TaxTMI 
TaxTMI 
2026 (7) TMI 1057
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....brata Das, who is a Personal Guarantor and was a Director of the Borrower namely M/s Haridra Vintrade Private Limited, is Respondent in Company Appeal (AT) (INS) 451 of 2025. Rahul Gupta, who is a Personal Guarantor and was a Director of the Borrower namely M/ s Haridra Vintrade Private Limited, is the is Respondent in Company Appeal (AT) (INS) 452 of 2025. 2. The Appellant contended that the Respondents were Directors of M/s Haridra Vintrade Private Limited, the Principal Borrower, and had executed a Personal Guarantees in respect of the Cash Credit Facility availed by the said company. It was further submitted that the Principal Borrower had approached the Appellant Bank on 06.06.2022 seeking a Cash Credit Facility. The Appellant further submitted that after examining the credentials and documents of the Principal Borrower, the Appellant sanctioned a Cash Credit Facility of Rs. 250 lakhs vide Sanction Letter dated 15.07.2022. The Appellant contended that pursuant thereto, the Respondents executed Letter of Guarantee in favour of the Appellant, thereby personally guaranteeing repayment of the said credit facility. 3. The Appellant submitted that subsequently the loan acco....
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....rty (Supra), we can safely conclude that: a. In terms of Section 60(1) and (2) read with Section 179 of the I&B Code, NCLT is the only Adjudicating Authority in respect of Personal Guarantors to a Corporate Debtor where a corporate insolvency resolution process or liquidation proceeding initiated against a corporate debtor is either pending before a National Company Law Tribunal or is already concluded. b. In absence of an "initiated" or "pending" or ' "concluded" CIRP against a Principal Borrower, an application under Section 95(1) to initiate Insolvency Resolution Process against a Personal Guarantor to a Corporate Debtor will not be maintainable before the NCLT. The Recovery Proceedings will lie only before the Debt Recovery Tribunal (DRT) having territorial jurisdiction." (Emphasis supplied) 8. From above, it is noted that the Adjudicating Authority is under impression that NCLT can proceed against Personal Guarantor of the Corporate Debtor only if CIRP or Liquidation proceedings against the Corporate Debtor has been initiated or completed. 9. Thus, only issue we have to decide in the present appeal is whether the Adjudicating Authority can procee....
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....od that the IBC aims for speed as well as value maximisation of the Corporate Debtor, thus forcing creditors onto a sequential and delayed recovery path will be against the very spirit of the Code. 13. In this connection, we will refer to the judgment of this Appellate Tribunal in Anita Goyal Versus Vistra ITCL (India) Ltd. & Anr (Company Appeal (AT) (Insolvency) No.2282 of 2024). The relevant paragraph of the said judgement reads as under: "10. Now, we come to the submission of the learned Counsel for the Appellant that NCLT has no jurisdiction to entertain Section 95 Application filed by the Financial Creditor and the Application ought to have been filed before the DRT. Although learned Counsel for the Respondent has contended that the objection regarding jurisdiction having not been raised before the NCLT, we proceed to examine the contention on merit. The issue raised by the Appellant needs consideration and answer in these Appeal(s) to clarify the law on the subject. 11. The submission which has been pressed by the Counsel for the Appellant is that NCLT shall be the Adjudicating Authority for Personal Guarantor only when proceeding of insolvency resolution....
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....y Financial Creditor against Personal Guarantor under Section 95, sub-section (1). The Application came to be rejected by NCLT Kolkata Bench, holding that NCLT shall have jurisdiction only when the proceedings for insolvency resolution or liquidation is pending against the Corporate Debtor and the Application under Section 95 filed by the Financial Creditor was dismissed. It is relevant to notice that NCLT Kolkata Bench had noticed the judgments of this Tribunal in State Bank of India vs. Mahendra Kumar Jajodia as well as Mahendra Kumar Agarwal vs. PTC India Financial Services case, but NCLT proceeded to distinguish the said judgments without there being any real distinction in the issue, which has arisen for consideration. To the similar effect is another judgment of NCLT Kolkata Bench in Tata Capital Financial Services Ltd. vs. Arjun Agarwal decided on 20.12.2024, i.e., on the same date, on which judgment of Aditya Birla Finance Ltd. was delivered. In the said judgment also the same view was taken by the NCLT Kolkata Bench while dismissing Section 95 Application filed by the Financial Creditor. The above two judgments, delivered by NCLT Kolkata Bench are in teeth of binding judgm....
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....e Court of India in the matter of ''Industrial Investment Bank of India Versus Biswanath Jhunjhunwala" [2009 SCC OnLine SC 1515], observed as under: "15. ***The very object of the guarantee is defeated if the creditor is asked to postpone his remedies against the surety. In the present case the creditor is a banking company. A guarantee is a collateral security usually taken by a banker. The security will become Useless if his rights against the surety can be so easily cut down." (Emphasis supplied) 16. We would also refer to another judgement of the Hon'ble Supreme Court of India in the matter of Bank of Bihar Ltd. Versus Damodar Prasad & Anr. [1968 SCC OnLine SC 280] wherein after having relied upon the judgment of the Division Bench of the Hon'ble Bombay High Court in the case of Lachhman Joharimal Vs. Bapu Khandu & Surety Tukaram Khandoji has observed as under: "A creditor is not bound to exhaust his remedy against the principal debtor before suing the surety and that when a decree is obtained against a surety, it may be enforced in the same manner as a decree for any other debt." (Emphasis supplied) 17. We find that surety's liability ....