Personal guarantor liability survives unpaid debt, and DRT recovery proceedings do not bar Section 95 insolvency initiation.

A personal guarantor's liability continued because the debt was not shown to have been fully discharged by repayments, plan allocations, or any no-dues certificate, settlement, novation, or waiver; the certified bank statement and the guarantee terms supported subsisting liability. Pendency of recovery proceedings before the DRT did not bar initiation of insolvency proceedings under Section 95 of the Insolvency and Bankruptcy Code, as the Code operates independently and need not await the recovery forum's outcome. Alleged defects in verification or notice did not vitiate the admission order where the guarantors had participated, replied, and filed objections without demonstrated prejudice.

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Issues: (i) Whether the debt due from the personal guarantors subsisted despite the repayments and plan payments relied upon by them. (ii) Whether pendency of recovery proceedings before the DRT barred initiation of proceedings under Section 95 of the Insolvency and Bankruptcy Code, 2016. (iii) Whether alleged defects in verification and notice vitiated the admission order.

Issue (i): Whether the debt due from the personal guarantors subsisted despite the repayments and plan payments relied upon by them.

Analysis: The certified bank statement was treated as binding under the guarantee deed, and the Appellants' own repayment calculations could not override it. The payments and acknowledgements relied upon did not amount to a discharge, and no no-dues certificate, settlement, novation, waiver, or other document extinguishing liability was shown. The approved resolution plan also did not expressly discharge the guarantors, and the unpaid balance after plan allocation continued to remain recoverable with the guarantors' co-extensive liability intact.

Conclusion: The debt subsisted and the challenge on the ground of extinguishment of liability failed, against the Appellants.

Issue (ii): Whether pendency of recovery proceedings before the DRT barred initiation of proceedings under Section 95 of the Insolvency and Bankruptcy Code, 2016.

Analysis: Pendency of DRT proceedings was held not to bar insolvency proceedings, since the Code operates as an independent statutory regime and the Adjudicating Authority was not required to await the outcome of the DRT dispute. The principle applicable to section 7 proceedings was applied pari materia to personal guarantor proceedings under section 95.

Conclusion: The pendency of DRT proceedings did not bar admission of the Section 95 application, against the Appellants.

Issue (iii): Whether alleged defects in verification and notice vitiated the admission order.

Analysis: The Appellants participated in the proceedings, replied to notices, filed objections, and made written submissions before the Adjudicating Authority. Any alleged lapse in service or verification did not cause prejudice, and the substantive finding of debt and default remained unaffected.

Conclusion: The alleged procedural defects did not invalidate the impugned admission order, against the Appellants.

Final Conclusion: The admission of insolvency proceedings against the personal guarantors was upheld, and both appeals failed.

Ratio Decidendi: A personal guarantor's liability continues where the debt is not shown to have been fully discharged, and pendency of separate recovery proceedings does not prevent initiation of insolvency proceedings under the Code.

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