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ROHINTON FALI NARIMAN, INDU MALHOTRA
STATE BANK OF INDIA – Appellant
Versus
V. RAMAKRISHNAN – Respondent
Key Points: - Section 14 moratorium applies only to the corporate debtor and not to personal guarantors of a corporate debtor (!) [1000612220016] - Proceedings against personal guarantors under the SARFAESI Act can continue despite corporate insolvency resolution process, as Section 60(2) refers only to bankruptcy under repealed Insolvency Acts [1000612220019][1000612220020] - A Resolution Plan approved under Section 31 is binding on the corporate debtor, its guarantors, and other stakeholders (!) [1000612220021] - Section 14 cannot apply to personal guarantors, as contrasted with Sections 96 and 101 of Part III of the IBC, which provide separate moratorium for individuals even if not yet in force [1000612220022][1000612220023] - The 2018 amendment to Section 14(3) explicitly excluding sureties in contracts of guarantee to corporate debtors is clarificatory and retrospective [1000612220026][1000612220028] - Historical context shows deliberate omission of moratorium protection for guarantors, unlike Section 22 of the Sick Industrial Companies Act, 1985 [1000612220024] - Personal guarantor's liability is co-extensive and independent under Section 128 of the Contract Act [1000612220005][1000612220021]
JUDGMENT
R.F. NARIMAN, J.
1. The present appeals revolve around whether Section 14 of the Insolvency and Bankruptcy Code, 2016, which provides for a moratorium for the limited period mentioned in the Code, on admission of an insolvency petition, would apply to a personal guarantor of a corporate debtor.
2. The factual backdrop of the present appeals is that the Respondent No.1 is the Managing Director of the corporate debtor, namely, the Respondent No.2 Company, and also the personal guarantor in respect of credit facilities that had been availed from the Appellant. The Guarantee Agreement entered into between the Appellant and the Respondent No.1 is dated 22.02.2014.
3. As the Respondent No.2 Company did not pay its debts in time, the account of Respondent No.2 was classified as a non-performing asset on 26.07.2015. Consequent thereto, the Appellant issued a notice dated 04.08.2015 under Section 13(2) of the SARFAESI Act demanding an outstanding amount of Rs.61,13,28,785.48 from the Respondents within the statutory period of 60 days. As no payment was forthcoming, a possession notice under Section 13(4) of the SARFAESI Act was issued on 18.11.2016.
4. As matters stood thus, an app
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