Writ of prohibition unavailable where guarantor liability after resolution plan and debt assignment requires merits adjudication.

A writ of prohibition is an exceptional remedy and will not issue unless there is patent lack of jurisdiction, breach of natural justice, or other rare grounds for immediate interference. The Debts Recovery Tribunal was held competent to examine whether a legally recoverable debt subsisted and whether personal guarantors remained liable after approval and implementation of a resolution plan. The Court noted that the effect of debt assignment, the guarantee contract, and the interaction between the Insolvency and Bankruptcy Code and the Indian Contract Act required adjudication on merits. It therefore declined threshold interference, rejected the writ applications, and allowed the recovery proceedings to continue before the Tribunal.

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Issues: Whether a writ of prohibition could be issued to restrain the Debts Recovery Tribunal from proceeding with recovery applications against personal guarantors on the ground that, after approval and implementation of the resolution plan, the debt stood assigned and the guarantors' liability stood discharged.

Analysis: The Court held that a writ of prohibition is an exceptional remedy and ordinarily lies only where there is a patent lack of jurisdiction, violation of natural justice, or other rare circumstances warranting immediate interference. The Debts Recovery Tribunal had jurisdiction under the Recovery of Debts and Bankruptcy Act, 1993 to examine whether a legally recoverable debt existed and whether the guarantors remained liable after the resolution process. The dispute turned on a detailed examination of the resolution plan, the terms of the guarantees, the effect of assignment of debt, and the interaction between the Insolvency and Bankruptcy Code, 2016 and the Indian Contract Act, 1872. The Court found that the issue was not one of patent want of jurisdiction but one that required adjudication by the Tribunal on merits. It further noted that approval of a resolution plan does not automatically discharge a personal guarantor, and the effect of discharge of the principal debtor by operation of law depends on the contract of guarantee and the surrounding legal framework.

Conclusion: No case for issuance of a writ of prohibition was made out. The writ applications were rejected and the Debts Recovery Tribunal was left to decide the jurisdictional and merits issues in accordance with law.

Final Conclusion: The Court declined to interfere at the threshold and permitted the statutory recovery proceedings to continue, holding that the Tribunal must determine the effect of debt assignment and the resolution plan on the guarantors' liability.

Ratio Decidendi: A writ of prohibition will not be granted where the alleged lack of jurisdiction is not patent on the face of the proceedings and the controversy requires adjudication by the competent statutory forum, particularly where the effect of a resolution plan on guarantor liability and debt assignment is in issue.

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