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TMI Blog2022 (6) TMI 718X X X X Extracts X X X X X X X X Extracts X X X X ..... of India, to the Corporate Debtor, M/s. Scotts Garments Limited (hereinafter called as 'Corporate Debtor'). 2. It is stated that the Financial Creditor had executed various credit facilities in favour of the Corporate Debtor for which the Respondent stood as the Personal Guarantor. However the Corporate Debtor failed to repay the credit facilities extended by the Applicant for which the Corporate Debtor was classified as Non-Performing Asset on 18.03.2018. It is further stated that, the Operational Creditor of the Corporate Debtor namely M/s. Saravana Distributors had initiated an application under Section 9 of IBC, 2016 r/w. Rule 6 of Insolvency and Bankruptcy (Application to Adjudicating Authority) seeking Corporate Insolvency Resolution Process against the Corporate Debtor, numbered as CP(IB) No. 68/BB/2018 which was admitted on 13.08.2018 and moratorium was imposed by this Tribunal. It is further submitted that in the Corporate Insolvency Resolution Proceedings, a Resolution Plan was submitted by a Resolution Applicant M/s. Lenin Art Private Limited, and this Tribunal had approved the Resolution Plan vide Order dated 16.09.2019. However, it is submitted that the Resolu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmendation of accepting the present application as the Personal Guarantor has not repaid the debt due to the Creditor. 5. From the report of the Resolution Professional there does not appear any request for issuance of any direction for the purpose of conducting negotiations between the Financial Creditor and the Personal Guarantor for arriving at the repayment plan. 6. The Respondent/Personal Guarantor has filed its objection to the RP Report vide Diary No. 656. On 23.02.2022, the Learned Counsel for the respondent after arguing for a while seeks permission to file written submission and to place certain decisions in support of the submission. And the same is allowed by this tribunal, for which the respondent has filed written arguments vide Diary No. 969 dated 10.03.2022. 7. The respondent in her written argument has submitted that the Corporate Debtor, M/s. Scotts Garments Ltd. has successfully undergone CIRP in CP(IB) No. 68/BB/2018. The Resolution Applicant submits that the Resolution plan was approved by this Tribunal vide order dated 16.09.2019 and on approval of the resolution plan all the pre-existing debts of the corporate debtors stands extinguished and there exists n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld liable only to the extent contemplated in the approved Resolution Plan. It is submitted Section 134 of the Indian Contract Act, 1872 provides that a surety is discharged when creditor releases the principal debtor resulting in the discharge of the principal debtor. It is submitted that this principle be applied pro-rata when a part of the debt is discharged in the hands of the principal debtor. 11. The Applicant/Financial Creditor vide Diary No. 984 has filed Rejoinder in reply to the statement of objections filed by the respondent. The Learned Counsel for the Applicant submits that the liability of the Guarantor is coextensive with that of the borrower. The creditor can proceed against the principal debtor or against the sureties, unless it is otherwise provided in the contract. The applicant relied on the judgment of Hon'ble Supreme Court of India in the matter of "Industrial Finance Corporation of India Ltd., v. Cannanore Blending & Weaving Mills Ltd"., wherein it is held that the liability of the Surety is co-extensive with that of the Borrower and discharge of the Principal Debtor by operation of Law does not discharge the Guarantor. The Applicant also relied on the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absolved by the acceptance of the Resolution Plan or by liquidation of the Corporate Debtor as contended by the Respondent. The Applicant further cited the judgment of the Hon'ble Apex Court in the matter of "Maharashtra State Electricity Board v. Official Liquidator"., AIR 1982 SC 1497 wherein it is held that a discharge which the principal debtor may secure by operation of law in bankruptcy or in liquidation proceedings in the case of a Company does not absolve the surety of his liability. The Apex Court has considered the interplay of Sec. 128 and 134 of the Contract Act and went to hold that, the fact that the Company which is the Principal Debtor has gone into liquidation would not have any effect on the liability of the Guarantor. It is submitted by the Applicant that the liability of the Respondent will continue even after the Resolution Plan has been sanctioned by the Adjudicating Authority. 14. It is further submitted that the pendency of any application before the Debt Recovery Tribunal will not affect any proceeding before this Hon'ble Tribunal under I & B Code 2016. It is submitted that with the admission of this application, the moratorium will set in and all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial sector regulator. 20. The Resolution Professional viz., Mr. Hem Chandra, who has been appointed under section 97 vide Order dated 02.12.2021, is directed to cause a public notice published on behalf of the Adjudicating Authority within 7 days of uploading of this Order on the website of the NCLT, Bengaluru inviting claims from all Creditors, who shall register their claims as provided under Section 103 within 21 days of such issuance. The notice shall contain the necessary information as provided under Section 102(2) of IBC, 2016. The publication of notice shall be made in newspaper, one in English and other in Vernacular which have wide circulation in the State where the Corporate Debtor and Personal Guarantor resides. The Resolution Professional shall furnish two copies of the notice to the Registry. 21. The Resolution Professional in exercise of the powers conferred under Section 104 of IBC, 2016 shall prepare a list of creditors within 30 days from the date of notice. The debtor shall prepare a repayment plan in consultation with the Resolution Professional as provided under Section 105 of IBC, 2016 which shall include provisions for payment of fee to the Resolution Profe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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