IBC personal guarantor process: Resolution Professional's report is recommendatory, natural justice applies at Adjudicating Authority stage, and DRT withdrawal has no effect.
Sections 95 to 100 of the IBC personal guarantor process are described as a separate statutory framework in which the Resolution Professional's role under Section 99 is recommendatory, not adjudicatory. Natural justice is said to arise principally when the Adjudicating Authority considers the Section 99 report under Section 100, and the text states that multiple opportunities to respond were given but not used, so no denial of fair hearing was found. The withdrawal of DRT proceedings pursuant to a settlement did not affect the independent Section 95 insolvency process. Additional objections on jurisdiction, fresh demand notice, and claimed amounts were treated as matters that should have been raised earlier and not for the appellate stage.
Issues: Whether, at the stage of consideration of the resolution professional's report under Section 99 of the Insolvency and Bankruptcy Code, 2016, the personal guarantor was entitled to a separate hearing before the adjudicating authority passed an order under Section 100, and whether the orders admitting the applications under Section 95 were vitiated for breach of natural justice.
Analysis: The report under Section 99 is only facilitative and recommendatory. The resolution professional is required to examine the application, gather relevant information, seek explanations where necessary, and recommend acceptance or rejection; no adjudicatory function is vested in that stage. Judicial determination begins only when the adjudicating authority considers the matter under Section 100. The principles of natural justice apply at the Section 100 stage, and the record showed that the personal guarantors were given multiple opportunities to respond, were supplied the report, and were granted time to file objections before their right to reply was forfeited. In that backdrop, the grievance of denial of opportunity was not made out.
Conclusion: The challenge based on violation of natural justice failed, and the orders admitting the applications under Section 95 were upheld.
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