Tribunal lacks jurisdiction to initiate insolvency against personal guarantors under unnotified Part-III of IBC.

The Tribunal held that it lacks jurisdiction to initiate insolvency proceedings against personal guarantors under the Insolvency & Bankruptcy Code (IBC) as Part-III of the Code has not been notified. The applications seeking Corporate Insolvency Resolution Process (CIRP) against personal guarantors were dismissed, allowing the Applicant to pursue remedies under existing insolvency laws.

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Issues Involved:
1. Maintainability of proceedings against personal guarantors under the Insolvency & Bankruptcy Code (IBC).
2. Jurisdiction of National Company Law Tribunal (NCLT) to initiate Corporate Insolvency Resolution Process (CIRP) against personal guarantors.
3. Applicability of Section 14 moratorium to personal guarantors.

Detailed Analysis:

1. Maintainability of Proceedings Against Personal Guarantors:
The Applicant filed Miscellaneous Applications under Section 60(2)(5) of the Insolvency & Bankruptcy Code (IBC) seeking to initiate CIRP against personal guarantors. The applications were based on the premise that personal guarantors are liable to discharge the debt of the Corporate Debtor under the Guarantee Agreements. The Respondents, who stood as personal guarantors, failed to repay the loan despite being notified, leading to the filing of these applications.

2. Jurisdiction of NCLT to Initiate CIRP Against Personal Guarantors:
The core issue was whether NCLT has jurisdiction to initiate insolvency proceedings against personal guarantors under the current legal framework. The Tribunal noted that while Section 60(2) of the IBC confers jurisdiction to NCLT to deal with personal guarantors, Part-III of the Code, which deals with insolvency/bankruptcy of individuals and partnership firms, has not been notified. The Tribunal emphasized that for NCLT to exercise jurisdiction over personal guarantors, the Debt Recovery Tribunal (DRT) must first be empowered under Part-III of the Code. Since Part-III has not been notified, the NCLT cannot assume jurisdiction over personal guarantors.

3. Applicability of Section 14 Moratorium to Personal Guarantors:
The Applicant argued that proceedings against personal guarantors should be initiated before NCLT, citing the Supreme Court judgment in the case of State Bank of India vs. Ramakrishnan & Another. However, the Tribunal clarified that the Supreme Court's judgment did not confer jurisdiction on NCLT to initiate insolvency proceedings against personal guarantors. The Supreme Court only held that the moratorium under Section 14 of the IBC does not extend to personal guarantors. The Tribunal reiterated that the current legal framework requires personal guarantors to be proceeded against under the existing insolvency laws, such as the Presidency-Towns Insolvency Act, 1909, and the Provincial Insolvency Act, 1920, as Part-III of the IBC has not been brought into force.

Conclusion:
The Tribunal concluded that it does not have jurisdiction to initiate insolvency proceedings against personal guarantors under the IBC, as Part-III of the Code has not been notified. The applications were dismissed as misconceived, with liberty to the Applicant to proceed in accordance with the existing laws.

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