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TMI Blog2023 (8) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... icating Authority' / 'Tribunal', while passing the 'impugned order', in CP (IB) No. 335 / 95 / HDB / 2020 (Filed by the 1st Respondent / Financial Creditor / Petitioner), at Paragraph Nos. 16 to 22, had observed the following: 16. "A plain reading of Section 179 supra, reveals that Section 179 itself is "subject to Section 60" and DRT is the Adjudicating Authority for insolvency resolution for all other categories of individuals and partnership firms. 17. That apart Hon'ble Supreme Court of India in re: Lalit Kumar Jain vs Union of India & Ors has categorically held as under:- "There is sufficient indication in the Code- by Section 2(e), Section 5(22), Section 60 and Section 179 indicating that personal guarantors, though forming part of the larger grouping of individuals, were to be, in view of their intrinsic connection with corporate debtors, dealt with differently, through the same adjudicatory process and by the same forum (though not insolvency provisions) as such corporate debtors". 18. In so far as the Ld. Counsel for the Personal Guarantor that by virtue of Sub-Section (4) of Section 60 of IBC, 2016, the jurisdiction of the NCLT in respect of matters relating to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including Corporate Debtors and Personal Guarantors as provided under sub-section (1) of Section 60. Therefore, in the light of the discussion as above, we hereby reject the contention of the Ld. Counsel for the Personal Guarantor that this Tribunal has no jurisdiction to try this Company Petition. The Point is answered accordingly." and admitted the 'Petition', under Section 95 of the I & B Code, 2016, and appointed '2nd Respondent, as a 'Resolution Professional', etc. Appellant 's Submissions: 3. Assailing the correctness, validity, propriety and legality of the 'impugned order', dated 21.07.2022, passed by the 'Adjudicating Authority' ('National Company Law Tribunal', Bench - I, Hyderabad) in CP (IB) No. 335 / 95 / HDB / 2020 (Filed by the 1st Respondent / Financial Creditor / Petitioner, under Section 95 of the I & B Code, 2016, read with Rule 7 (2) of I & B ('Application to Adjudicating Authority for Insolvency Process for Personal Guarantors to Corporate Debtors') Rules, 2019, the Learned Counsel for the Appellant / 1st Respondent / Personal Guarantor, submits that the 'Appellant', is a 'Personal Guarantor' of 'GATI Infrastructure Bhasmey Power Pvt. Ltd.' (referred to as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... '. 9. The Learned Counsel for the Appellant, takes a stand that Section 60 (1) of the Code locates the 'Tribunal', which has territorial jurisdiction in 'Insolvency Resolution Process', against the 'Corporate Debtor'. Also Section 60 (2) of the Code, mentions that an 'Application', relating to 'Interim Resolution Professional' of a 'Personal Guarantor', shall be filed before the 'National Company Law Tribunal', where the 'Corporate Insolvency Resolution Process' or 'Liquidation Proceeding' of a 'Corporate Debtor', is pending. Thereafter, for the purpose of Section 60(2), Section 60(4) vest the 'National Company Law Tribunal', with the powers of 'Debt Recovery Tribunal'. 10. The Learned Counsel for the Appellant, adverts to the 'Judgment' of the Hon'ble Supreme Court of India, dated 14.08.2018, in State Bank of India v. Mr. V. Ramakrishnan and Anr. (vide Civil Appeal No. 3595 of 2018 with No. 4553 of 2018), wherein at Paragraphs 22 to 24, it is observed as under: 22. "We are afraid that such arguments have to be turned down on a careful reading of the Sections relied upon. Section 60 of the Code, in sub-section (1) thereof, refers to insolvency resolution and liquidation for bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... National Company Law Tribunal constituted under the Companies Act, 2013. 24. The scheme of Section 60(2) and (3) is thus clear - the moment there is a proceeding against the corporate debtor pending under the 2016 Code, any bankruptcy proceeding against the individual personal guarantor will, if already initiated before the proceeding against the corporate debtor, be transferred to the National Company Law Tribunal or, if initiated after such proceedings had been commenced against the corporate debtor, be filed only in the National Company Law Tribunal. However, the Tribunal is to decide such proceedings only in accordance with the Presidency Towns Insolvency Act, 1909 or the Provincial Insolvency Act, 1920, as the case may be. It is clear that sub-section (4), which states that the Tribunal shall be vested with all the powers of the Debt Recovery Tribunal, as contemplated under Part III of this Code, for the purposes of sub-section (2), would not take effect, as the Debt Recovery Tribunal has not yet been empowered to hear bankruptcy proceedings against individuals under Section 179 of the Code, as the said Section has not yet been brought into force. Also, we have seen that Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , may be well appreciated in the teeth of undermentioned provisions, which runs as under: (i) Section 5 (12) defines Insolvency Commencement Date as the date on which an Application U/s 7, 9 & 10 is admitted by an adjudicating authority. (ii) Section 5 (14) states that the insolvency resolution process period means the period of 180 days beginning from the date abovementioned. (iii) Section 7 (6) also states that Corporate Insolvency Resolution Process shall commence from the date of admission of the application. 13. According to the Learned Counsel for the Appellant, Rule 3(a) of the Insolvency and Bankruptcy ('Application to Adjudicating Authority for Bankruptcy Process for Personal Guarantors to Corporate Debtors') Rules, 2019, defines an 'Adjudicating Authority', as the 'Debt Recovery Tribunal'. Furthermore, the stand of the Appellant is that, 'Corporate Insolvency Resolution Process', can said to be pending, only when an 'Application', under Section 7, 9 or 10, is admitted, by an 'Adjudicating Authority', as the 'Insolvency Resolution Process', only begins when an 'Application', under Section 7, 9 or 10, is admitted, as such, it is projected on the side of the 'Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a corporate insolvency process is not pending against the corporate debtor, the jurisdiction in respect of Insolvency and Bankruptcy of personal guarantor is Debt Recovery Tribunal." 18. The Learned Counsel for the Appellant, points out the 'Working Group Final Report', wherein, while discussing the outline of Part III of the I & B Code, 2016, it is mentioned as under: "Adjudicating Authority: 4.9. "Section 179 of the Code provides that the Adjudicating Authority for individuals and partnership firms is the Debt Recovery Tribunal ("DRT"). However, for personal guarantors, both the National Companies Law Tribunal ("NCLT") and DRT have jurisdiction in different scenarios. 4.10. Section 60(2) lays down that if a corporate insolvency resolution process ("CIRP") or liquidation process is ongoing against a corporate debtor, then an application for IRP or bankruptcy of the personal guarantor to the corporate debtor shall be filed with the NCLT in which the CIRP or liquidation is going on. Therefore, the Adjudicating Authority for personal guarantors will be the NCLT if a parallel CIRP or liquidation proceeding is going on for the corporate for whom the guarantee is given. 4.11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21) SCC Online Bom. 9260, wherein, at paragraphs 17 & 18, it is observed as under: 17. " Thus from an analysis of the provisions contained in sections 95 to 100 of IBC, we find that a definite time-line has been provided at each stage of the proceeding. That apart, the interim moratorium in terms of section 96 which commences from the date of the application remains in force till the date of admission of such application under section 100. Though time-lines have been prescribed at each stage of the proceeding leading to acceptance or rejection of the application under section 100, we find that no such time-line has been prescribed for submission of report by the resolution professional though section 100 provides that the adjudicating authority shall take a decision either admitting or rejecting the application within 14 days from the date of submission of the report. That apart on a careful examination of section 100, we are of the view that before the adjudicating authority takes a decision to either admit or reject the application upon receipt of report from the resolution professional, the parties to the insolvency resolution process are required to be heard. Though the legis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the petitioner has given assurance that the petitioner would not seek any adjournment in the proceedings before the Debt Recovery Tribunal." 24. The Learned Counsel for the Appellant, falls back upon the 'Order' of this 'Tribunal', dated 27.01.2022, in State Bank of India, Stressed Asset Management Branch v. Mahendra Kumar Jajodia (vide Comp. App. (AT) (INS.) No. 60 / 2022 and Comp. App. (AT) (INS.) No. 61 of 2022), wherein, at paragraphs 7 to 11, it is observed as under: 7. "Sub-Section 1 of Section 60 provides that Adjudicating Authority for the corporate persons including corporate debtors and personal guarantors shall be the NCLT. The Sub-Section 2 of Section 60 requires that where a CIRP or Liquidation Process of the Corporate Debtor is pending before 'a' National Company Law Tribunal the application relating to CIRP of the Corporate Guarantor or Personal Guarantor as the case may be of such Corporate Debtor shall be filed before 'such' National Company Law Tribunal. The purpose and object of the sub-section 2 of Section 60 of the Code is that when proceedings are pending in 'a' National Company Law Tribunal, any proceeding against Corporate Guarantor should al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only on the ground that no CIRP or Liquidation Proceeding of the Corporate Debtor are pending before the NCLT. In result, we set aside the order dated 05th October, 2021 passed by the Adjudicating Authority. The Application filed by the Appellant under Section 95(1) of the Code is revived before the NCLT which may be proceeded in accordance with the law." 25. The Learned Counsel for the Appellant, relies on the decision of the 'Adjudicating Authority' / 'Tribunal', dated 20.01.2022, in State Bank of India, through the Resolution Professional, Mahesh Sureka v. Savita Satish Gowda, wherein, at paragraphs 13 to 18, it is observed as under: 13. "This Bench is of the opinion that be that as it may, the CIRP of the Corporate Debtor was commenced and the Resolution plan was approved by this Tribunal and the jurisdiction to entertain the Petition of the Personal Guarantor is vested by the Tribunal under section 60(1)(2)(3) of the Code. Further the Hon'ble Supreme Court at para 95, have observed that in the event of an ongoing resolution process or liquidation process or bankruptcy of the Personal Guarantor of the Corporate Debtor shall be filed with the concerned NCLT which is seized o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1871 - 1872 of 2022), wherein, at paragraph 3, it is observed as under: 3. "We have heard learned Solicitor General and learned senior counsel for the parties and perused the record. We do not see any cogent reason to entertain the Appeals. The judgment impugned does not warrant any interference." 27. The Learned Counsel for the Appellant, adverts to the 'Order' dated 05.04.2022 of the Hon'ble High Court of Karnataka in W.P. No.21626 of 2021 (GM-RES), between Sri. Babu A. Dhammanagi & 2 Ors. v. Union of India, wherein, at paragraph 4, it is observed as under: 4. "We have considered the submission made by learned counsel for the petitioner. From perusal of the report of resolution professional, it is evident that the insolvency proceedings initiated against the personal guarantor under the Code is a time bound process. The aforesaid procedure contains filing of application under Section 95 of the Code for appointment of resolution professional by the Adjudicating Authority under Section 99 of the Code, submission of the report by the resolution professional under Section 99 of the Code recording reasons for recommending the request for acceptance or rejection of the applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate Bank of India, Stressed Assets Management Branch, Egmore, Chennai and 2 Ors. (vide Comp. App (AT) (CH) (INS.) No. 239 of 2022), wherein, at paragraphs 74, 85 to 88 , it is observed as under: 74. "Be it noted, Section 126 of the Indian Contract Act, 1872, deals with "contract of guarantee'', "surety'', "principal debtor'' and "creditor''. Section 128 of the Indian Contract Act, 1872, pertains to "Surety's Liability'', which is co-extensive with that of the "Principal Debtor'', unless it is otherwise provided by the "Contract''. Further, this 'Tribunal' worth recalls and recollects the decision of the Hon'ble Supreme Court of India in Central Bank of India v. C L Vimla, reported in AIR 2015 SC Page 2280, wherein it is observed as under: "We are of the opinion that the questions that need to be decided by us are regarding the liability of the guarantor under Section 128 of the Indian Contract Act, 1872. The legislature has succinctly stated that the liability of the guarantor is co-extensive with that of the principal debtor unless it is otherwise provided by the contract. This Court has decided on this quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Piramal Capital & Housing Finance Limited', before the 'Adjudicating Authority' ('Tribunal'), through the Resolution Professional, under Section 95 of the Code for initiation of 'Insolvency Resolution Process' against the 'Personal Guarantor'. The Hon'ble Court had considered that I & B Code provides a particular eligibility criterion which a 'Resolution Professional' must possess and a Code of Conduct is to be followed, which governs their activities. 87. Apart from that, the Hon'ble Supreme Court of India in the decision of State Bank of India (Stressed Asset Management Branch) v. Mahendra Kumar Jajodia had held that the 'Financial Creditors' specially Banks may now initiate 'Insolvency Proceedings' directly against the 'Personal Guarantors' of 'Corporate Debtors', irrespective of pending proceedings in the Court against the 'Corporate Debtor' under I & B Code. 88. In the decision in State Bank of India v. Ramakrishnan & Another, the Hon'ble Supreme Court of India has held that Section 14 of the I & B Code, did not apply to 'Personal Guarantor', but only applies to the 'Corporate Debtor'. The 'Creditor' can p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt under Section 152 to vary its judgment so as to give effect to its meaning and intention, which observations authoritatively explained the scope of the power under Section 152 in the following terms: 14. How to solve this riddle? In our opinion, the successful party has no other option but to have recourse to Section 152 CPC which provides for clerical or arithmetical mistakes in judgments, decrees or orders or errors arising therein from any accidental slip or omission being corrected at any time by the court either on its own motion or on the application of any of the parties. A reading of the judgment of the High Court shows that in its opinion the plaintiffs were found entitled to succeed in the suit. There is an accidental slip or omission in manifesting the intention of the court by couching the reliefs to which the plaintiffs were entitled in the event of their succeeding in the suit. Section 152 enables the court to vary its judgment so as to give effect to its meaning and intention. Power of the court to amend its orders so as to carry out the intention and express the meaning of the Court at the time when the order was made was upheld by Bowen, L.J. in Swire, Re, M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e explanation explaining the so called delay/laches on the part of the plaintiff in moving the present application for the rectification of the order dated 16.04.2021. 24. The application is accordingly allowed." 30. The Learned Counsel for the Appellant, refers to the Judgment of this 'Tribunal', in Comp. App (AT) (INS.) No. 305 of 2022 etc., in UCO Bank Flagship Corporate Branch v. Navin Kumar Jain, wherein, at paragraph 22, it is observed as under: 22. "One of the submissions raised before us is that the Application under Section 7 has been filed against the Principal Borrower as is the case in Company Appeal (AT) (Ins.) No. 305 of 2022, hence, the condition under Section 60(2) is also fulfilled. It is submitted that the mere fact that Application is not admitted does not lead to conclusion that Application is not pending. We having already held that there is no pre-condition of pendency of insolvency resolution process or liquidation against the Corporate Debtor for filing an Application under Section 60(1), there is no necessity to dwell on the submission any further." 31. The Learned Counsel for the Appellant, cites the decision of the Hon'ble High Court of Punjab and H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... till the proceedings before the Tribunal are taken to their logical conclusion, in terms of Sections 100 and 101 of the Code). 75. The other interpretation that can be given is that the phrases "all legal proceedings" and "any debt", only pertain to debts as are relatable to the corporate debtor in any manner; and any other personal debt incurred by the guarantor to a corporate debtor, as has nothing to do with such corporate debtor or corporate debt, would not be affected in any manner by the application filed under Section 94 by the personal guarantor to a corporate debtor and consequently the complaint filed by the respondent herein under Section 138 of the Act can continue wholly independently of the proceedings before the Adjudicating Authority/NCLT. 76. To further try and understand as to which of the aforesaid two interpretations would apply, the following part of the judgment of the Supreme Court (in paragraph 26.1) of V. Ramakrishnans' case (supra) would need to be looked at again:- ".......... and it is clear that in the vast majority of cases, personal guarantees are given by Directors who are in management of the companies. The object of the Code is not to all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersonal guarantors." ( Emphasis applied in this judgment only ) 78. Hence, it is obviously clear from a reading of the aforesaid part of the said judgment as also from the relevant provisions of the Code as have been reproduced hereinabove, that personal guarantors to corporate debtors are to be treated differently from other categories of individuals who would be covered by Part III of the Code, with it to be again observed that personal guarantors have however only been defined in Section 5(22) falling in Part II thereof and not in Part III. 79. Yet, the rule making authority under Section 239 of the Code (the Central Government) promulgated the Rules of 2019 by invoking jurisdiction under the said provision as also under the other provisions referred to in the preamble to the rules, and stipulated in Rule 6 therein that an application to be made by such a guarantor under the provisions of Section 94(1) would be submitted in 7terms of the procedure laid down under that Rule. 80. Thus, the application to be made by a personal guarantor to a corporate debtor, even though such a person/individual is referred to in Section 5(22) and Section 60, both falling in Part II of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsolutely generic meaning of the word, in Section 3 (11) of the Code (falling in the preliminary Part-I thereof); and further, as admitted by learned counsel for the respondent, a debt as is subject matter of proceedings under Section 138 of the Act, has not been prescribed to be an "excluded debt" in terms of Section 79(e) of the Code. 84. In this regard, it also needs to be observed here that unless the wordings of a statute are "unworkable" or wholly impractical, nothing extra can be read into a statute or taken away therefrom. 85. As regards the second question posed to itself by this court in paragraph 34 (supra), it would have to be held that by virtue of the term "any legal action or proceedings pending in respect of any debt (as per Section 96), proceedings under Section 138 of the Act, would be deemed to be stayed irrespective of the fact that such proceedings were initiated far before the application under Section 94 of the Code was filed by the personal guarantor to a corporate debtor. 86. In that very context, as regards the dismissal by the Supreme Court of other appeals and writ petitions as were heard with P. Mohanrajs' case (as have been pointed to by Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ountry and is no more an Indian citizen. It is well settled principle of statutory interpretation that such interpretation of a statute should be adopted which makes the statute functional and does not make a statute non-functional. Accepting the submission of Shri Mukherjee shall lead to interpretation which shall defeat the object and purpose of the Code. 31. The submission of Shri Mukherjee that the Adjudicating Authority has acted beyond the scope of the Code and its action is ultra vires cannot be accepted. The Adjudicating Authority is well within its jurisdictions to initiate insolvency resolution process against the Appellant, the Personal Guarantor of the Corporate Debtor, in accordance with the scheme of Section 95(1) r/w Section 60 of the Code. The Adjudicating Authority in its order dated 16.06.2022 has taken note of the facts and submissions of the Appellant and after considering submissions of the parties has rightly rejected the submission raised on behalf of the Appellant while admitting the application under Section 95(1). The direction issued in Para 29 of the order are consequential to admission of application under Section 95(1). We, thus, are of the view that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate Insolvency Resolution Process' proceedings, were pending against the 'Corporate Debtor', not only on the date when the 'Application', was filed before the 'Adjudicating Authority' / 'Tribunal', as well as on the date, when the 'impugned order', was filed, and in fact the 'CIRP' proceedings, continued to be 'pending', against the 'Corporate Debtor', as on date. 37. The Learned Counsel for the 1st Respondent / Financial Creditor / Petitioner, points out that the details of the 'Corporate Insolvency Resolution Process', against the 'Corporate Debtor', as available on the website of the 'Adjudicating Authority' / 'Tribunal', are as under: S. No. Company Petition No. Date of Filing & Registration Status 1 CP(IB) No.779/9/HDB/2019: KL Steels Pvt Ltd vs. Gati Infrastructure Bhamsey Power Private Limited (under Section 9 of the IBC) 25.11.2019 Dismissed as withdrawn on 24.12.2021 on the basis of settlement with creditor. 2 CP(IB) No.108/9/HDB/2020: Raghavender Yadagirkar vs. Gati Infrastructure Bhamsey Power Pvt. Ltd. (under Section 9 of the IBC) 03.02.2020 Dismissed on 09.07.2021 for non-prosecution with liberty to revive. 3 NCLT Application in the present case: CP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re upheld. 43. The Learned Counsel for the 1st Respondent, refers to Section 128 of the Indian Contract Act, 1872, that the 'Guarantor's Liability', is co-extensive with that of the 'Principal Debtor', and that the 'Personal Guarantee', in the instant case, clearly mentions that the 'Guarantee', is an independent obligation of the 'Guarantor', and on 08.03.2019, the 'Personal Guarantee', was invoked on behalf of all the 'Lenders', including the '1st Respondent'. 44. The Learned Counsel for the 1st Respondent, brings it to the notice of this 'Tribunal', that the 'Appellant', had filed Transfer Petition (C) No. 1235 of 2020, seeking the same 'reliefs', as sought to be agitated in the present proceedings, Viz. 'Transfer of Proceedings', before the 'Adjudicating Authority', in the present case, to the 'Debt Recovery Tribunal'. As a matter of fact, the 'Transfer Petition' was 'Dismissed as Withdrawn', by an 'Order', dated 21.01.2022, passed by the Hon'ble Supreme Court of India, and in reality, the filing of the 'Transfer Petition', was not disclosed by the 'Appellant'. 45. The Learned Counsel for the 1st Respondent, comes out with a plea that the 1st Respondent / Financial Creditor' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 'Dismissal' of the instant Comp. App (AT) (CH) (INS.) No. 8 of 2023, filed by the 'Appellant'. 1st Respondent's Citations: 51. The Learned Counsel for the 1st Respondent, relies on the 'Judgment' of the Hon'ble Supreme Court of India, in Rajahmundry Electric Supply Corporation Ltd. v. A. Nageshwara Rao & two Ors., reported in AIR 1956 SC at Page 213, 26 Comp. Cas 91, wherein, at Paragraph 5, it is observed as under: 5. "This point is not dealt with in the judgment of the trial court, and the argument before us is that as the objection went to the root of the matter and struck at the very maintainability of the application, evidence should have been taken on the matter and a finding, recorded thereon. We do not find any substance in this contention. Though the objection was raised in the written statement, the respondents did not press the same at the trial, and the question was never argued before the trial Judge. The learned Judges before whom this contention was raised on appeal declined to entertain it, as it was not pressed in the trial court, and there are no grounds for permitting the appellant to raise it in this appeal. Even otherwise, we are of opinion that this con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s pending before NCLT. The object is that when a CIRP or Liquidation Proceeding of a Corporate Debtor is pending before 'a' NCLT the application relating to Insolvency Process of a Corporate Guarantor or Personal Guarantor should be filed before the same NCLT. This was to avoid two different NCLT to take up CIRP of Corporate Guarantor. Section 60(2) is applicable only when CIRP or Liquidation Proceeding of a Corporate Debtor is pending, when CIRP or Liquidation Proceeding are not pending with regard to the Corporate Debtor there is no applicability of Section 60(2). 9. Section 60(2) begins with expression 'Without prejudice to sub-section (1)' thus provision of Section 60(2) are without prejudice to Section 60(1) and are supplemental to sub-section (1) of Section 60. 10. Sub-Section 1 of Section 60 provides that Adjudicating Authority in relation to Insolvency or Liquidation for Corporate Debtor including Corporate Guarantor or Personal Guarantor shall be the NCLT having territorial jurisdiction over the place where the Registered Office of the Corporate Person is located. The substantive provision for an Adjudicating Authority is Section 60, sub-Section (1), wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Personal Guarantors and dismissing the Company Petitions. All the Appeals are allowed. Order of the Adjudicating Authority dated 22.02.2022 is set aside. The Company Petitions CP No. (IB) - 25/95/JPR/2021, CP No. (IB) - 26/95/JPR/2021 and CP No. (IB) - 27/95/JPR/2021 are held maintainable and are revived before the Adjudicating Authority to be proceeded in accordance with law." 53. The Learned Counsel for the 1st Respondent, relies on the decision of the Hon'ble High Court of Delhi in Axis Trustee Services Limited v. Brij Bhushan Singal, reported in (2022) SCC OnLine Del. 3634, wherein, at paragraphs 17, 21 to 29, it is observed as under: 17. "To appreciate the aforesaid submissions, a reference may be made to the relevant provisions of the IBC. Part II of the IBC deals with "INSOLVENCY RESOLUTION AND LIQUIDATION FOR COPORATE PERSONS" and Section 60 of the IBC occurs in Chapter VI of Part II of the IBC titled "ADJUDICATING AUTHORITY FOR CORPORATE PERSONS." The relevant portion of Section 60 of the IBC is set out below: 60. (1) The Adjudicating Authority, in relation to insolvency resolution and liquidation for corporate persons including corporate debtors and personal gua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken up, when CIRP or liquidation proceeding of such a corporate debtor is already pending before NCLT. The object of sub-section (2) is to group together (A) the CIRP or liquidation proceeding of a corporate debtor, and (B) the insolvency resolution or liquidation or bankruptcy of a corporate guarantor or personal guarantor of the very same corporate debtor, so that a single forum may deal with both. This is to ensure that the CIRP of a corporate debtor and the insolvency resolution of the individual guarantors of the very same corporate debtor do not proceed on different tracks, before different fora, leading to conflict of interests, situations or decisions. 34. If the object of sub-section (2) of Section 60 is to ensure that the insolvency resolutions of the corporate debtor and its guarantors are dealt with together, then the question that arises is as to why there should be a reference to the powers of the DRT in sub-section (4). The answer to this question is to be found in Section 179 of the IBC, 2016. Under Section 179(1), it is the DRT which is the adjudicating authority in relation to insolvency matters of individuals and firms. This is in contrast to Section 60(1) w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l guarantor pending in any Court or Tribunal, shall stand transferred to the adjudicating authority dealing with the insolvency resolution process of the corporate debtor. 26. On behalf of the plaintiff, reliance has been placed on sub-section (2) of Section 60 to contend that insolvency proceedings in respect of a personal guarantor of a corporate debtor shall be filed in the NCLT only if the CIRP is pending in respect of corporate debtor before the NCLT. In view of the fact that the CIRP in respect of corporate debtor, Bhushan Steel already stands concluded, insolvency proceedings in respect of its guarantors have to be filed before the DRT and not the NCLT. The aforesaid submission overlooks the fact that sub-section (2) of Section 60, IBC starts with words without prejudice to sub-section (1)'. Clearly, sub-section (2) of Section 60 is supplemental to sub-section (1) of Section 60 and has to be read along with sub-section (1) of Section 60. A harmonious reading of the aforesaid provisions would lead to the conclusion that sub-section (1) of Section 60 applies in respect of insolvency proceedings in respect of personal guarantors of corporate debtors irrespective of the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Bank of India v. Biswanath Jhunjhunwala: (2009) 9 SCC 478; and (iv) United Bank of India v. Satyawati Tondon and Ors.: AIR 2010 SC 3413 and (V) Ferro Alloys v. Rural Electrification : Company Appeal (AT) (Ins.) No. 92 of 2017 decided on 08.01.2019; upheld by the Hon'ble Supreme Court by its Order dated 11.02.2019, for the proposition that there is 'no need in Law', for a 'Creditor', to initiate 'Proceedings', against the 'Debtor', before initiating 'Proceedings', against the 'Guarantor'. Gist of Status Report Filed by the 2nd Respondent / Resolution Professional: 55. In the 'Status Report', filed by the '2nd Respondent / Resolution Professional', among other things, it is mentioned that the 'Personal Guarantor', had failed to 'Repay' the 'Debt' Amount of the 'Financial Creditor', and because of the said 'Default', the 'Financial Creditor', had filed a 'Petition', before the 'Adjudicating Authority' / 'Tribunal', under Section 95 (1) of the I & B Code, 2016, demanding a Sum of Rs.1,76,75,60,935/- as on 15.01.2020. 56. It comes to be known that a 'Resolution Professional', was appointed by the 'Adjudicating Authority', on 08.07.2021, and a 'Report', was directed to be filed wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or', is located, which in turn creates a link between the 'Insolvency Resolution' or 'Bankruptcy Processes' of the 'Corporate Debtor', and 'Personal Guarantors', such that the 'matters', relating to the same 'Debt', are dealt with in the same 'Tribunal'. 62. It was decided that Section 60 of the 'Code', may be suitably amended, to provide for the same 'National Company Law Tribunal', to deal with the 'Insolvency Resolution' or 'Liquidation Processes' of the 'Corporate Debtor' and its 'Corporate Guarantor'. Discussions : 63. Before the 'Adjudicating Authority' / 'Tribunal', the '1st Respondent / Financial Creditor / Petitioner', had filed CP (IB) No. 335 / 95 / HDB / 2020 (under Section 95 (1) of the I & B Code, 2016 read with Rule 7 (2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019, wherein, among other things, it is mentioned as under: "PFS sanctioned financial assistance of Rs.125,00,00,000 of which Rs.116,07,13,161 was disbursed for the project. However, due to failure of the Corporate Debtor in achieving financial closure of cost overrun and failure in equ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled on 30.07.2020, which is beyond the 'Limitation Period'. 66. Added further, it is the stand of the Appellant / Personal Guarantor that the 'Lenders Claim', vis-à-vis the 'Respondent's Claim', for the 'non-disbursal of the Sanctioned Loan', which caused it 'Loss of Property', as well as 'Project', for which, entire 'Agreement', was made, is pending 'Adjudication', before the 'Debt Recovery Tribunal', Delhi and because of the 'Disputes', being raised by the 'Principal Borrower', the present 'Application', is 'not maintainable'. 67. In the 'Rejoinder', before the 'Adjudicating Authority', the '1st Respondent / Financial Creditor', inter alia, had averred that the 'Period of Limitation', was extended by the Hon'ble Supreme Court, through its Order dated 23.03.2020, and hence the main 'Company Petition', filed by the '1st Respondent / Financial Creditor', is well within the 'Three Years Limitation Period', from 15.05.2017. 68. Also, according to the 1st Respondent / Financial Creditor, 'no Dispute', exists on the 'Debt' due, and the 'Personal Guarantor's Liability', to repay the said 'Debt', was 'admitted' and absolute and the 'Liability' of the 'Personal Guarantor', has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed a 'Transfer Petition (C) No.1235 of 2020', before the Hon'ble Supreme Court, against the '1st Respondent / Financial Creditor / Petitioner' ('PTC India Financial Services Ltd.', New Delhi), praying for 'allowing of the Transfer Petition' (under Article 139A of the Constitution of India, read with Section 25 of the Civil Procedure, 1908, and Order XLI of the Supreme Court Rules, 2013), seeking 'Transfer' of main CP (IB) No. 335 / 95 / HDB / 2020, titled as 'PTC India Financial Services Ltd. v. Mahendra Kumar Agarwal', pending before the 'National Company Law Tribunal', Hyderabad, Telangana, to the 'Debt Recovery Tribunal', Delhi, the said 'Transfer Petition', was 'Dismissed' by the Hon'ble Supreme Court as 'Withdrawn', through an 'Order', dated 21.01.2022. 74. In 'Law', 'Guarantee', is an 'independent obligation' of the 'Guarantor', which is evident from the 'Personal Guarantee', and that there is 'no requirement', enabling a 'Person', to 'exhaust', any 'remedy', against a 'Corporate Debtor', prior to the issuance of 'Demand', in terms of 'Personal Guarantee' and in the present case, Clauses 3, 4 and 6 of the 'Personal Guarantee', cannot be lost sight off. In reality, Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "DRAT"). This court hears appeals from both the NCLAT and the DRAT." 114. In view of the above discussion, it is held that the impugned notification is not an instance of legislative exercise, or amounting to impermissible and selective application of provisions of the Code. There is no compulsion in the Code that it should, at the same time, be made applicable to all individuals, (including personal guarantors) or not at all. There is sufficient indication in the Code by Section 2(e), Section 5(22), Section 60 and Section 179 indicating that personal guarantors, though forming part of the larger grouping of individuals, were to be, in view of their intrinsic connection with corporate debtors, dealt with differently, through the same adjudicatory process and by the same forum (though not insolvency provisions) as such corporate debtors. The notifications under Section 1(3), (issued before the impugned notification was issued) disclose that the Code was brought into force in stages, regard being had to the categories of persons to whom its provisions were to be applied. The impugned notification, similarly inter alia makes the provisions of the Code applicable in respect of person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion the Bank has undertaken to pay the Electricity Board any sum up to Rs 50,000 and in order to realise it all that the Electricity Board has to do is to make a demand. Within forty-eight hours of such demand the Bank has to pay the amount to the Electricity Board which is not under any obligation to prove any default on the part of the Company in liquidation before the amount demanded is paid. The Bank cannot raise the plea that it is liable only to the extent of any loss that may have been sustained by the Electricity Board owing to any default on the part of the supplier of goods i.e. the Company in liquidation. The liability is absolute and unconditional. The fact that the Company in liquidation i.e. the principal debtor has gone into liquidation also would not have any effect on the liability of the Bank i.e. the guarantor. Under Section 128 of the Contract Act, 1872, the liability of the surety is coextensive with that of the principal debtor unless it is otherwise provided by the contract. A surety is no doubt discharged under Section 134 of the Indian Contract Act, 1872 by any contract between the creditor and the principal debtor by which the principal debtor is released ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts the liability of a guarantor who is bound by the deed of guarantee executed by it. The High Court has referred to a decision of this Court in Maharashtra SEB v. Official Liquidator [(1982) 3 SCC 358] where the liability of the guarantor in a case where liability of the principal debtor was discharged under the Insolvency law or the Company law, was considered. It was held in this case that in view of the unequivocal guarantee, such liability of the guarantor continues and the creditor can realise the same from the guarantor in view of the language of Section 128 of the Contract Act, 1872 as there is no discharge under Section 134 of that Act. 6. In our opinion, the principle of the aforesaid decision of this Court is equally applicable in the present case. The right of the appellant to recover money from Respondents 1, 2 and 3 who stood guarantors arises out of the terms of the deeds of guarantee which are not in any way superseded or brought to a naught merely because the appellant may not have been able to recover money from the principal borrower. It may here be added that even as a result of the Nationalisation Act the liability of the principal borrower does not come to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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