Personal guarantor insolvency can proceed despite pending corporate CIRP, with mandatory appointment of a resolution professional.

Proceedings under the Insolvency and Bankruptcy Code, 2016 against a personal guarantor may continue even while corporate insolvency resolution proceedings or resolution plans concerning the principal debtor are pending. Section 60(2) permits the personal guarantor's insolvency application to be filed before the same Adjudicating Authority where the corporate debtor's CIRP or liquidation is underway, and the guarantor's liability is not discharged merely because the principal debtor is in insolvency or liquidation. Once an application under section 95 is filed, section 97(3) requires the Authority to advance the process, including appointment of a resolution professional from an already shared panel without insisting on a fresh nomination.

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Issues: Whether proceedings under the Insolvency and Bankruptcy Code, 2016 could be pursued against a personal guarantor while corporate insolvency resolution proceedings and resolution plans concerning the principal debtors were pending, and whether the Adjudicating Authority was bound to act under section 97(3) by appointing a resolution professional.

Analysis: Section 60(2) permits an application relating to the insolvency resolution of a personal guarantor to be filed before the same Adjudicating Authority when a corporate insolvency resolution process or liquidation proceeding of the corporate debtor is pending. The pendency of resolution plans for the corporate debtors did not suspend or defer the statutory machinery for proceedings against the personal guarantor. The liability of a guarantor is not extinguished merely because the principal debtor is undergoing insolvency or liquidation, and the discharge of the principal debtor by operation of law does not absolve the surety. Once applications under section 95 were filed, section 97(3) imposed a mandatory duty to move the process forward, and the Authority was required to proceed in accordance with the prescribed mechanism. The Authority also noted that, in view of the panel already shared by the Board, the resolution professional could be appointed from that panel without directing a fresh nomination process.

Conclusion: The proceedings against the personal guarantor were maintainable notwithstanding the pending corporate insolvency resolution processes, and the direction under section 97(3) was rightly issued. The applications were allowed in part, with appointment of the resolution professional and refusal of the remaining prayer.

Ratio Decidendi: Pendency of insolvency or liquidation proceedings against a corporate debtor does not discharge the personal guarantor, and the statutory process for personal guarantor insolvency must proceed when initiated under sections 60(2), 95, and 97 of the Insolvency and Bankruptcy Code, 2016.

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