TaxTMI 
TaxTMI 
2021 (8) TMI 797
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....y Code, 2016 (hereinafter referred as Code) read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (Personal Guarantors Insolvency Rules) against Ketan Vinod Kumar Shah, Personal Guarantor/Respondent of the Corporate Debtor S.K. Products LLP, for initiating Insolvency Resolution Process. 3. The brief facts of the case are that the Corporate Debtor S.K. Products LLP, had applied for sanction of loan from the Financial Creditor vide application form dated 05.10.2018. The total amount due is Rs. 31,52,781/- which includes principal outstanding of Rs. 27,50,000/- alongwith interest of Rs. 4,02,781/- @18% p.a. from 12....
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.... settled law, the guarantor cannot insist that the creditor must first exhaust all remedies against the principal debtor before recovering the debts from surety holders. The liability of principal debtor and the surety though coextensive are separate liabilities arising out of the same transaction. 8. The Ld. Counsel for the Financial Creditor had relied upon the judgment of Hon'ble National Company Law Appellate Tribunal (hereinafter referred as NCLAT) in the case of State Bank of India Vs. Athena Energy Ventures Private Limited, in which it is held that Corporate Insolvency Resolution Process (hereinafter referred as CIRP) can be initiated against both the Corporate Debtor as well as personal guarantor simultaneously for the same set of ....
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....uarantors. Further, the appellate authority has also admitted a petition to review its aforesaid judgment in the Piramal Enterprises Limited case 33 Give this, the Committee decided that no legal changes may be required at the moment, and this issue may be left to judicial determination." 9. The Hon'ble NCLAT at Para 19 has categorically held that in the matter of guarantee, CIRP can proceed against the principal borrower as well as guarantor. 10. The Hon'ble NCLAT also clarified that in the matter of Dr. Vishnu Kumar Agarwal Vs. Piramal Enterprises Limited, it was held that once a petition under section 7 of the Code is filed against the principal debtor and CIRP is initiated, the Financial Creditor cannot file another application on the....
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....the CIRP proceedings against M/s Athena Chattisgarh Power Limited. (Principal Borrower). The IRP/RP will act in accordance with law keeping observations in this judgment in view. No order as to costs." 11. In view of the ratio laid down by the Hon'ble NCLAT in the matter of State Bank of India Vs. Athena Chhattisgarh Power Ltd., the Financial Creditor for initiate proceedings simultaneously against the principal borrower and the corporate guarantor. In the case of Edelweiss Asset Reconstruction Company Limited Vs. Sachet Infrastructure Limited and others, the Hon'ble NCLAT permitted simultaneous initiation of CIRP against the principal borrower and its corporate guarantor. REPLY BY THE PERSONAL GUARANTOR 12. The Personal Guarantor/Resp....
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.... borrower and guarantor is coextensive as enunciated u/s 128 of the Contract Act, 1872, and the Creditor may proceed against the principal borrower or the guarantor simultaneously, however, the judgement of Hon'ble NCLAT in the case of Dr. Vishnu Kumar Agarwal Vs. Piramal Enterprises Limited, it was laid down that there cannot be two CIRP proceedings, one against the borrower and one against the guarantor. 14. The judgment of Hon'ble NCLAT in State Bank of India Vs. Athena Energy Ventures Private Limited, further clarified that CIRP can be initiated against the principal borrower and the guarantor. 15. The issue for consideration is whether a Financial Creditor can initiate CIRP against the personal guarantor in the absence of any resolut....
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.... contemplated under Part III of this Code for the purpose of sub-section (2). (5) Notwithstanding anything to the contrary contained in any other law for the time being in force, the National Company Law Tribunal shall have jurisdiction to entertain or dispose of- (a) any application or proceeding by or against the corporate debtor or corporate person; (b) any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and (c) any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code. 6. Notwithstandin....