The Resolution Plan approved by the National Company Law Tribunal did not discharge the liability of the guarantor, as analyzed under the provisions of the Contract Act, 1872 and the Code of 2016.

JUDGMENT :

1. The petitioner has sought for a direction upon the bank, which is the first respondent herein, to remove the name of the petitioner from the list of defaulters maintained by Credit Information Bureau (India) Limited (CIBIL) presently known as Trans Union CIBIL Limited.

2. Learned Advocate appearing for the petitioner has submitted that, the petitioner is a guarantor of credit facilities enjoyed by a company, under the name and style of Divya Jyoti Sponge Iron Private Limited, from the first respondent. The company faced proceedings before the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016. By an order dated March 13, 2018, the National Company Law Tribunal approved a Resolution Plan in respect of the company in such proceedings. By and under such Resolution Plan, the liabilities of the company as against the creditors of the companies were dealt with. According to him, the personal guarantee given by the petitioner stood extinguished upon such Resolution Plan being approved. It is thereafter that, the first respondent issued a notice dated March 26, 2019 under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) to the petitioner on the basis of the guarantee. The petitioner thereafter came to learn that, the petitioner was posted with CIBIL for an alleged default of Rs. 12,62,11,278/- towards the first respondent.

3. Learned Advocate appearing for the petitioner has submitted that, with the liability of the company to the first respondent being extinguished by virtue of the Resolution Plan sanctioned by the National Company Law Tribunal, and the resolution applicant paying the first respondent in terms of the Resolution Plan, the guarantee of the petitioner to the first respondent stood extinguished. The liability of the guarantor is co-extensive with that of the principal debtor. The principal debtor not having any liability to the first respondent, subsequent to the payment in terms of the Resolution Plan, it cannot be said that, the guarantor, that is, the petitioner, has any liability towards the first respondent. In support of such contentions, he has relied upon Sections 135, 139 and 145 of the Contract Act, 1872. According to him, the creditor having made a composition of the debt due from the principal debtor, the same discharged the surety. The composition was made without the consent and approval of the petitioner.

In the facts of the present case therefore, the petitioner as the guarantor did not have any liability towards the loan granted by the first respondent to the company. Moreover, the conduct of the first respondent is inconsistent with the right of the petitioner as the guarantor, and that, the same amounts to discharge the liabilities of the petitioner from the contract of guarantee. According to him, the first respondent as the guarantor having agreed and assented to the Resolution Plan before the National Company Law Tribunal, such conduct releases the petitioner from the guarantee. Even if the first respondent had not agreed or assented to the Resolution Plan, then also the Resolution Plan as sanctioned by the National Company Law Tribunal exercising jurisdiction under the Code of 2016 being binding on the first respondent as a creditor of the company undergoing a resolution process under the Code of 2016, the first respondent cannot claim any amount from the petitioner on the basis of the guarantee. He has relied upon 2012 Volume 171 Company Cases page 94 (Shri Kundanmal Dabriwala v. Haryana Financial Corporation & Anr.), 1893 Appeal Cases page 313 (Commercial Bank of Tasmania v. Jones and Anr.) and 1957 (3) Kay and Johnson page 438 (Webb. Vs. Hewitt) in support of his contentions. In such circumstances, he has submitted that, the petitioner having been discharged of his liabilities, the first respondent has put the name of the petitioner with CIBIL illegally. Such action should be q