Tribunal affirms CIRP initiation against Guarantor, emphasizing co-extensive liability with Principal Debtor.

The Tribunal upheld the Adjudicating Authority's order, affirming the initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Guarantor. The Tribunal dismissed the appeal, emphasizing that the Guarantor's liability is co-extensive with that of the Principal Debtor, allowing the creditor to independently proceed against the Guarantor without exhausting remedies against the Principal Borrower.

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Issues Involved:
1. Validity of ex-parte order and sufficiency of service of notice.
2. Classification of the Respondent as a Financial Creditor.
3. Liability of the Corporate Guarantor under the Guarantee Agreement.
4. Impact of withdrawal of CIRP against Principal Borrowers on proceedings against the Guarantor.

Detailed Analysis:

1. Validity of Ex-Parte Order and Sufficiency of Service of Notice:
The Appellant contended that the Impugned Order was passed ex-parte without due notice. The Tribunal examined the service of notice and found that the notice was served via email to the registered email ID on the Company Master Data and to the personal email ID of a Director, as well as through WhatsApp. The Tribunal concluded that the service was legally sufficient and upheld the ex-parte order due to the Appellant's non-appearance on multiple dates.

2. Classification of the Respondent as a Financial Creditor:
The Appellant argued that the Respondent, being a mortgagee or Indirect Secured Creditor, does not qualify as a Financial Creditor under Section 5(8) of the Insolvency and Bankruptcy Code (IBC). The Tribunal referred to the Supreme Court's judgment in 'Anuj Jain, Interim Resolution Professional for Jaypee Infratech Limited Vs. Axis Bank Limited,' which distinguished between Financial Creditors and those holding only security interests. However, the Tribunal found that the Respondent had a direct engagement with the Corporate Debtor through the Guarantee Agreement, making it a Financial Creditor.

3. Liability of the Corporate Guarantor under the Guarantee Agreement:
The Tribunal analyzed the Guarantee Agreement, which stated that the Guarantor's liability is co-extensive with that of the Principal Debtor. Under Section 128 of the Indian Contract Act, 1872, the Guarantor's liability is equivalent to that of the Principal Debtor. The Tribunal cited various judgments, including 'Central Bank of India Vs. C.L. Vimla and Others,' affirming that the creditor can proceed against the Guarantor without first exhausting remedies against the Principal Debtor. The Tribunal concluded that the Appellant, as the Corporate Guarantor, is liable for the outstanding debts.

4. Impact of Withdrawal of CIRP against Principal Borrowers on Proceedings against the Guarantor:
The Appellant argued that the withdrawal of CIRP against the Principal Borrowers precludes proceedings against the Guarantor. The Tribunal rejected this argument, stating that the creditor is not required to exhaust remedies against the Principal Borrower before proceeding against the Guarantor. The Tribunal emphasized that the withdrawal of CIRP against the Principal Borrowers does not bar initiating CIRP against the Guarantor, as the Guarantor's liability is independent and co-extensive.

Conclusion:
The Tribunal upheld the Adjudicating Authority's order, affirming the initiation of CIRP against the Corporate Guarantor. The Tribunal dismissed the appeal, reinforcing the principle that the Guarantor's liability is co-extensive with that of the Principal Debtor and that the creditor can independently proceed against the Guarantor.

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