TMI Blog2022 (8) TMI 478X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in Lalit Kumar Jain v. Union of India [ 2021 (5) TMI 743 - SUPREME COURT ], where the Supreme Court has, in very clear terms, held that discharge of the corporate debtor from a debt owed by it to its creditors, by way of an involuntary process such as insolvency proceedings, does not absolve the guarantor of its liability since it arises out of an independent contract. Thus, the passing of a resolution plan does not ipso facto discharge the personal guarantor. Non-implementation of the resolution plan - HELD THAT:- The aggrieved party is actually Respondent No. 1, who has not been paid in terms of the resolution plan approved by NCLT. As pointed out by the counsel for Respondent No. 1, there has been a default on the part of the resolution applicant in payment of instalments, and as per the counter affidavit, 15 instalments amounting to Rs. 4,53,60,000/- remain pending. It is therefore for Respondent No. 1 to now take action for recovery of its dues from the resolution applicant, as it may deem fit, utilizing any remedy available to it under law. Respondent No. 1 certainly has the right to proceed against the collateral securities for recovery of its dues, which ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the National Company Law Tribunal, New Delhi Bench [ NCLT ]. A resolution plan, accepted by the Committee of Creditors [ CoC ] was approved by the NCLT vide approval Order dated 20th February 2020 [ Approval Order ]. Under the approved resolution plan, the resolution applicant Apex Heights Pvt. Ltd. [ Respondent No. 2 ], was to make payment of Rs. 10,35,00,000/- to Respondent No. 1 (Rs. 03 crores in FDR on the date of the Approval Order, and the remaining in 24 equal instalments), but it defaulted. 3. Thereafter, proceedings were initiated by Respondent No. 1 under Section 13(4) of the SARFAESI Act, and in furtherance thereto, proceedings were also instituted under Section 14 of the SARFAESI Act, for taking possession of the security offered by the Guarantor being the dwelling unit of the Petitioner as well as for appointment of a receiver. The Petitioner is aggrieved by such action of Respondent No. 1. PETITIONER S SUBMISSIONS 4. Mr. Mrinal Harsh Vardhan, counsel for the Petitioner, has contended as follows: 4.1. The impugned SARFAESI action has been initiated with the sole intent to recover amounts in excess of the resolution plan, and is thus, ex facie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent No. 1 dated 02nd September 2021 under Section 13(4) of the SARFAESI Act. Thereafter, proceedings under Section 14 of the SARFAESI Act were launched by Respondent No. 1 before the Chief Metropolitan Magistrate, Karkardooma District Court, Delhi. Misc. Crl. 101 of 2021 titled Canara Bank v. Maple Realcon Pvt. Ltd. etc. Initiation of SARFAESI proceedings on the basis of the aforenoted notices issued before and after the Approval Order respectively, is bad in law. In fact, the Petitioner had filed an application under Section 17 of the SARFAESI Act before the DRT, Lucknow Bench in S.A. No. 404 of 2021 against the issuance of the same by Respondent No. 1. 4.4. Respondent No. 1 has not declared the restructured loan as a non-performing asset, in order to initiate any legal proceedings under Section 13 of the SARFAESI Act. The bank instead relied upon the default made by the corporate debtor prior to the Approval Order (as noted above). The alleged default is unrelated to the new management of the corporate debtor and therefore, the entire premise for proceedings under the SARFAESI Act is illegal and liable to be quashed. 4.5. Section 31 of IBC deals with the approval ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the resolution applicant to act strictly as per the approved resolution plan. 5.3. Irrespective, the Petitioner, as a guarantor, is not discharged of its liability on account of sanction and approval of a resolution plan by the NCLT. For this, reliance is placed on the judgment of the Supreme Court in State Bank of India v. V. Ramakrishnan and Anr. 2018 SCC Online SC 963., and Lalit Kumar Jain v. Union of India and Ors. 2021 SCC Online SC 396. 5.4. While the amount of Rs. 10,35,18,740/- (including interest due as on the date of commencement of insolvency) was admitted for payment by Respondent No. 2 under the approved resolution plan, the total outstanding that Respondent No. 1 is entitled to receive is much more, and accordingly, it has lawfully invoked its remedy against the personal guarantors and issued notices under SARFAESI Act. As on 28th February 2022, the total outstanding has been calculated as Rs. 6,56,00,000/-. This right of Respondent No. 1 against collateral securities which is sought to be enforced by it, for recover of its dues, is independent of the plan which stood approved by the NCLT vide the Approval Order. ANALYSIS 6. The counsels have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refused to interfere with proceedings initiated to enforce personal guarantees by financial creditors; it was observed as follows: 106. Following this judgment in V. Ramakrishnan case [SBI v. V. Ramakrishnan, (2018) 17 SCC 394], it is difficult to accept Shri Rohatgi's argument that that part of the resolution plan which states that the claims of the guarantor on account of subrogation shall be extinguished, cannot be applied to the guarantees furnished by the erstwhile Directors of the corporate debtor. So far as the present case is concerned, we hasten to add that we are saying nothing which may affect the pending litigation on account of invocation of these guarantees. However, NCLAT judgment being contrary to Section 31(1) of the Code and this Court s judgment in V. Ramakrishnan case [SBI v. V. Ramakrishnan, (2018) 17 SCC 394], is set aside. 108. It is therefore, clear that the sanction of a resolution plan and finality imparted to it by Section 31 does not per se operate as a discharge of the guarantor s liability. As to the nature and extent of the liability, much would depend on the terms of the guarantee itself. However, this court has indicated, time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra) the UK Supreme Court reviewed a large number of previous authorities on the concept of double proof, i.e. recovery from guarantors in the context of insolvency proceedings. The court held that: The function of the rule is not to prevent a double proof of the same debt against two separate estates (that is what insolvency practitioners call double dip ). The rule prevents a double proof of what is in substance the same debt being made against the same estate, leading to the payment of a double dividend out of one estate. It is for that reason sometimes called the rule against double dividend. In the simplest case of suretyship (where the surety has neither given nor been provided with security, and has an unlimited liability) there is a triangle of rights and liabilities between the principal debtor (PD), the surety (S) and the creditor (C). PD has the primary obligation to C and a secondary obligation to indemnify S if and so far as S discharges PD's liability, but if PD is insolvent S may not enforce that right in competition with C. S has an obligation to C to answer for PD's liability, and the secondary right of obtaining an indemnity from PD. C can (after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed above), 15 instalments amounting to Rs. 4,53,60,000/- remain pending. It is therefore for Respondent No. 1 to now take action for recovery of its dues from the resolution applicant, as it may deem fit, utilizing any remedy available to it under law. 11. We must also take note of Section 33(3) of the IBC, which envisages a liquidation process in the event of contravention of a resolution plan. The same reads as under: Where the resolution plan approved by the Adjudicating Authority is contravened by the concerned corporate debtor, any person other than the corporate debtor, whose interests are prejudicially affected by such contravention, may make an application to the Adjudicating Authority for a liquidation order as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1). 12. Under the afore-noted provision, Respondent No. 1 certainly has the right to proceed against the collateral securities for recovery of its dues - which are independent of the resolution plan approved by the NCLT. If the resolution plan approved by the Adjudicating Authority is contravened by the concerned corporate debtor, any person other than the corporate debtor, who ..... X X X X Extracts X X X X X X X X Extracts X X X X
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