TMI Blog2022 (2) TMI 1295X X X X Extracts X X X X X X X X Extracts X X X X ..... [ 2021 (3) TMI 340 - SUPREME COURT] , patently this Tribunal has no jurisdiction to entertain this petition - it is determined that the applicant personal guarantor herein, who is a stranger to the insolvency and bankruptcy proceedings pending between the financial creditor and corporate debtor before this Tribunal, cannot invoke section 60(5) (c), IBC, 2016, to file this present petition, which therefore is neither maintainable nor sustainable before this Tribunal. Whether the notification dated 15.11.2019 mandates that any / all proceeding /s against the personnel guarantor of corporate debtor must be initiated only under the provisions of the IBC, 2016? - HELD THAT:- The irresistible conclusion is that after the aforesaid notification S.O.4126(E) dated 15.11.2019, only if any insolvency proceeding is to be initiated against the personal guarantor of corporate debtor it must be only under IBC,2016, not under the provisions of the PTA and PIA Acts, and the said notification does not in any manner whatsoever prohibit the financial creditor to proceed against the person al guarantor of corporate debtor by instituting recovery proceedings permissible under any other existing an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial creditor prior to the expiry of moratorium imposed in terms of liquidation order under Section 33, IBC, 2016, is erroneous. Further, the above attempt to recover the debt by the financial creditor is in contravention of Section 238, IBC,2016. Hence, the applicant has filed this petition under Section 60(5), IBC,2016, seeking to quash the proceedings of auction and possession of the immoveable property by the financial creditor, and further restraining it from dealing with it prior to the completion of liquidation process of the corporate debtor. The reply of the 1 st respondent financial creditor in brief are: - 4. This petition could not be entertained since the financial creditor 1 st respondent being the mortgagee / secured creditor has absolute right to recover its dues from any such secured asset/s. The personnel guarantor to the corporate debtor cannot under any stretch of imagination be made a party to the liquidation proceedings initiated against the corporate debtor, There is neither any bar for proceeding against the properties of the personal guarantor during pendency of liquidation proceeding against the corporate debtor nor does the provisions under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estrain the appellant from terminating the PPA, However, our decision is premised upon a recognition of the centrality of the PPA in the present case to the success of the CIRP, in the factual matrix of this case, since it is the sole contract for the sale of electricity which was entered into by the Corporate Debtor. In doing so, we reiterate that the NCLT would have been empowered to set aside the termination of the PPA in this case because the termination took place solely on the ground of insolvency, The jurisdiction of the NCLT under Section 60(5)(c) of the IBC cannot be invoked in matters where a termination may take place on grounds unrelated to the insolvency of the corporate debtor, 7. However, the Hon'ble Apex Court in the aforesaid Judgment has also rightly cautioned that the NCLT and NCLAT must ensure that they do not usurp the legitimate jurisdiction of other courts, tribunals and fora when the dispute is one, which does not arise solely from or relate to the insolvency of the corporate debtor. 8. It is comprehended from a plain reading of Section 60(5)(c) that the NCLT has jurisdiction only if the dispute has arisen solely from or which relates to the insol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted only under the IBC since Part III of IBC, 2016, was made applicable to the personal guarantors of the corporate debtors vide the notification S.O.4126(E) dated 15.11.2019 from the Ministry of Corporate Affairs, which reads as follows: - MINISTRY OF CORPORATE AFFAIRS NOTIFICATION New Delhi, the 15 th November, 2019 S.O. 4126(E), -In exercise of the powers conferred by sub-section (3) of section 1 of the Insolvency and Bankruptcy Code, 2016 (31 of 2076), the Central Government hereby appoints the 1 st 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 section239; (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. [F. No. 30 /21/2018-Insolvency Section] GYANESHWAR KUMAR SINGH, Jt, Secy. Albeit, the above notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with the Presidency-Town Insolvency Act, 1909, or the Provincial Insolvency Act, 1920, as the case may be. 14. In fact, the respondent relies upon the V. Ramakrishnan case supra in support of its argument that pendency of liquidation proceeding against the corporate debtor under IBC, 2016, will not bar the proceedings against the personnel guarantcr of corporate debtor under the SARFAESI Act, 2002. It is worthful to see Para 125 (in down loaded copy para 111) in the Lalit case supra wherein it is held that: - In view of the above discussion, it is held that approval of a resolution plan does not ipso facto discharge a personal guarantor (of a corporate debtor) of her or his liabilities under the contract of guarantee and discharge of principal borrower from debt owed by it to its creditor by an insolvency process i.e. by operation of law or due to liquidation or insolvency proceeding does not absolve the surety / guarantor of his or her liability, which arises out of an independent contract. 15. The Judgment in the Lalit Kumar Jain case supra, when read as a whole, does not support the applicant, in any manner whatsoever, since its narrow interpretation by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e debt, but an insolvency proceeding is in respect of the debtor. The order in a recovery suit is in personam, but an order in an insolvency proceeding is in rem. The insolvency proceedings can be initiated only when the debtor is unable to pay the debt owing to financial crunch meaning insolvency, and when it does not have the money to pay its debts or when the total debt exceeds its total assets. Thus, it is only appropriate to institute recovery proceedings, when the debtor is reluctant to pay the debt albeit solvent with sufficient means to pay the debt. 20. In these circumstances, the irresistible conclusion is that after the aforesaid notification S.O.4126(E) dated 15.11.2019, only if any insolvency proceeding is to be initiated against the personal guarantor of corporate debtor it must be only under IBC,2016, not under the provisions of the PTA and PIA Acts, and the said notification does not in any manner whatsoever prohibit the financial creditor to proceed against the person al guarantor of corporate debtor by instituting recovery proceedings permissible under any other existing and applicable law. Thus, this point is answered. Point No.3:- 21. The responde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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