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TMI Blog2021 (1) TMI 1234X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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/44/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. IA(IBC)/171/KOB/2021 IN IBA/43/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/43/KOB/2020, on 06th October 2021 admitting the application filed against the Applicants/ Personal Guarantors and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in IBA 43/KOB/2020 filed by the State Bank of India invoked the personal guarantee granted by Mr.Zaheer E.N. and in IBA 44/KOB/2020 filed by the State Bank of India invoked the personal guarantee granted by Mr.E.lqbal. 6. After filing of the aforesaid IBAs, this Tribunal vide Order dated 06.10.2021 allowed the IBAs and appointed a Resolution Professional, who filed a report recommending 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. 7. It is stated that under Section 95 of the Insolvency and Bankruptcy Code, 2016 read with Section 2(e) of the IB Code read with Notification SO No.4126(E) dated 15th November 2019 invoking the jurisdiction of this Tribunal as against the personal guarantors of Corporate Debtor was brought into force. To that extend, Section 60(1), 60(2).60(3) also got activated as against personal guarantors to Corporate Debtors. 8. It is stated by the Applicants that the provisions of Section 60(2) and Section 60(3) says that in order to invoke the jurisdiction of this Tribunal, there must be pending proceedings before the Adjudicating Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16 (31 of 2016), the Central Government hereby appoints the 1st day of December, 2019 as the date on which the following provisions of the said Code only in so far as they relate to personal guarantors to corporate debtors, shall come into force:― (1) Clause (e) of section 2; (2) section 78 (except with regard to fresh start process) and section 79; (3) sections 94 to 187 [both inclusive]; (4) clause (g) to clause (i) of sub-section (2) of section 239; (5) clause (m) to clause (zc) of sub-section (2) of section 239; (6) clause (zn) to clause (zs) of sub-section (2) of section 240; and (7) section 249." 13. In order to understood the amendment Section 2 of IBC is quoted below: - Section 2: Application. *2. The provisions of this Code shall apply to- (a) any company incorporated under the Companies Act, 2013 or under any previous company law; (b) any other company governed by any special Act for the time being in force, except in so far as the said provisions are inconsistent 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 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brought, legislature was very clear that not to impose any pre-condition to initiate CIRP against Corporate Debtor before invoking application under Part-III. It is also stated that under Sub-Regulation 1(e) of Regulation 4 of IBBI (Insolvency Resolution Process for personal guarantor to Corporate Debtors) Regulations, 2019 also emphasis the above submission when legislature choose to have different insolvency professional for conducting CIRP under Part II and Resolution/bankruptcy Process under Part-III. The Regulation states that an Insolvency Resolution Professional, who is an IRP and RP of the Corporate Debtor cannot be a Resolution Professional for personal guarantor to the Corporate Debtor. Therefore, the statute is plain and unambiguous that personal guarantor to Corporate Debtor under Sub Section (e) of Section 2 is separate and distinct category and has an independent existence like applications of the Code to other categories under Section 2. When the statute is clear 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 Cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The exercise of power in issuing the impugned notification under Section 1(3) is therefore, not ultra vires; the notification is valid." 19. From the above, it is clear that the Hon'ble 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. 20. 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 Res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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