Personal guarantor insolvency proceedings do not continue against legal heirs after death, as the tribunal treated them as non-recovery proceedings.

Proceedings under the Insolvency and Bankruptcy Code against a personal guarantor do not continue against legal heirs after the guarantor's death. Although Rule 53 of the NCLT Rules, 2016 permits substitution of legal representatives in pending matters, the Tribunal treated a section 95 application as a personal insolvency proceeding against an individual surety, not a recovery action. On that basis, it held that impleading the deceased guarantor's heir was not maintainable and rejected the request to continue the proceeding against the estate.

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Issues: Whether, on the death of a personal guarantor in proceedings under the Insolvency and Bankruptcy Code, 2016, the legal heir can be impleaded and the proceedings continued against the estate.

Analysis: Rule 53 of the NCLT Rules, 2016 permits substitution of legal representatives in pending proceedings, but the Tribunal held that the proceeding in question was one initiated against an individual personal guarantor. A personal guarantor is an individual surety to a corporate debtor under Section 5(22) of the Insolvency and Bankruptcy Code, 2016. The Tribunal reasoned that proceedings under Section 95 of the Insolvency and Bankruptcy Code, 2016 are not recovery proceedings and, on the death of such guarantor, continuation of the insolvency proceeding through legal heirs would not arise.

Conclusion: The request to implead the legal heir was rejected and the application was dismissed.

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