an individual is the subject of a resolution process before the DRT and he has furnished a personal guarantee for a debt owed by a company B, in the event a resolution process is initiated against B in an NCLT, the provision results in transferring the proceedings going on against A in the DRT to NCLT. 24. That the provisions of the Personal Guarantor were notified by the Central Government vide Gazette Notification dated 15.11.2019 by virtue of which the Insolvency and Bankruptcy (Application to Adjudicating Authority for Bankruptcy Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (hereinafter referred as 'Personal Guarantor Rules 2019') came into effect from 01.12.2019. 25. At this stage, we would like to visit the definition of 'Guarantor' as provided in the Personal Guarantor Rules 2019. As per Rule 3(f) of the Insolvency Bankruptcy (Application to Adjudicating Authority for Bankruptcy Process for Personal Guarantors to Corporate Debtors) Rules, 2019, the term guarantor has been defined as: (f) guarantor means a debtor who is a personal guarantor to a corporate debtor and in respect of whom guarantee has been inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Debtor in the NCLT to initiate CIR process, which are pending adjudication before this Adjudicating Authority. As per the details furnished by the Applicant, these applications are registered as IB/360/2020; IB/98/2021; CP (IB) 30/2021; IB/1044/2020; IB/2187/2019; IB/647/2020 and IB/2396/2019. 31. While going through the Section 60(1), we have seen that the Adjudicating Authority, in relation to the insolvency resolution and liquidation for corporate persons including corporate debtors and personal guarantors thereof shall be the NCLT having territorial jurisdiction over the place where the registered office of a corporate person is located. Hence, in the case herein, there is a situation where various IB applications for initiation of CIR process against the Corporate Debtor are pending. In our considered view, the moment the IB application in relation to Insolvency resolution of the Corporate Debtor is pending before this Adjudicating Authority, the provisions of Section 60(1) get attracted and the jurisdiction to entertain insolvency process against the personal guarantor would, therefore, lie with the NCLT. 32. In the light of the aforesaid facts, we would like to summa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) The Creditors of the personal guarantor shall not initiate any legal action or proceedings in respect of any debt. This shall, however, not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. 36. The Applicant/Creditor has proposed the name of Mr. Rakesh Prasad Khandelwal, Insolvency Professional, for appointment as Resolution Professional, who has accepted to be appointed and declared that he is eligible to be appointed and that no disciplinary proceedings are pending against him. Therefore, Mr. Rakesh Prasad Khandelwal is appointed as the Resolution Professional in exercise of the powers conferred under Section 97 of the IBC, 2016 on this Authority subject to the Regulation 4(1) and (2) of the Insolvency and bankruptcy Board of India (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019. The details of the Resolution Professional are as under: 37. Mr. Rakesh Prasad Khandelwal, Resolution Professional (RP) shall exercise all the powers as enumerated under Section 99 of the IBC, 2016 read with the Rules made thereunder. The RP is directed to examine th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
