JUDGMENT :

SUDHANSU JYOTI MUKHOPADHAYA, J.

Mr. V. Ramakrishnan (1st Respondent), Director of M/s. Veesons Energy Systems Pvt. Ltd. (“Corporate Debtor”) given personal guarantee and mortgagor of collateral securities of his assets with the Appellant- State Bank of India (“Financial Creditor”) against the facilities availed by the ‘Corporate Debtor’. In view of the personal Guarantee given by Mr. V. Ramakrishnan (1st Respondent), he comes within the meaning of ‘Personal Guarantor’ as defined under sub-section (22) of Section 5 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “I&B Code”)

2. The State Bank of India (“Financial Creditor”) invoked its right under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (hereinafter referred to as “SARFAESI Act, 2002”) against the ‘Personal Guarantor’ under Section 13(2) on 4th August, 2015 for recovery of Rs. 61,13,28,785.48/- from the said 1st Respondent as securities. The notice was challenged by the ‘Corporate Debtor’ before the Hon’ble High Court of Madras, which was dismissed with costs on 17th November, 2016. Thereafter, the State Bank of India (‘Financial Creditor’) issued a Possession Notice dated 18th November, 2016 under Section 13(4) of the SARFAESI Act, 2002 and taken symbolic possession of the secured assets.

3. Having failed to get relief from Hon’ble High Court of Madras, the ‘Corporate Debtor’ invoked Section 10 of the ‘I&B Code’ which was admitted, order of ‘Moratorium’ was passed and an ‘Interim Resolution Professional’ was appointed.

4. Even after declaration of the ‘Moratorium’, the Appellant- State Bank of India (‘Financial Creditor’) continued to take measure under SARFAESI Act, 2002 and proceeded against the property of the ‘Personal Guarantor’ (1st Respondent) and issued Sale Notice on 12th July, 2017.

5. Being aggrieved the ‘Personal Guarantor’ (1st Respondent), who is also the promotor of the ‘Corporate Debtor’ filed application before the Adjudicating Authority (National Company Law Tribunal), Chennai, for stay of proceedings under SARFAESI Act 2002, including the auction notice dated 12th July, 2017. The Adjudicating Authority by impugned order dated 18th September, 2017 observed that ‘Moratorium’ prohibits transferring, encumbering, alienating or disposing of by the ‘Corporate Debtor’ any of its assets or any legal right or beneficial interest therein.

6. In view of the provisions of ‘I&B Code’, Section 140 of the Indian Contract Act, 1872 and the decision of the Hon’ble High Court of Madras, the Adjudicating Authority allowed the Interlocutory Application preferred by the ‘Personal Guarantor’, and restrained the Appellant- State Bank of India (‘Financial Creditor’) from proceeding against the ‘Personal Guarantor’ till the period of ‘Moratorium’ is over.

7. Learned counsel for the Appellant submits that the order of ‘Moratorium’ will not affect the assets of the ‘Personal Guarantor’. On the other hand, according to counsel for the Respondents, in view of sub-section (1)(b) of Section 14 and sub-section (1) of Section 31 of the ‘I&B Code’, the Appellant- State Bank of India (‘Financial Creditor’) cannot proceed even against the ‘Personal Guarantor’.

8. We have heard learned counsel for the parties and perused the record.

9. ‘I&B Code, 2016’ is in three parts. Part I- ‘Preliminary’ including the definitions given therein applies to both Part II- ‘Insolvency Resolution and Liquidation for Corporate Persons’ and Part III-‘Insolvency Resolution and Bankruptcy for Individuals and Partnership Firms’.

10. As per Part II, ‘Insolvency Resolution’ and ‘Liquidation Proceedings’ can be initiated only against the ‘Corporate Persons’ and not against an individual, including ‘Personal Guarantor’, as defined under sub-section (22) of Section 5 of the ‘I&B Code’ and reads as follows: -

“5. Definitions. - ………….(22) “personal guarantor” means an individual who is the surety in a contract of guarantee to a corporate de