Non-implementation of the resolution plan cannot be a ground for the High Court to entertain the writ petition – Sanjay Sarin Vs. The Authorised Officer, Canara Bank & Ors – Delhi High Court

The Court held that on a bare perusal of the the judgment of Supreme Court in Lalit Kumar Jain v. Union of India (2021) ibclaw.in 61 SC, it is clear that the Supreme Court has, in very clear terms, held that discharge of the corporate debtor from a debt owed by it to its creditors, by way of an involuntary process such as insolvency proceedings, does not absolve the guarantor of its liability since it arises out of an independent contract. Thus, the passing of a resolution plan does not ipso facto discharge the personal guarantor. The Court also held that under Section 33(3) of the IBC, Respondent No. 1 certainly has the right to proceed against the collateral securities for recovery of its dues – which are independent of the resolution plan approved by the NCLT. If the resolution plan approved by the Adjudicating Authority is contravened by the concerned corporate debtor, any person other than the corporate debtor, whose interests are prejudicially affected, may make an application to the Adjudicating Authority for an order for liquidation. Where a resolution applicant succeeds as a corporate debtor, but fails to comply with its assurance in terms of the resolution plan, then subsequent step to be taken has been specified in Section 33(3) of the IBC.

Non-implementation of the resolution plan cannot be a ground for the High Court to entertain the writ petition – Sanjay Sarin Vs. The Authorised Officer, Canara Bank & Ors – Delhi High Court Read Post »