Guarantor liability survives corporate liquidation, allowing SARFAESI enforcement against personal assets despite relinquishment of debtor assets.

Following liquidation of the corporate debtor under the Insolvency and Bankruptcy Code, a secured creditor may still enforce its security against the personal properties of guarantors under the SARFAESI Act. The Court noted that a guarantor's liability remains co-extensive with that of the principal debtor, that the liquidation estate does not include the guarantors' personal assets, and that the moratorium does not extend to a surety in a contract of guarantee. It therefore found no statutory bar to action against the guarantors merely because the corporate debtor's secured assets had been relinquished to the liquidator, and the challenge to the e-auction notice failed.

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Issues: Whether, after liquidation of the corporate debtor under the Insolvency and Bankruptcy Code, 2016, the secured creditor could proceed under the SARFAESI Act, 2002 against the personal properties of the guarantors notwithstanding relinquishment of the corporate debtor's secured assets to the liquidator.

Analysis: The petitioners' challenge was founded on the interaction between the insolvency regime and enforcement against guarantors, contending that once the secured creditor had relinquished the corporate debtor's assets to the liquidation estate, it could not simultaneously proceed against the guarantors. The Court examined the scheme of the Insolvency and Bankruptcy Code, 2016, including the provisions governing liquidation, the rights of a secured creditor, and the treatment of personal guarantors. It also considered the principle that the liability of a guarantor is co-extensive with that of the principal debtor, and the effect of the moratorium provisions. The Court held that the guarantors' personal properties do not form part of the liquidation estate of the corporate debtor, that Section 14(3)(b) excludes a surety in a contract of guarantee from the moratorium, and that there is no statutory bar preventing action under the SARFAESI Act against guarantors merely because the corporate debtor is under liquidation.

Conclusion: The secured creditor was entitled to proceed under the SARFAESI Act against the personal properties of the guarantors, and the challenge to the e-auction notice failed.

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