DIVISION BENCH, COURT NO. II

Company Petition (IB) No. 286 of 2024

And

I.A. (IB) No. 2023/KB/2024

IN THE MATTER OF:

Company Petition (IB) No. 286 of 2024

An application under Section 95(1) of the Insolvency and Bankruptcy

Code, 2016, read with Rule 7 (2) of the Insolvency and Bankruptcy

(Application to Adjudicating Authority for Insolvency Resolution

Process for Personal Guarantors to Corporate Debtors) Rules, 2019.

IN THE MATTER OF:

UCO BANK

…FINANCIAL CREDITOR

Versus

Mr. Subrata Das

…PERSONAL GUARANTOR

And

IA (IB) No.2023/KB/2024

An application under Section 99 of the Insolvency and Bankruptcy

Code.

Mr. Vaibhav Khandelwal

… RESOLUTION PROFESSIONAL/APPLICANT

Date of Pronouncement: December 17, 2024.

APPEARANCES:

Ms. A. Rao, Adv. ] For the Financial Creditor

Ms. Prerna Shaha, Adv. ] For the Resolution Professional

Mr. Vaibhav Khandelwal, ] RP-in-person

And Company Petition (IB) No. 286 of 2024

ORDER

Per: Bidisha Banerjee, Member (Judicial)

1. The Court congregated through a hybrid mode.

2. Heard the Ld. Counsel appearing on behalf of the Financial Creditor and the Ld. Counsel appearing on behalf of the Resolution Professional.

3. This application has been filed by the Financial Creditor, namely, UCO Bank to initiate insolvency proceeding against Mr. Subrata Das, the Personal Guarantor to the Principal Borrower M/s HARIDRA VINTRADE PRIVATE LIMITED under Section 95(1) of the Insolvency and Bankruptcy Code, 2016, for brevity “IBC”.

4. In terms of Section 99 of the IBC, report was called for from the RP appointed in the matter, namely, Mr. Vaibhav Khandelwal, the RP has forwarded the following report prayer in terms of Section 99(7) of IBC, which is extracted hereunder for clarity: -

Report u/s 99(7) of the IBC Code, 2016 Report under Section 99 of IBC

1. Particulars of Applicant/Financial Creditor UCO BANK, Asset Management Branch, the Financial Creditor has filed the original application C.P.(IB)/286(KB) 2024 under Section 95(1) of Insolvency and Bankruptcy Code 2016 against Subrata Das, personal guarantor to M/s Haridra And Company Petition (IB) No. 286 of 2024 And Company Petition (IB) No. 286 of 2024 And Company Petition (IB) No. 286 of 2024 And Company Petition (IB) No. 286 of 2024

5. A bare perusal of the report extracted above indicates that no Corporate Insolvency Resolution Process or CIRP has been initiated against the principal borrower M/s HARIDRA VINTRADE PRIVATE LIMITED.

And Company Petition (IB) No. 286 of 2024

6. At hearing it was argued that in absence of any CIR proceeding initiated against the principal borrower the present petition under Section 95(1) seeking to initiate insolvency proceedings against the Personal Guarantor of the Principal Borrower is not maintainable before this Adjudicating Authority i.e., NCLT. It would eventually lie before the jurisdictional the Debt Recovery Tribunal (DRT).

7. Thus, the issues that have cropped up for determination in the present matter are two folds are:

(i) Whether proceedings against Personal Guarantor under Section 95 of the Code is maintainable even when no CIRP proceedings have been initiated against the Corporate Debtor/ Principal Borrower (ii) Whether the present application under Section 95(1)

of the Code against the Personal Guarantor would be maintainable before this forum, or should the creditor approach the Learned Debt Recovery Tribunal (DRT)

for its relief.

8. To determine the same, we would refer to a few statutory provisions in this context as under:

A. Liability of the Personal Guarantors is co-extensive with the Principal Debtor:

And Company Petition (IB) No. 286 of 2024 Section 128 of the Indian Contract Act, 1872, stipulates that the liability of the surety or guarantor is co-extensive with the principal debtor unless it is otherwise provided by the contract.

There is no quarrel over the proposition and the celebrated decisions of Lalit Kumar Jain v. Union of India reported in (2021) 9 SCC 321 and Dilip B Jiwrajka vs Union of India & Ors. in Writ Petition (Civil) No. 1281 of 2021 also propound