TaxTMI 
TaxTMI 
2026 (6) TMI 1153
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....the controversy at hand. And more importantly, what is being primarily argued by the Ld. Counsel for the Appellant, is that, the entire proceedings of admission of the application filed under Section 95 of the Code, would be vitiated because the deed of guarantee dated 30.05.2019 of the Appellant and that of the other Co-Guarantor were not placed on record. And furthermore, that the entire proceedings have been carried on the basis of letter of guarantee. 3. The facts that could be culled out from the records of the company appeal are that, M/s. Furnace Fabrica (India) Limited, the Corporate Debtor, is a company engaged in the manufacture of structural metal products, tanks, reservoirs and steam generators. In order to continue with their business and to augment the same, admittedly, the Corporate Debtor had approached the Respondent/Financial Creditor in 2019 for availing of the financial assistance, to the tune of Rs. 36,00,00,000/- (Rupees Thirty-Six Crores only) in the shape of a term loan and working capital facility and thereafter an additional amount of Rs. 3,60,00,000/- (Rupees Three Crore Sixty Lakhs Only), totalling to Rs. 39,60,00,000/- (Rupees Thirty-Nine Crore Sixty....
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....being on record, the Appellant could not have at all been determined as to be a Personal Guarantor to the Corporate Debtor. 8. In response, it was submitted by the Respondent herein that, non-production of the Guarantee Deed of 30.05.2019 will not have any adverse bearing on the proceedings under Section 95 of the Code, owing to the peculiar circumstances of the instant case, where it has already been admitted by the Appellant, of his status of being the Personal Guarantor herein and when admittedly he was the signatory to the term loan agreement dated 30.05.2019 in the capacity of being the Personal Guarantor. 9. Hence, irrespective of whether there happens to be any independent Guarantee Agreement on record or not, the same will not override the admission made by the Appellant as regards his status as a guarantor when he himself was the executant of the loan agreement, having signed the same in the capacity of being the Personal Guarantor. The facts pertaining to the terms of the loan agreement, the existence of signatures, the extension of the financial assistance and the description of his status as a Personal Guarantor, were the facts which have not been disputed or rais....
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....uarantee is to establish a liability, which will be restricted by the terms of the contract in an event of default by the principal borrower. But once the status of the Personal Guarantor itself is a fact, which stands determined and settled by the own conduct of the Personal Guarantor having signed the loan agreement, that itself will meet the object and the necessity of execution of the deed of guarantee. 14. The argument of the Ld. Counsel for the Appellant is, that the proceedings are vitiated due to non-production of the deed of guarantee executed by the Respondent/Financial Creditor for the purposes to determine the Appellant's status as to be a Personal Guarantor. We could have a reference to the definition of "Personal Guarantor" as given under Section 5(22) of the Code, which reads as under: - "(22) "personal guarantor" means an individual who is the surety in a contract of guarantee to a corporate debtor;" 15. The legislature has contemplated that the Personal Guarantor is an individual who is the "surety in a contract of guarantee to the Corporate Debtor". Thus, it has to be examined as to whether the same is satisfied in the documents filed by the Fin....
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.... of the document itself. When there is no plea of fraud ever raised in relation to the signature of the Applicant in the status of Personal Guarantor, appearing in the loan agreement itself, the Appellant now cannot deny the liability of his status as that being of a Personal Guarantor. 18. This could be further confirmed from the audited books of accounts of the Corporate Debtor, which show the existence of loan and from the clauses of the agreement of the term loan dated 30.05.2019 which records the status of the Appellant being the Guarantor for the loan facility being extended loan to the borrower as per the terms and conditions appearing in the agreement, in which the Appellant as a Guarantor has guaranteed by affixing his signature to the said document, the extension of financial assistance and the discharge of its obligations. The relevant extract from the loan agreement dated 30.09.2019 is given hereunder: - 8. Guarantee a) In consideration of the Lender, at the request of the Guarantor, granting the facility to the Borrower on the terms and conditions appearing in the T&Cs and this Agreement, the Guarantor, hereby guarantees the due payment and dischar....