Personal Guarantors

Even if there is no plea raised regarding limitation, the Court is obliged to examine the question of limitation before further proceeding in any matter | Default in the case of Personal Guarantors arises when the guarantees were invoked making them liable to pay the debt – Bank of Maharashtra Ltd. Vs. Mr. Suraj Bharatkumar Parekh – NCLT Mumbai Bench

The Hon’ble NCLT Mumbai Bench held that it is well settled that even if there is no plea raised regarding limitation, the Court is obliged to examine the question of limitation before further proceeding in any matter. The default in the case of Personal Guarantors arises when the guarantees were invoked making them liable to pay the debt. Generally, the default date of the principal borrower is the date of default for the guarantor also. However, it may not always be the same, rather it depends upon the nature and contents of the deed of guarantee executed by the guarantor.

Even if there is no plea raised regarding limitation, the Court is obliged to examine the question of limitation before further proceeding in any matter | Default in the case of Personal Guarantors arises when the guarantees were invoked making them liable to pay the debt – Bank of Maharashtra Ltd. Vs. Mr. Suraj Bharatkumar Parekh – NCLT Mumbai Bench Read Post »

When last day of limitation falls on a public holiday, the said period shall be excluded from calculation of period u/s 61 of IBC – Kotak Mahindra Bank Ltd. Vs. Mohit Kumar – NCLAT New Delhi

The Hon’ble NCLAT held that the law as provided in the Limitation Act as well as Rule 3 of the NCLAT Rules, 2016 is that when last day of limitation falls on a public holiday, the said period shall be excluded. Thus, when last days of limitation i.e. 30th day is falling on public holiday, benefit of said public holiday can be extended to the applicant. The submission of the Appellant that all Saturdays and Sundays which are falling within 45 days should be excluded is clearly an absurd argument and not as per the benefit available in Limitation Act as well as Rule 3 of the NCLAT Rules, 2016.

When last day of limitation falls on a public holiday, the said period shall be excluded from calculation of period u/s 61 of IBC – Kotak Mahindra Bank Ltd. Vs. Mohit Kumar – NCLAT New Delhi Read Post »

Whether 180 days moratorium period prescribed under Section 101(1) of the IBC is directory or mandatory, and whether it can be extended by Adjudicating Authority or Appellate Tribunal? – Anil Kumar Vs. Mukund Choudhary – NCLAT New Delhi

The Hon’ble NCLAT held that:

(i) Conceding any power to the Adjudicating Authority or this Tribunal to extend the said period shall be plainly against the statutory scheme of Section 101(1).
(ii) When the statutory scheme is clear and unambiguous, there is no role of any interpretive process to find out the jurisdiction of NCLT to extend the period of Moratorium when statute provides a date for cessation of the Moratorium it cannot be extended by the Adjudicating Authority or by this Tribunal against the statutory intendment under Section 101(1).

Whether 180 days moratorium period prescribed under Section 101(1) of the IBC is directory or mandatory, and whether it can be extended by Adjudicating Authority or Appellate Tribunal? – Anil Kumar Vs. Mukund Choudhary – NCLAT New Delhi Read Post »

Stayed on proceedings under Section 138 of the Negotiable Instruments Act, 1881 upon initiation of personal insolvency in view of moratorium under Section 96 of IBC – Rakesh Rajpal Vs. Ashok Kumar Gupta – Madhya Pradesh High Court

Counsel for the petitioner submits that the trial Court as well as Revisional Court have erroneously refused to stay the proceedings under Section 138 of Negotiable Instruments Act. The petitioner is facing proceedings under Insolvency and Bankruptcy Code, 2016 and on his application, an order under Section 96 regarding interim moratorium has been passed and, therefore the proceedings ought to have been stayed. Considering the aforesaid submissions, as an interim measure, it is directed that the further proceedings pending before the concerning trial Court shall remain stayed.

Stayed on proceedings under Section 138 of the Negotiable Instruments Act, 1881 upon initiation of personal insolvency in view of moratorium under Section 96 of IBC – Rakesh Rajpal Vs. Ashok Kumar Gupta – Madhya Pradesh High Court Read Post »

When no CIRP or liquidation proceedings of a Corporate Debtor is pending before the NCLT, whether an application for personal insolvency against a Personal Guarantor has to be filed before the NCLT? – Anita Goyal Vs. Vistra ITCL (India) Ltd. and Anr. – NCLAT New Delhi

The Hon’ble NCLAT referred the following judgments:

a. State Bank of India vs. Mahendra Kumar Jajodia, (2022) ibclaw.in 89 NCLAT
b. Mahendra Kumar Agarwal v. PTC India Financial Services Ltd. and Anr., (2023) ibclaw.in 488 NCLAT
c. Lalit Kumar Jain vs. Union of India & Ors. (2021) ibclaw.in 61 SC
d. Rohit Nath @ Rohit Rabindra Nath v. KEB Hana Bank Ltd. (2023) ibclaw.in 1207
e. Rohit Nath @ Rohit Rabindra Nath Vs. KEB Hana Bank Ltd. (2021) ibclaw.in 79 HC
f. State Bank of India v. V. Ramakrishnan and Anr., (2018) ibclaw.in 29 SC
g. Axis Trustee Services Ltd. vs. Brij Bhushan Singal (2022) ibclaw.in 239 HC
h. Aditya Birla Finance Ltd. v. Sarita Mishra (2024) ibclaw.in 1185 NCLT
i. Tata Capital Financial Services Ltd. vs. Arjun Agarwal, (2024) ibclaw.in 1223 NCLT

And decided the issue when no CIRP or liquidation proceedings of a Corporate Debtor is pending before the NCLT, whether an Application for personal insolvency against a Personal Guarantor has to be filed before the NCLT.

The Hon’ble Tribunal also held that judgments in Aditya Birla Finance Ltd. v. Sarita Mishra (2024) ibclaw.in 1185 NCLT and Tata Capital Financial Services Ltd. vs. Arjun Agarwal, (2024) ibclaw.in 1223 NCLT do not lay down correct law and are per incuriam.

When no CIRP or liquidation proceedings of a Corporate Debtor is pending before the NCLT, whether an application for personal insolvency against a Personal Guarantor has to be filed before the NCLT? – Anita Goyal Vs. Vistra ITCL (India) Ltd. and Anr. – NCLAT New Delhi Read Post »

In absence of an “initiated” or “pending” or “concluded” CIRP against a Principal Borrower, an application under Section 95(1) of IBC against a Personal Guarantor will not be maintainable before the NCLT, recovery proceedings will lie only before the DRT – State Bank of India Vs. Nikunj Bothra – NCLT Kolkata Bench

The Hon’ble NCLT Kolkata Bench held that:

(i) 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.
(ii) 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.

In absence of an “initiated” or “pending” or “concluded” CIRP against a Principal Borrower, an application under Section 95(1) of IBC against a Personal Guarantor will not be maintainable before the NCLT, recovery proceedings will lie only before the DRT – State Bank of India Vs. Nikunj Bothra – NCLT Kolkata Bench Read Post »

Report of RP under Section 99 of IBC, 2016 is purely recommendatory in nature and cannot bind the Adjudicating Authority – Bank of Baroda Vs. Mr. Bharat Raj Punj – NCLT Allahabad Bench

In this judgment, following issues are covered:
A. A proceeding against a personal guarantor
B. Personal Guarantor resigned from the post of Managing Director
C. Guarantee is conditional and it is limited to the value of the assets inherited by him
D. Insolvency Petition filed by the Financial Creditor Bank of Baroda unilaterally without taking any approval from the Consortium of Banks
E. Report submitted by the RP is purely recommendatory in nature and cannot bind the Adjudicating Authority
F. The role of the Adjudicating Authority in personal insolvency
G. Personal Guarantor to have been given opportunity by a issuance of notice to him before the appointment of the RP
H. Conclusion

Report of RP under Section 99 of IBC, 2016 is purely recommendatory in nature and cannot bind the Adjudicating Authority – Bank of Baroda Vs. Mr. Bharat Raj Punj – NCLT Allahabad Bench Read Post »

The essence of proceedings against a Personal Guarantor remains a recovery proceeding, which is clear from the words “Repayment Plan” as against a “Resolution Plan”, which is so generic a word meant for resolving a corporate person – Indian Bank Vs. Mr. Ankur Prahladka – NCLT Kolkata Bench

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The essence of proceedings against a Personal Guarantor remains a recovery proceeding, which is clear from the words “Repayment Plan” as against a “Resolution Plan”, which is so generic a word meant for resolving a corporate person – Indian Bank Vs. Mr. Ankur Prahladka – NCLT Kolkata Bench Read Post »

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