60 (2)

Interpretation of the phrases “all the debts” and “any legal actions or proceedings pending in respect of any debt” as are referred to in Section 96 of IBC and proceedings under Section 138 of NI Act, 1881 even a cheque was issued by the Personal Guarantor in his personal capacity and was not in any manner in discharge of any corporate debt – Vijay Kumar Ghai Vs. Pritpal Singh Babbar – Punjab & Haryana High Court

Whether criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881, would also remain stayed in terms of Section 96 of the Code, even where the cheque in question was not issued to discharge a corporate debt, though issued by a personal guarantor qua a corporate debtor. The Hon’ble High Court held that personal guarantors to corporate debtors are to be treated differently from other categories of individuals who would be covered by Part III of the Code, with it to be again observed that personal guarantors have however only been defined in Section 5(22) falling in Part II thereof and not in Part III. Though in the opinion of this court otherwise a proceeding under Section 138 of the Act, qua a debt as is wholly incurred qua an individual who is not in any manner connected to the corporate debtor that the petitioner stood a personal guarantor for, nor to the corporate debt itself, would need to proceed independently so as not to make the complainant in such proceedings under Section 138 suffer further delays, especially when in the present case he has already suffered a delay of about 10 years since his complaint was initially filed, however, in the light of the aforesaid observations as also the fact that Section 96 of the Code does not specifically carve out any exception qua such a debt as is subject matter of an instrument in the context of which a complaint under Section 138 of the Act has been filed, this court would have to interpret the terms “all the debts” and “any legal action or proceedings pending in respect of any debt” as occur in Section 96 of the Code, to mean that it would cover all such debts including any debt not pertaining to a corporate debtor for whom the accused in such a complaint under Section 138 stood as a personal guarantor to, even in his capacity as a Director of such corporate debtor.

Interpretation of the phrases “all the debts” and “any legal actions or proceedings pending in respect of any debt” as are referred to in Section 96 of IBC and proceedings under Section 138 of NI Act, 1881 even a cheque was issued by the Personal Guarantor in his personal capacity and was not in any manner in discharge of any corporate debt – Vijay Kumar Ghai Vs. Pritpal Singh Babbar – Punjab & Haryana High Court Read Post »

There is no pre-condition of pendency of CIRP or Liquidation against the Principal Borrower for initiating Insolvency Resolution Process against the Personal Guarantor – UCO Bank Flagship Corporate Branch Vs. Navin Kumar Jain – NCLAT New Delhi

After Hon’ble Supreme Court dismissed the appeal in Mahendra Kumar Jagodia case, NCLAT, in this case, confirmed that there is no pre-condition of pendency of CIRP or Liquidation against the Principal Borrower for initiating Insolvency Resolution Process against the Personal Guarantor. NCLAT held that the dismissal of Civil Appeal by the Hon’ble Supreme Court on 06.05.2022 clearly approved the view taken by this Tribunal. It also held that the judgment of the Hon’ble Supreme Court in “Lalit Kumar Jain” does not support this case. NCLAT interpreted the Section 60 of IBC as the use of expression “without prejudice to sub-section (1)” under sub-section (2) makes it clear that provision of sub-section (2) in no manner cuts down the generality of the meaning of sub-section (1). The provision of Section 60(2) in no manner can cut down the generality of Section 60(1). Section 60(2) has been engrafted to cover the specific situation and the provision is an addition to and is supplemental to provision of Section 60(1).

There is no pre-condition of pendency of CIRP or Liquidation against the Principal Borrower for initiating Insolvency Resolution Process against the Personal Guarantor – UCO Bank Flagship Corporate Branch Vs. Navin Kumar Jain – NCLAT New Delhi Read Post »

Once the Corporate Debtor was admitted into CIRP and Resolution Plan is approved, yet NCLT is vested with the jurisdiction to entertain the Petition related to Personal guarantees of Corporate Debtor – State Bank of India Vs. Ms. Savita Satish Gowda – NCLT Mumbai Bench

The question which arises for consideration is whether the petition filed for Initiation of insolvency of the Personal Guarantor is maintainable in view of the fact that the Resolution Plan is approved. The AA hold that the CIRP of the Corporate Debtor was commenced and the Resolution plan was approved by this Tribunal and the jurisdiction to entertain the Petition of the Personal Guarantor is vested by the Tribunal under section 60(1)(2)(3) of the Code. Once the Corporate Debtor was admitted into CIRP and Resolution Plan is approved, yet the Tribunal has the territorial jurisdiction to hear any applications filed by the Monitoring Committee and in the instant case, Interim Applications with regard to implementation of Resolution Plan are pending before the Tribunal and therefore this Tribunal is vested with the jurisdiction to entertain the Petition related to Personal guarantees of Corporate Debtor.

Once the Corporate Debtor was admitted into CIRP and Resolution Plan is approved, yet NCLT is vested with the jurisdiction to entertain the Petition related to Personal guarantees of Corporate Debtor – State Bank of India Vs. Ms. Savita Satish Gowda – NCLT Mumbai Bench Read Post »

The Section 60(2) does not in any way prohibit filing of insolvency proceedings under Section 95 of the Code against Personal Guarantor even if no proceeding are pending against the Corporate Debtor before NCLT – State Bank of India Vs. Mahendra Kumar Jajodia – NCLAT New Delhi

NCLAT holds that Sub-Section 1 of Section 60 provides that Adjudicating Authority for the corporate persons including corporate debtors and personal guarantors shall be the NCLT. The Sub-Section 2 of Section 60 requires that where a CIRP or Liquidation Process of the Corporate Debtor is pending before ‘a’ National Company Law Tribunal the application relating to CIRP of the Corporate Guarantor or Personal Guarantor as the case may be of such Corporate Debtor shall be filed before ‘such’ National Company Law Tribunal. The purpose and object of the sub-section 2 of Section 60 of the Code is that when proceedings are pending in ‘a’ National Company Law Tribunal, any proceeding against Corporate Guarantor should also be filed before ‘such’ National Company Law Tribunal. The idea is that both proceedings be entertained by one and the same NCLT. The sub-section 2 of Section 60 does not in any way prohibit filing of proceedings under Section 95 of the Code even if no proceeding are pending before NCLT.

The Section 60(2) does not in any way prohibit filing of insolvency proceedings under Section 95 of the Code against Personal Guarantor even if no proceeding are pending against the Corporate Debtor before NCLT – State Bank of India Vs. Mahendra Kumar Jajodia – NCLAT New Delhi Read Post »

When an Application under Section 7 of IBC cannot be entertained for a debt, which is barred by time and is liable to be rejected, any addition in the claim, which may fall into the category of time barred debt, also cannot be entertained – Ome Prakash Verma (Suspended Director of Neesa Leisure Ltd.) Vs. Amit Jain, (RP of Neesa Leisure Ltd.) – NCLAT New Delhi

NCLAT set aside the order of the AA holding that that the Resolution Professional does not enjoy the adjudicatory functions. The Adjudicating Authority has complete jurisdiction to adjudicate on the claim, which was filed against the Corporate Debtor. When an Application under Section 7 cannot be entertained for a debt, which is barred by time and is liable to be rejected, any addition in the claim, which may fall into the category of time barred debt, also cannot be entertained. The Appellant having objected to the addition of claim consequent to assignment by United Bank of India, it had every right to agitate the issue and pray for adjudicatory orders from the Adjudicating Authority, which he did by filing an Application. The Adjudicating Authority by misplaced observation rejected the Application without considering the merits of the claim. We, thus, are of the view that order impugned is unsustainable and deserve to be set aside.

When an Application under Section 7 of IBC cannot be entertained for a debt, which is barred by time and is liable to be rejected, any addition in the claim, which may fall into the category of time barred debt, also cannot be entertained – Ome Prakash Verma (Suspended Director of Neesa Leisure Ltd.) Vs. Amit Jain, (RP of Neesa Leisure Ltd.) – NCLAT New Delhi Read Post »

Where an application in relation to the Corporate Debtor for initiation of CIRP is pending at NCLT then, initiation of CIRP of the Corporate Debtor is not a pre-requisite for maintainability of an application under Section 95 of the IBC, 2016 filed for initiating IR Process against the Personal Guarantor – PNB Housing Finance Ltd. Vs. Mr. Mohit Arora (Managing Director of Supertech Ltd.) – NCLT New Delhi Bench Court-II

The issue in this case is that whether initiation of the CIRP of the Corporate Debtor is a prerequisite for maintainability of an application under Section 95 of the IBC, 2016 filed for initiating IR Process of the Personal Guarantor of that Corporate Debtor before the NCLT?
The Adjudicating Authority held that in a situation where Application(s) in relation to the Corporate Debtor for initiation of CIRP is pending at NCLT then, initiation of CIRP of the Corporate Debtor is not a prerequisite for maintainability of an application under Section 95 of the IBC, 2016 filed for initiating IR Process against the Personal Guarantor of that Corporate Debtor before the NCLT. The moment the IB application in relation to Insolvency resolution of the Corporate Debtor is pending before this Adjudicating Authority, the provisions of Section 60(1) get attracted and the jurisdiction to entertain insolvency process against the personal guarantor would, therefore, lie with the NCLT.

Where an application in relation to the Corporate Debtor for initiation of CIRP is pending at NCLT then, initiation of CIRP of the Corporate Debtor is not a pre-requisite for maintainability of an application under Section 95 of the IBC, 2016 filed for initiating IR Process against the Personal Guarantor – PNB Housing Finance Ltd. Vs. Mr. Mohit Arora (Managing Director of Supertech Ltd.) – NCLT New Delhi Bench Court-II Read Post »

Scroll to Top