Tribunal rules personal guarantor not secured creditor under IBC

The Tribunal dismissed the appeal, ruling that the application under Section 60(5) of the Insolvency and Bankruptcy Code (IBC) was not maintainable as proceedings against the personal guarantor under the SARFAESI Act were deemed independent. The moratorium imposed under IBC does not prevent actions against the guarantor. The personal guarantor could not be included as a secured creditor as no security interest was established. The Tribunal held that IBC provisions supersede those of the Indian Contract Act, denying the appellant's claim as a secured creditor.

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Issues Involved:
1. Maintainability of the application under Section 60(5) of the Insolvency and Bankruptcy Code (IBC).
2. Whether the moratorium imposed during the liquidation process bars proceedings against a personal guarantor under the SARFAESI Act.
3. Obligation of the liquidator to include the personal guarantor as a secured creditor.
4. Whether the provisions of IBC override the provisions of the Indian Contract Act.

Issue-wise Analysis:

1. Maintainability of the Application under Section 60(5) of IBC:
The Tribunal held that the application under Section 60(5) of IBC was not maintainable. The appellant, a personal guarantor, filed the application claiming various reliefs. The Tribunal referred to the Supreme Court's decision in "Gujarat Urja Vikas Nigam Limited Vs. Amit Gupta," which clarified that the jurisdiction of NCLT under Section 60(5)(c) of the IBC cannot be invoked in matters unrelated to the insolvency of the corporate debtor. The proceedings under SARFAESI Act against the personal guarantor were deemed independent and not related to the insolvency of the corporate debtor. Therefore, the Tribunal concluded that the application under Section 60(5) was not maintainable.

2. Moratorium Imposed During Liquidation Process:
The Tribunal addressed the appellant's contention that the moratorium imposed under Section 14 and Section 33(5) of IBC bars proceedings against the personal guarantor. The Tribunal noted that Section 14(3) explicitly excludes sureties in a contract of guarantee from the moratorium. The Tribunal also referred to the Delhi High Court's decision in "Kiran Gupta Vs. State Bank of India," which held that the moratorium does not prevent creditors from proceeding against guarantors. The Tribunal concluded that the moratorium under IBC does not bar proceedings against the personal guarantor under the SARFAESI Act.

3. Obligation to Include Personal Guarantor as a Secured Creditor:
The Tribunal examined whether the personal guarantor could be included as a secured creditor in the list of creditors prepared under Section 38 of IBC. The Tribunal noted that the appellant did not raise this specific contention before the adjudicating authority. The Tribunal referred to Sections 128 and 140 of the Indian Contract Act, which state that a surety's liability is co-extensive with that of the principal debtor. However, the Tribunal emphasized that the appellant could not be considered a secured creditor under IBC as no security interest was created in his favor. Therefore, the appellant could not be included in the list of secured creditors.

4. Provisions of IBC vs. Indian Contract Act:
The Tribunal discussed the interplay between IBC and the Indian Contract Act. It referred to the Supreme Court's decision in "Lalit Kumar Jain vs. Union of India," which held that the approval of a resolution plan does not discharge a personal guarantor's liabilities under the contract of guarantee. The Tribunal concluded that the provisions of IBC override the provisions of the Indian Contract Act. Consequently, the appellant could not claim to be a secured creditor under IBC despite having rights under Section 140 of the Indian Contract Act.

Summary of Findings:
1. The application under Section 60(5) of IBC is not maintainable as the proceedings under SARFAESI Act against the personal guarantor are independent and unrelated to the insolvency of the corporate debtor.
2. The moratorium imposed under IBC does not bar proceedings against the personal guarantor under the SARFAESI Act.
3. The appellant, as a personal guarantor, cannot be included as a secured creditor in the list of creditors under IBC as no security interest was created in his favor.
4. The provisions of IBC override the provisions of the Indian Contract Act, and the appellant cannot claim to be a secured creditor under IBC.

Conclusion:
The Tribunal dismissed the appeal, holding that the appellant is not entitled to any relief under Section 60(5) of IBC, the moratorium does not bar proceedings against the guarantor under SARFAESI Act, and the appellant cannot be included as a secured creditor under IBC. The provisions of IBC override the provisions of the Indian Contract Act.

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