AI Drafter 
TaxTMI 
TaxTMI 
2026 (4) TMI 1748
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.... Andalamma, contended that he becomes a necessary party to be impleaded, to the proceedings carried by Respondent No.1 as against Respondent No.2, under Section 95 of the I & B Code, 2016, which was registered before the Learned NCLT, Hyderabad Bench - I, in the shape of CP(IB) No.393/95/HDB/2022, State Bank of India Vs Sri Manchala Chandraiah. 2. The contention of the Appellant was that the Respondent No.1, Financial Creditor, is said to have extended financial assistance to M/s. Maruthi Tubes Private Limited, (the Respondent No.3), herein to the Company Appeal/Corporate Debtor and in relation to the financial assistance that was extended to Respondent No.3, the Respondent No.2 herein i.e., Sri Manchala Chandraiah, the father of the Appellant, was shown to have stood as guarantor for the loan advances. On account of the committing of a default, which is said to be have chanced on 16.09.2022, an amount of Rs.5,94,11,895/- was shown to be outstanding due to be paid by Respondent No.3. 3. In an earlier proceeding, that were drawn by M/s. Dugar Polymers Ltd., who had filed CP(IB) No.15/9/HDB/2021, seeking initiation of the CIRP under Section 9 of the Code, as against the Respond....
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....of Sri Manchala Chadraiah and Late Smt. Manchala Andalamma that was only kept as a security for the guarantee, and no other property apart from the one disclosed in the guarantee by Sri Manchala Chadraiah and Late Smt. Manchala Andalamma were kept as a security for the securing the loan advances to the Corporate Debtor. 8. Late Smt. Manchala Andalamma, the mother of the Appellant and one of the guarantors of the said loan, has met with a sad demise and according to the Appellant himself, as per the law of the Succession, the property of Late Smt. Manchala Andalamma, was to be devolved upon her husband Sri Manchala Chandraiah, and further the claim raised by the Appellant was that it will also be devolving upon her children i.e., Manchala Nagesh Kumar, the Appellant i.e., Dr. Srinivas Manchala, and Sri Manchala Raghavendra. Since Sri Manchala Raghavendra had met with sad demise, the property will be devolving upon his legal heirs. However, this is a subject to be decided on an independent civil proceeding, which is still pending consideration. 9. The Appellant, had come up with a case that the proceedings of OA No.175/2020, that was allowed ex-parte on 13.12.2023, and since th....
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....ause of which the Respondent No.1/Bank vide its letter of 03.01.2022, has stated that it was by mistake the Appellant was included in the list of guarantors, as he was a legal heir of Late Smt. Manchala Andalamma. But it is an admitted case that the bank would withdraw the name of the Appellant as a guarantor and will issue a fresh notice to the Appellant only as the legal heir of Late Smt. Manchala Andalamma. The case of the Appellant is that, knowing well that the Appellant had a coparcenary right over the property of the deceased guarantor, Late Smt. Manchala Andalamma, the proceedings drawn by the Financial Creditor by invocation of Section 95 of the I & B Code, 2016, would be bad and it could not be permitted to be carried, and it is unsustainable in the eyes of law. When the IA (Intervention Petition) (IBC) No.4/2026, when it came up for consideration before the Learned Tribunal. The Learned Tribunal has proceeded to reject the same on the ground that: - (i) No intervention would be maintainable since the intervention application was preferred on 02.02.2026 in a Company Petition, which has already been finally decided on 28.01.2026. (ii) Secondly, since the ....
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....ent Company Petition. Further, the rights and liabilities of Sri Manchala Chandraiah, would be restricted in accordance with the terms of the guarantee deed executed by the Sri Manchala Chandraiah in favour of the Respondent No.1, and all interse rights and liabilities flowing between the Respondent No.1 and Respondent No.2 would be exclusively governed by the terms and conditions of the guarantee document which will be binding on Respondent No.2, and it will not at all lead to creation of any right or liability in respect to the Appellant, who only claims to be the coparcener of Late Smt. Manchala Andalamma, who is not a party to the present proceedings and no proceedings as against Late Smt. Manchala Andalamma has ever been drawn by Respondent No.1 under Section 95 of the Code, though she was admittedly one of the guarantors. Since property covered under the guarantee deed executed by the Late Smt. Manchala Andalamma, which was executed in favour of Respondent No.1, is not a subject matter of the proceedings of CP(IB) No.393/95/HDB/2022, which is exclusively confined to guarantee of Sri Manchala Chandraiah, the present Appellant does not become a necessary party to Section 95 pro....
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....25 Act reads as under: "Section 306 - Demands and rights of action of or against deceased survive to and against executor or administrator.- All demands whatsoever and all rights to prosecute or defend any action or special proceeding existing in favor of or against a person at the time of his decease, survive to and against his executors or administrators; except causes of action for defamation, assault, as defined in the Indian Penal Code, 1860 (45 of 1860) or other personal injuries not causing the death of the party; and except also cases where, after the death of the party, the relief sought could not be enjoyed or granting it would be nugatory."" 18. The above Judgment was dealing with the case in relation to the personal rights arising out of the contractual obligation or the rights that relate to the statutes. The Hon'ble Apex Court was drawing an interpretation qua the provision contained under Section 306 of the Indian Succession Act, 1925. In the context of the ratio of a maxim, "actio personalis moritur cum persona". If the principles laid down in the said Judgment are taken into consideration, laying down the principles as to whether the legal repr....
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....ual", here because otherwise under the I & B Code, the person had been independently defined and that is why under Sub-Section (22) of Section 5 of the I & B Code, 2016, the word "person", has not been used, which could have include the person as defined under Sub-Section (23) of Section 3 of the I & B Code, 2016, which includes apart from individual, HUF, trust, partnership, LLP and any entity established under a statute and such other hierarchy of family. Hence, from that perspective, if the proceedings under Section 95 of the I & B Code, 2016, is restricted to be regulated against the personal guarantors, as defined under Sub-Section (22) of Section 5 of the I & B Code, 2016, and when Section 95 of the I & B Code, 2016, in itself restricts its proceedings against the guarantors, a person claiming the coparcenary right may not be falling within the zone of consideration to be impleaded for the purposes of deciding the proceeding under Section 95 of the I & B Code, 2016. 22. It is not in doubt that, the proceedings under Section 95 of the I & B Code, 2016, are governed under the provisions of the special statute, and it would not entail within it, determination of any proclaime....
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....on it had been the case of the Appellant that a guarantee executed by the personal guarantor was not a validly executed guarantee. In these situations, is the Appellant who is not a party to the guarantee contract, would not be bound by the terms of the Guarantee Agreement and therefore, he would not be the necessary party who is at all required to be impleaded. Even otherwise also in the absence of Appellant being made as a party to the proceedings, the application under Section 95 of the I & B Code, 2016, could be effectively decided. Hence, he would not be a necessary party to intervene in the proceedings, since not being a necessary or a contracting party. In that view of the matter, too, the rejection of the application has been rightly justified by the Learned Tribunal, while passing the impugned order. Hence, the impugned order does not call for any interference. 25. We will have to look at the controversy in the light of the provisions contained under Sections 126 & 127 of the Contract Act, and the same is extracted hereunder: - "126. "Contract of guarantee", "surety", "principal debtor" and "creditor".-A "contract of guarantee"&nbs....