TaxTMI 
TaxTMI 
2021 (10) TMI 706
X X X X Extracts X X X X
X X X X Extracts X X X X
....r viz., PNB Housing Finance Ltd. is a Company incorporated under the erstwhile Companies Act, 1956. The Applicant/Creditor Company is in the business of Housing Finance. It is stated by the Applicant that a Loan Agreement dated 10.03.2017 was executed by and between the Applicant/Creditor and the Corporate Debtor herein along with its co-borrowers, namely, Sarv Realtors Private Limited and ASP Sarin Realty Private Limited. 3. It is stated by the Applicant that in order to secure the aforesaid loan amount, an irrevocable Deed of Guarantee dated 10.03.2017 was executed by the Personal Guarantor herein, in favour of the Financial Creditor, in terms of which the Guarantor unconditionally and absolutely agreed to pay, without demur, all the amounts payable by the Corporate Debtor under the Loan Agreement dated 10.03.2017. 4. It is further stated by the Applicant that the Corporate Debtor committed breach of the Loan Agreement dated 10.03.2017, inter alia, by making defaults in payments of the monthly instalments due and payable to the Financial Creditor on various dates including but not limited to 30.04.2019, 31.05.2019, 30.06.2019, 31.07.2019, 31.08.2019, 30.09.2019 and 31.10.20....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is submitted that Section 2(e) and (g) of the Code provides that the provisions of the Code shall be applicable to "personal guarantors to corporate debtors" and "individuals, other than persons referred to in clause (e)", thereby meaning individuals other than personal guarantors. 3. The proceedings under the Code for these classes are also different in as much as Personal Guarantor to a Corporate Debtor proceedings are a part of Part - II proceedings whereas insolvency resolution of individuals other than personal guarantors to corporate debtors fall under Part - III. Section 179 envisages the Debt Recovery Tribunal to be the Adjudicating Authority to individuals however, this section, i.e., Section 179 is subject to the provisions of Section 60 which defines the National Company Law Tribunal as the Adjudicating Authority in case of personal guarantors to corporate debtors. The provisions of Section 60 of the Code are clear and unequivocal as the same clearly defines the process to be carried on for insolvency resolution of personal guarantors to corporate debtors while also specifying the Adjudicating Authority in case of Section 2(e) individuals depending on the stage....
X X X X Extracts X X X X
X X X X Extracts X X X X
....118. The impugned notification authorises the Central Government and the Board to frame rules and regulations on how to allow the pending actions against a personal guarantor to a corporate debtor before the Adjudicating Authority. The intent of the notification, facially, is to allow for pending proceedings to be adjudicated in terms of the Code. Section 243, which provides for the repeal of the personal insolvency laws has not as yet been notified. Section 60(2) prescribes that in the event of an ongoing resolution process or liquidation process against a corporate debtor, an application for resolution process or bankruptcy of the personal guarantor to the corporate debtor shall be filed with the concerned NCLT seized of the resolution process or liquidation. Therefore, the Adjudicating Authority for personal guarantors will be the NCLT, if a parallel resolution process or liquidation process is pending in respect of a corporate debtor for whom the guarantee is given. The same logic prevails, under Section 60(3), when any insolvency or bankruptcy proceeding pending against the personal guarantor in a court or tribunal and a resolution process or liquidation is initiated against t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arantor) shall be, what has been provided under Section 60 of the Code [as amended vide the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018] [effective from 06.06.2018]. The Applicant has submitted that a bare perusal of Section 60 of the Code shows that this Section has following three limbs/situations, under which an Application can be entertained before this Adjudicating Authority: "A) Section 60(1) deals with the situation where the Adjudicating Authority will be NCLT having territorial jurisdiction over the place where the registered office of the corporate person is located. {fresh filing} B) Whereas Section 60(2) deals with a situation where, the Adjudicating Authority would be NCLT where CIRP or liquidation proceedings of a Corporate Debtor is pending. {pending CIRP against CD} C) Section 60 which deals with the situation where the Adjudicating Authority would be NCLT which has seized of the matter against the Corporate Debtor and the insolvency resolution process or liquidation or bankruptcy proceeding is already pending against the Corporate Guarantor or Personal Guarantor in any Court or Tribunal shall be transferred to such NCLT de....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Code, thus giving overriding effect to Section 60(2) as far as it provides that the application relating to insolvency resolution, liquidation or bankruptcy of personal guarantors of corporate debtors shall be filed before the NCLT, where proceedings relating to corporate debtors are pending.......". It is contended by the Applicant that it is clear from the aforesaid analysis that the Parliamentary intent was to treat the personal guarantor differently from other categories of individuals. 19. After hearing submissions of both the parties, perusing the documents placed on record and written submissions of the parties, this Bench is of the view that the issue which needs adjudication is that: "Whether initiation of the Corporate Insolvency Resolution Process of the Corporate Debtor is a prerequisite for maintainability of an application under Section 95 of the IBC, 2016 filed for initiating IR Process of the Personal Guarantor of that Corporate Debtor before the National Company Law Tribunal?" 20. That to decide this issue, it is necessary to check as to when the DRT can entertain an application under the IBC. Hence, we refer to the contents of Section 179(1) of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cation for initiating IR process against the Personal Guarantor. This would be evident from the following analysis of Section 60(1), 60(2) and 60(3): a) That Section 60(1) depicts a situation, where the CIR process or Liquidation process has not been initiated. The same can be inferred from the words "in relation to" insolvency resolution and liquidation for corporate persons, which includes the Pre-CIRP Period. b) That Section 60(2) depicts a situation, where the Corporate Insolvency Resolution Process or Liquidation process is already initiated and pending. The same can be inferred from the words "is pending". Further, the Hon'ble Supreme Court in the matter of Lalit Kumar Jain Vs. Union of India & Ors., Transferred Case (Civil) No. 245/2020 dated 21.05.2021, has interpreted Section 60(2) as: "95. ......... Section 60(2) prescribes that in the event of an ongoing resolution process or liquidation process against a corporate debtor, an application for resolution process or bankruptcy of the personal guarantor to the corporate debtor shall be filed with the concerned NCLT seized of the resolution process or liquidation..." c) That Section 60(....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orate debtor" means a corporate person who owes a debt to any person; 28. That the term "corporate person", used in the definition of Corporate Debtor is defined under Section 3(7) of IBC, which reads as: (7) "Corporate person" means a company as defined in clause (20) of section 2 of the Companies Act, 2013 (18 of 2013), a limited liability partnership, as defined in clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2019), or any other person incorporated with limited liability under any law for the time being in force but shall not include any financial service provider; 29. Now, we examine the case herein in the light of the aforesaid definitions given in the law. The Personal Guarantor herein has given the guarantee in respect of the loan availed by M/s. Supertech Ltd. to the Applicant/PNB Housing Finance Ltd. That the main argument of the Respondent/Personal Guarantor is that to initiate IR Process against the Personal Guarantor before this Adjudicating Authority (NCLT), it is necessary that the Corporate Debtor should be under CIR Process or Liquidation, which is not the case in the present matter. We observe that R....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y Law Tribunal in terms of Section 60(1) of IBC 2016. 33. Hence, we conclude that in a situation where Application(s) in relation to the Corporate Debtor for initiation of CIRP is pending at National Company Law Tribunal (NCLT) then, initiation of CIRP of the Corporate Debtor is not a prerequisite for maintainability of an application under Section 95 of the IBC, 2016 filed for initiating IR Process against the Personal Guarantor of that Corporate Debtor before the NCLT. 34. The Applicant has contended in its Application annexed with documents that the Personal guarantor/debtor has committed prima facie default in making repayment of the loan alongwith the interest to the Applicant, for which he has given the personal guarantee to the Applicant on behalf of the Corporate Debtor. Hence, we are inclined to proceed in the matter in accordance with the law. As regards, the issue of limited notice to the personal guarantor as held by the Hon'ble NCLAT in the matter of Ravi Ajit Kulkarni V. State Bank of India in Company Appeal (AT) (Insolvency) No. 316 of 2021 vide its judgment dated 12.08.2021, since the Personal Guarantor has already caused appearance on the advance notice, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e directed to serve the copy of this Order along with copy of the Application and documents immediately on the Resolution Professional so appointed by all modes for information and compliance. 40. List the matter on 11.10.2021. ============= Document 1 You are here Home>> Track Consignment = Track Consignment * Indicates a required field. *Consignment Number ED921847683IN Quick help Track More Booked At Booked On Destination Pincode Tariff Article Type Delivery Location Delivery Confirmed On Connaught Place SO 09/07/2021 15:00:43 201303 50.00 Speed Post Parcel Domestic Sec37 Noida 16/07/2021 So 16:25:16 Event Details For: ED921847683IN Current Status: Item Delivery Confirmed Date Time Office Event 15/07/2021 16:25:16 Sec37 Noida So 14/07/2021 10:50:08 Sec37 Noida GO 12/07/2021 10:25:55 Sec37 Noida SO 11/07/2021 07:51:42 11/07/2021 11/07/2021 04:10:43 02:55:36 Ghaziabad Ma RMS TMO Ghaziabad NSH 11/07/2021 02:49:10 Ghaziabad NSH 11/07/2021 01:38:32 Ghaziabad NSH 09/07/2021 16:27:46 Connaught Place S....