Personal Guarantors not covered under Section 10A of Insolvency Code. Adjudicating Authority's due process upheld. Appeal dismissed.

The Tribunal held that Section 10A of the Insolvency and Bankruptcy Code does not apply to Personal Guarantors, as it specifically pertains to Corporate Debtors only. Additionally, it found that the Adjudicating Authority followed due process in appointing the Resolution Professional and issuing notice to the Appellant. The appeal was dismissed, allowing the Appellant to raise objections during the proceedings under Section 100.

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Issues Involved:
1. Applicability of Section 10A of the Insolvency and Bankruptcy Code (I&B Code) to Personal Guarantors.
2. Procedure followed by the Adjudicating Authority in appointing the Resolution Professional and issuing notice.

Issue-wise Detailed Analysis:

1. Applicability of Section 10A of the I&B Code to Personal Guarantors:

The primary issue was whether the benefit of Section 10A, which suspends the initiation of Corporate Insolvency Resolution Process (CIRP) for defaults arising between 25.03.2020 and 24.03.2021, extends to Personal Guarantors. Section 10A explicitly prohibits the initiation of CIRP against Corporate Debtors for defaults during this period. The Appellant argued that this protection should also extend to Personal Guarantors to avoid discrimination and ensure consistent interpretation of the I&B Code.

However, the Tribunal observed that Section 10A, which is part of Chapter II of Part II of the I&B Code, specifically applies to Corporate Debtors and does not mention Personal Guarantors. The Tribunal emphasized the principles of statutory interpretation, stating that when the language of a statute is clear and unambiguous, courts must give effect to its plain meaning. The Tribunal cited several Supreme Court judgments reinforcing this principle, including "Commissioner of Agricultural Income Tax, West Bengal vs. Keshab Chandra Mandal" and "Lalu Prasad Yadav & Anr vs. State of Bihar & Anr."

The Tribunal concluded that the legislative intent was clear in restricting the suspension of CIRP to Corporate Debtors only. No corresponding amendment was made in Chapter III of Part III of the I&B Code, which deals with insolvency resolution for individuals and partnership firms, including Personal Guarantors. Therefore, the Tribunal rejected the Appellant's argument, holding that Section 10A does not apply to Personal Guarantors.

2. Procedure Followed by the Adjudicating Authority:

The second issue was whether the Adjudicating Authority followed due process in appointing the Resolution Professional and issuing notice to the Appellant. The Appellant contended that no notice was issued before appointing the Resolution Professional, violating the procedure established by law.

The Tribunal noted that the application under Section 95(1) was filed by serving advance notice to the Appellant in Form-B. Furthermore, the Adjudicating Authority issued notice to the Personal Guarantor by its order dated 03.02.2022. The Personal Guarantor appeared before the Adjudicating Authority on 29.03.2022 and requested time to file a reply, which was granted.

The Tribunal referred to its earlier judgment in "Ravi Ajit Kulkarni vs. State Bank of India," emphasizing that the purpose of limited notice is to allow the Personal Guarantor to participate in the proceedings under Section 95 and object to the application, including the report of the Resolution Professional. The Tribunal clarified that the interim moratorium under Section 96 automatically commences on the date of the application filed under Section 95. The Personal Guarantor can raise all objections at the time the Adjudicating Authority considers the application under Section 100.

The Tribunal concluded that the Appellant still had the opportunity to file a reply and object to the Section 95 application and the Resolution Professional's report. Therefore, the Tribunal found no procedural irregularity and upheld the Adjudicating Authority's order dated 03.02.2022.

Conclusion:

The Tribunal dismissed the appeal, holding that Section 10A of the I&B Code does not extend to Personal Guarantors and that the Adjudicating Authority followed due process in appointing the Resolution Professional and issuing notice. The Appellant retains the right to file objections during the proceedings under Section 100.

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