TMI Blog2021 (1) TMI 1234X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Supreme Court in Lalit Kumar Jain Vs. Union of India and Ors [ 2021 (5) TMI 743 - SUPREME COURT ] upheld the constitutional validity of the notification by which Section 2(e) was inserted. It was categorically held that personal guarantors, in view of their intrinsic connection with Corporate Debtors shall be dealt differently through same adjudicating process as Corporate Debtor. The impugned notification, similarly inter alia makes the provisions of the Code applicable in respect of Personal Guarantors to Corporate Debtors, as another such category of persons to whom the Code has been extended. Moreover, the State Bank of India who filed the IBAs under consideration already filed CP(IB)/43/KOB/2021 which is pending adjudication. The Hon ble NCLAT only set aside the Order passed in favour of the Union Bank of India against the Corporate Debtor. The Guarantors of the Corporate Debtor may be the same in both Insolvency Applications, but as per the decision of the Hon ble Supreme Court, the Personal Guarantors are different entities and the Creditors may initiate Insolvency Resolution Process against them. In a situation where Application(s) in relation to the Corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2020, on 06th October 2021 admitting the application filed against the Applicants/ Personal Guarantors and consequently pass an order rejecting the report if any filed by the learned Resolution Professional in pursuance of the above order. IA(IBC)/172/KOB/2021 IN IBA/45/KOB/2020 a) To declare that pursuant to the Hon ble NCLAT vide its order and decision dated 09th September 2021 setting aside of the Order dated 15th October 2020 commencing Corporate Insolvency Resolution Process in the Corporate Debtor, the order of this Adjudicating Authority dated 15th October 2020 has become non-est in the eyes of law and all proceedings initiated under the same have also become infructuous; b) To recall the order passed by this Tribunal in IBA/45/KOB/2020, on 06th October 2021 admitting the application filed against the Applicants/ Personal Guarantors and consequently pass an order rejecting the report if any filed by the learned Resolution Professional in pursuance of the above order. The facts in brief are as under: - 3. The basis for commencement of CIRP against M/s. Green Gateway Leisure Limited was occurred when IBA/01/KOB/2020 filed by the Union Bank of India has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 60(3) says that in order to invoke the jurisdiction of this Tribunal, there must be pending proceedings before the Adjudicating Authority either in the CIRP or liquidation of a Corporate Debtor. The power conferred upon the Adjudicating Authority under Section 60(1) of the IB Code to order Insolvency Resolution Process against personal guarantors to Corporate Debtors is wedded to the existence of either the CIRP or the liquidation proceedings. 9. It is stated that the State Bank of India filed the IBAs relying the order of this Tribunal dated 15th October, 2020, without which the application under Section 95(1) of the 1B Code could not have been invoked at all. Since the Hon ble NCLAT by its order dated 09th September, 2021 set aside the order passed by this Tribunal, there is no CIRP or Liquidation applications pending for adjudication before this Tribunal. 10. It is also stated that in view of the above order of Hon'ble NCLAT, the Order passed by this Tribunal on 15.10.2020 has become non-est in the eyes of law and that the Order dated 6th October 2021 allowing the IBAs and appointing RP is liable to be recalled duly taking note of the legal effect of the order dated 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the provisions of such special Act; (c) any Limited Liability Partnership incorporated under the Limited Liability Partnership Act, 2008; (d) such other body incorporated under any law for the time being in force, as the Central Government may, by notification, specify in this behalf; 1[***] 2[(e) personal guarantors to corporate debtors; (f) partnership firms and proprietorship firms; and (g) individuals, other than persons referred to in clause (e).] in relation to their insolvency, liquidation, voluntary liquidation or bankruptcy, as the case may be. 14. On the basis of the aforesaid amendment, a debtor may file an application to initiate Insolvency Resolution Process under Section 94 and creditor may apply under Section 95 of the Act under Chapter -II of Part -III of the Code. 15. It is stated by them that either the working Committee Report or the provisions of the Code mandate that initiating CIRP against Corporate Debtor is pre-condition for filing an application under Section 94 and Section 95 of the Code. Section 2(e) is a sperate and distinct category under the Code, by which either creditor or the debtor can independently proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a different interpretation cannot be given contrary to the intention of the legislature. 17. We have heard the learned counsel for the Applicants/ Personal Guarantors as also the learned counsel for the Creditor through video conferencing and have gone through the materials placed on record. It is seen from the records that the Hon ble NCLAT passed an order setting aside the order of admission of CIRP against the Corporate Debtor vide order dated 09.09.2021 granting time to the Corporate Debtor to settle the dues of Union Bank of India within six months, and liberty to proceed with Insolvency Resolution Process against the Corporate Debtor in the event of default. Since the debt of the Respondent/Creditor herein was not cleared they have filed application under Section 7 of IBC before this Tribunal against the Corporate Debtor and the same is now pending before this Tribunal as CP(IB)/43/KOB/2021. Hence, as far as the Creditor SBI is concerned, there is a CIRP pending against the Corporate Debtor. 18. In order to reach a clear picture in the matter, we had gone through the decision of the Hon ble Supreme Court in Lalit Kumar Jain Vs. Union of India and Ors ( LL2021 SC LiveLaw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Corporate Debtor may be the same in both Insolvency Applications, but as per the decision of the Hon ble Supreme Court, the Personal Guarantors are different entities and the Creditors may initiate Insolvency Resolution Process against them. In the Report of RP, it is very clearly stated that he recommends the acceptance of the application filed under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 by the applicant State Bank of India against the Personal Guarantors. 21. Hence, we conclude that 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 Insolvency Resolution Process against the Personal Guarantor of that Corporate Debtor before the NCLT. 22. Therefore, we are of the considered opinion that the Interlocutory Applications filed by the Personal Guarantors of the Corporate Debtor for recalling the Order passed by this Tribunal in IBA/43/KOB/2020, IBA/44/KOB/2020 and IBA/45/KOB/2020 and to reject the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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