Resolution plan approved, Guarantor's liability upheld: Financial Creditor can recover.

The Tribunal initiated the Insolvency Resolution Process against the Personal Guarantor, declaring a moratorium and directing the Resolution Professional to publish a public notice, invite claims, and prepare a list of creditors. Despite the approval of a resolution plan, the Personal Guarantor's liability under the contract of guarantee was upheld, allowing the Financial Creditor to realize the default amount. The application met procedural requirements, leading to the admission of the application under Section 100 of the Insolvency and Bankruptcy Code, 2016.

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Issues Involved:
1. Initiation of Insolvency Resolution Process against the Personal Guarantor.
2. Validity and enforceability of the Deed of Guarantee.
3. Impact of the approval of a resolution plan on the liability of the Personal Guarantor.
4. Compliance with procedural requirements under the Insolvency and Bankruptcy Code (IBC), 2016.

Detailed Analysis:

1. Initiation of Insolvency Resolution Process against the Personal Guarantor:
The application was filed under Section 95 of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016) by the Financial Creditor (State Bank of India) to initiate insolvency proceedings against the Personal Guarantor for a default amount of Rs. 176,45,58,095.31/-. The Tribunal noted that the Hon'ble Supreme Court in Lalit Kumar Jain vs. Union of India & Ors. upheld the validity of the notification bringing into force the insolvency process for Personal Guarantors to Corporate Debtors. Thus, the NCLT is the competent forum to file such applications when a Corporate Insolvency Resolution Process (CIRP) is pending against the Corporate Debtor.

2. Validity and Enforceability of the Deed of Guarantee:
The Deed of Guarantee dated 25.04.2014 was executed by the Personal Guarantor in favor of the SBI-led Consortium. Clause 24 of the Deed of Guarantee states that the guarantee is irrevocable and the obligations of the Guarantor shall be discharged only by performance. The Tribunal referenced Section 128 of the Indian Contract Act, 1872, which establishes that the liability of the surety is co-extensive with that of the principal debtor. The Tribunal also cited the NCLAT judgment in State Bank of India vs. Athena Energy Venture Private Limited, which clarified that CIRP can proceed against both the Principal Borrower and the Guarantor.

3. Impact of the Approval of a Resolution Plan on the Liability of the Personal Guarantor:
The Respondent argued that the liability towards the personal guarantee would be reduced due to the approval of a resolution plan. However, the Tribunal referred to the Supreme Court's judgment in Lalit Kumar Jain vs. Union of India & Ors., which held that the approval of a resolution plan does not discharge the personal guarantor's liabilities under the contract of guarantee. The liability of the Personal Guarantor continues despite the approval of a resolution plan, and the Financial Creditor can realize the default amount from the Personal Guarantor.

4. Compliance with Procedural Requirements under IBC, 2016:
The Tribunal reviewed the application and the report filed by the Interim Resolution Professional (IRP). The IRP confirmed the default amount and the applicability of Part III of IBC, 2016. The Tribunal noted that the application was presented in Form C with the prescribed fee and met the necessary procedural requirements. The Tribunal admitted the application under Section 100 of IBC, 2016, and initiated the Insolvency Resolution Process against the Personal Guarantor. A moratorium was declared, and the Resolution Professional was directed to publish a public notice, invite claims from creditors, and prepare a list of creditors. The debtor was instructed to prepare a repayment plan in consultation with the Resolution Professional.

Order:
The Tribunal ordered the initiation of the Insolvency Resolution Process against the Personal Guarantor and declared a moratorium. The Resolution Professional was directed to publish a public notice, invite claims, and prepare a list of creditors. The debtor was instructed to prepare a repayment plan in consultation with the Resolution Professional. The Resolution Professional was also directed to submit periodic reports to the Tribunal.

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