Surendra B. Jiwrajka Vs. Omkara Assets Reconstruction Pvt. Ltd. - As per sub-section (9) [of section 99] the resolution professional is required to record reasons in both eventualities either recommending acceptance or rejection of the application.

HC Bombay (30.09.2021) In Surendra B. Jiwrajka Vs. Omkara Assets Reconstruction Pvt. Ltd. [Writ Petition (L.) No. 21271 of 2021 and Writ Petition (L.) No. 21272 of 2021] held that; 

• that having regard to the scheme of the IBC, more particularly sections 95 to 100, no interference by the writ court at this stage is called for. He submits that the stage from sections 95 to 99 is only for the purpose of collecting evidence. Question of hearing the petitioner or for that matter the respondent will arise only after submission of report by the resolution professional under section 100 of IBC.

• A conjoint reading of sub- sections (6) and (7) of section 99 would indicate that the resolution professional shall examine the application and ascertain whether the application satisfies the requirement set out in sections 94 and 95 and whether the applicant has provided information and given explanation sought for by the resolution professional under sub-section (4). After examination of the application resolution professional may recommend acceptance or rejection of the application in his report. 

• As per sub-section (9) [of section 99] the resolution professional is required to record reasons in both eventualities either recommending acceptance or rejection of the application. In terms of sub-section (10) the resolution professional shall give a copy of the report so prepared to the debtor or to the creditor, as the case may be.

• Though the legislature itself has provided in section 99(10) that a copy of the report of the resolution professional be furnished to the debtor or to the creditor thus complying with the requirement of the principles of natural justice, it would be in the fitness of things and in furtherance of the principles of natural justice that the parties are also heard before the decision is taken by the adjudicating authority one way or the other under section (1) of section 100.

Excerpts of the order;

4. From a perusal of the aforesaid order we find that the impugned order was passed under section 97 of the Insolvency and Bankruptcy Code, 2016 (IBC). Application was filed by the respondent before the Tribunal to initiate insolvency resolution process against the petitioner and for appointment of resolution professional. The application was opposed by the petitioner on the ground that petitioner had already assigned the entire loan to J.M. Finance. Therefore, the application under section 95 of IBC was not maintainable. Petitioner contended that resolution professional has no power to decide the issue and therefore, before proceeding further Tribunal should decide on maintainability of the application to initiate insolvency resolution process. Notwithstanding such objection raised by the petitioner, Tribunal took the view that provisions of the IBC, more particularly from sections 95 to 100, do not contemplate entertaining any objection at that stage till the receipt of report from the resolution professional. Therefore, objection raised by the petitioner was rejected whereafter resolution professional was appointed and he was directed to submit report in terms of IBC.

 

5. Mr. Dwarkadas, learned senior counsel for the petitioner submits that the principal borrower was under corporate insolvency resolution process. The New India Co-operative Bank Limited which had sanctioned the term loan to the borrower had assigned all its rights, title and interest in the term loan to the respondent. In terms of the implemented resolution plan outstanding dues has been assigned to the JM Financial Asset Reconstruction Company, JM Finance ARC- March, 2018 Trust (ARC Trust). Therefore, respondent can no longer seek to enforce the loan which is already sold for consideration to the ARC Trust. This is a jurisdictional fact the existence of which is essential for the Tribunal to assume jurisdiction. In the absence of such jurisdictional fact Tribunal could not have exercised jurisdiction and proceed with the application filed by the respondent. Referring to section 96 of IBC he submits that the moment such application is filed under section 95, interim moratorium commences thereby causing serious prejudice to the petitioner. That apart, subjecting the petitioner to such proceeding without affording him a hearing would impact his standing in the market. There is serious invasion of petitioner’s privacy, that too without the Tribunal first determining as to whether it has jurisdiction to proceed with the matter. Impugned decision of the Tribunal is clearly in violation of the principles of natural justice rendering the same a nullity. Therefore, interference by the High Court under Article 226 is called for.

 

6. To support his submissions, learned senior counsel has placed reliance on the following decisions:-

• 1. Arun Kumar Vs. Union of India, (2007)1 SCC 732.

• 2. State Bank of India Vs. M/s Veekay Polycoats Ltd., (IB)-1291(PB)/2018.

• 3. Lalit Kumar vs. Union of India, Civil No.245/2020.

 

7. The writ petition is vehemently resisted by Dr. Saraf, learned senior counsel for the respondent who submits that having regard to the scheme of the IBC, more particularly sections 95 to 100, no interference by the writ court at this stage is called for. He submits that the stage from sections 95 to 99 is only for the purpose of collecting evidence. Question of hearing the petitioner or for that matter the respondent will arise only after submission of report by the resolution professional under section 100 of IBC. Therefore, there is no error or infirmity in the impugned order. To support his submission Dr. Saraf has relied on a recent decision of the National Company Law Appellate Tribunal, Principal Bench, New Delhi in Ravi Ajit Kulkarni Vs. State Bank of India, decided on 12th August, 2021.

 

8. Submissions made by learned counsel for the parties have received the due consideration of the court.

 

9. We have already extracted the impugned order whereby objection raised by the petitioner to decide the jurisdictional issue at the threshold was declined by the Tribunal holding that at the present stage the same is unwarranted.

 

10. Section 95 of IBC deals with application by creditor to initiate insolvency resolution process. As per sub-section (1), a creditor may apply either by himself or jointly with other creditors or through a resolution professional to the adjudicating authority for initiating an insolvency resolution process under section 95 by submitting an application. As per sub-section (4) the application under sub-section (1) should be accompanied by the details and documents mentioned therein. Sub-section (5) mandates that the creditor should provide a copy of the application made under sub-section (1) to the debtor.

 

11. In terms of section 96(1) when an application is filed under section 94 (section 94 deals with application by debtor to initiate insolvency resolution process) or under section 95, an interim moratorium shall commence on the date of the application in relation to all the debts and shall cease to have effect on the date of admission of such application. During the interim moratorium period, all legal actions or proceedings pending in respect of such debt shall remain stayed and creditors shall not initiate any legal action or proceeding in respect of such debt.

 

12. Section 97 deals with appointment of resolution professional. Under sub-section (3) where an application under sections 94 or 95 is filed by the debtor or by the creditor himself, as the case may be, the adjudicating authority shall direct the Insolvency and Bankruptcy Board of India (briefly “the board” hereinafter) to nominate a resolution professional for the insolvency resolution process within 7 days of the filing of such application. Under sub-section (4) the board shall nominate a resolution professional within 10 days of receiving the direction issued by the adjudicating authority under sub-section (3), whereafter the adjudicating authority shall appoint the resolution professional under sub-section (5). Sub-section (6) provides that the resolution professional appointed by the adjudicating authority shall be provided a copy of the application for insolvency resolution process.

 

13. Section 98 deals with replacement of resolution professional which may not have much relevance vis-a-vis the subject matter of the present writ petitions.

 

14. Under sub-section (1) of section 99 the resolution professional shall examine the application referred to in section 94 or section 95, as the case may be, within 10 days of his appointment, and submit a report to the adjudicating authority recommending for approval or rejection of the application. As per sub-section (2) where the application has been filed under section 95, the resolution professional may require the debtor to prove repayment of the debt claimed as unpaid by the creditor by furnishing evidence etc. In terms of sub-section (4), the resolution professional may seek such further information or explanation for the purpose of examining the application from the debtor or the creditor or any other person. Sub-section (5) says that the person from whom information or explanation is sought under sub-section (4) shall furnish such information or explanation within 7 days of the receipt of the request. A conjoint reading of sub- sections (6) and (7) of section 99 would indicate that the resolution professional shall examine the application and ascertain whether the application satisfies the requirement set out in sections 94 and 95 and whether the applicant has provided information and given explanation sought for by the resolution professional under sub-section (4). After examination of the application resolution professional may recommend acceptance or rejection of the application in his report. As per sub-section (9) the resolution professional is required to record reasons in both eventualities either recommending acceptance or rejection of the application. In terms of sub-section (10) the resolution professional shall give a copy of the report so prepared to the debtor or to the creditor, as the case may be.

 

15. That brings us to section 100 of IBC which deals with admission or rejection of the application. As per sub-section (1), the adjudicating authority shall within 14 days from the date of submission of the report under section 99 pass an order either admitting or rejecting the application referred to in sections 94 or 95, as the case may be. Sub-section (2) deals with the situation where the adjudicating authority admits an application under subsection (1) and sub-section (4) deals with the situation where the application under sub-section (1) is rejected by the adjudicating authority. In either case under sub-section (3) a copy of such order is required to be provided to the creditor alongwith the report of the resolution professional within 7 days from the date of the order.

 

16. Thus from an analysis of the provisions contained in sections 95 to 100 of IBC, we find that a definite time-line has been provided at each stage of the proceeding. That apart, the interim moratorium in terms of section 96 which commences from the date of the application remains in force till the date of admission of such application under section 100. Though time-lines have been prescribed at each stage of the proceeding leading to acceptance or rejection of the application under section 100, we find that no such time-line has been prescribed for submission of report by the resolution professional though section 100 provides that the adjudicating authority shall take a decision either admitting or rejecting the application within 14 days from the date of submission of the report. That apart on a careful examination of section 100, we are of the view that before the adjudicating authority takes a decision to either admit or reject the application upon receipt of report from the resolution professional, the parties to the insolvency resolution process are required to be heard. Though the legislature itself has provided in section 99(10) that a copy of the report of the resolution professional be furnished to the debtor or to the creditor thus complying with the requirement of the principles of natural justice, it would be in the fitness of things and in furtherance of the principles of natural justice that the parties are also heard before the decision is taken by the adjudicating authority one way or the other under section (1) of section 100.

 

17. In such circumstances, we do not find any good ground to interfere with the impugned orders save and except that the resolution professional should submit the report within a definite time period. This is because under sub-section (1) of section 96 the interim moratorium automatically commences from the date of the application and continues till the date of admission of such application (or rejection as the case may be). The legislative intent which is discernible is that such interim moratorium should be for a limited duration. Therefore, the resolution professional should expedite preparation and submission of report but at the same time complying with the requirements of section 99 of IBC. We may note that in this case the resolution professional has already been appointed.

 

18. Accordingly, we direct that the resolution professional shall submit his report within a period of six weeks from the date of receipt of a copy of this order, whereafter the Tribunal shall decide the application within 14 days thereafter in terms of section 100 of IBC after giving due opportunity of hearing to the parties. All contentions are kept open.

 

19. Both the writ petitions are accordingly disposed of.

 

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PNB Housing Finance Ltd. Vs. Mr. Mohit Arora - Jurisdiction to entertain Insolvency Process against the Personal Guarantor.

 NCLT New Delhi-II (29.09.2021) In PNB Housing Finance Ltd. Vs. Mr. Mohit Arora (Managing Director of Supertech Ltd.) [Company Petition No. (IB)-395(ND)2021] held that;

• In our considered view, 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.

• Hence, we conclude that in a situation where Application(s) in relation to the Corporate Debtor for initiation of CIRP is pending at National Company Law Tribunal (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.

Excerpts of the order;

Under consideration is the Application preferred by M/s PNB Housing Finance Ltd. (the ‘Applicant/Financial Creditor’), under Section 95(1) read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for IRP for Personal Guarantors to Corporate Debtor) Rules, 2019. The Application is filed for initiating the Insolvency Resolution Process (the “IR Process") against Mr. Mohit Arora (hereinafter, referred to as ‘Personal Guarantor/Debtor’, who is the Managing Director of Supertech Ltd. (the ‘Corporate Debtor’).

# 2. The factual matrix of the case is that the Applicant/Creditor viz., PNB Housing Finance Ltd. is a Company incorporated under the erstwhile Companies Act, 1956. The Applicant/Creditor Company is in the business of Housing Finance. It is stated by the Applicant that a Loan Agreement dated 10.03.2017 was executed by and between the Applicant/Creditor and the Corporate Debtor herein along with its co-borrowers, namely, Sarv Realtors Private Limited and ASP Sarin Realty Private Limited.

# 3. It is stated by the Applicant that in order to secure the aforesaid loan amount, an irrevocable Deed of Guarantee dated 10.03.2017 was executed by the Personal Guarantor herein, in favour of the Financial Creditor, in terms of which the Guarantor unconditionally and absolutely agreed to pay, without demur, all the amounts payable by the Corporate Debtor under the Loan Agreement dated 10.03.2017

# 4. It is further stated by the Applicant that the Corporate Debtor committed breach of the Loan Agreement dated 10.03.2017, inter alia, by making defaults in payments of the monthly instalments due and payable to the Financial Creditor on various dates including but not limited to 30.04.2019, 31.05.2019, 30.06.2019, 31.07.2019, 31.08.2019, 30.09. 2019 and 31.10.2019. In the circumstances, it is added that the Financial Creditor was constrained to recall the Loan Facility and as a result, the account of the Corporate Debtor was declared as a “Non-Performing Asset” on 31.07.2019 in the books of accounts of the Financial Creditor.

# 5. It is further added by the Applicant that it has also invoked the personal guarantee tendered by the Guarantor vide its Loan Recall Notice dated 15.09.2018.

# 6. It is submitted by the Applicant that accordingly it had issued a Demand Notice through Speed Post in Form-B on 09.07.2021 to the Personal Guarantor/Respondent, seeking payment of the outstanding/ unpaid debt of Rs. 3,58,91,09,333.74/-. The Tracking Report depicting successful delivery of the Demand Notice is annexed on page no. 130-131 of the Petition. 

# 7. It is submitted by the Applicant that there are multiple IBC proceedings pending against the Corporate Debtor before this Tribunal viz: IB/360/2020; IB/98/2021; CP(IB)-30/2021; IB/1044/2020; IB/2187/ 2019; IB/647/2020 and IB/2396/2019.

# 11. Thus, the Personal Guarantor has submitted that if the CIRP/ Liquidation proceedings against the Corporate Debtor have not commenced, which is the case in the present proceedings, the jurisdiction to entertain an application against the Personal Guarantor shall lie with the DRT, where the Personal Guarantor resides/ works for gain.

# 12. The Personal Guarantor has placed reliance on the decision of Mumbai Bench of NCLT dated 09.07.2021 passed in the matter of Altico Capital India Ltd. Vs. Rajesh Patel & Ors. in I.A No. 1062/2021 in C.P. No. 293/2020. The Order dated 09.07.2021 is reproduced below:

• “I.A. 1062/2021

• The above I.A. is filed by the Financial Creditor under section 95 of IBC against the personal guarantor. However, on an enquiry from the Bench it came out that the Corporate Debtor for which the personal guarantee has been given is not under CIRP. In view of the above, the present I.A. cannot be prosecuted and therefore the above I.A. 1062/2021 is disposed of and CP 293/2020 is also dismissed.”

# 13. Further, the Personal Guarantor has placed reliance on para 118 and 123 of Judgment dated 21.05.2021 of the Hon’ble Supreme Court passed in the matter on Lalit Kumar Jain v. Union of India & Others, (2021) SCC OnLine SC 396, which is quoted below :

• “118. The impugned notification authorises the Central Government and the Board to frame rules and regulations on how to allow the pending actions against a personal guarantor to a corporate debtor before the Adjudicating Authority. The intent of the notification, facially, is to allow for pending proceedings to be adjudicated in terms of the Code. Section 243, which provides for the repeal of the personal insolvency laws has not as yet been notified. Section 60(2) prescribes that in the event of an ongoing resolution process or liquidation process against a corporate debtor, an application for resolution process or bankruptcy of the personal guarantor to the corporate debtor shall be filed with the concerned NCLT seized of the resolution process or liquidation. Therefore, the Adjudicating Authority for personal guarantors will be the NCLT, if a parallel resolution process or liquidation process is pending in respect of a corporate debtor for whom the guarantee is given. The same logic prevails, under Section 60(3), when any insolvency or bankruptcy proceeding pending against the personal guarantor in a court or tribunal and a resolution process or liquidation is initiated against the corporate debtor. Thus if A, an individual is the subject of a resolution process before the DRT and he has furnished a personal guarantee for a debt owed by a company B, in the event a resolution process is initiated against B in an NCLT, the provision results in transferring the proceedings going on against A in the DRT to NCLT.”

• “123. It is clear from the above analysis that Parliamentary intent was to treat personal guarantors differently from other categories of individuals. The intimate connection between such individuals and corporate entities to whom they stood guarantee, as well as the possibility of two separate processes being carried on in different forums, with its attendant uncertain outcomes, led to carving out personal guarantors as a separate species of individuals, for whom the Adjudicating authority was common with the corporate debtor to whom they had stood guarantee. The fact that the process of insolvency in Part III is to be applied to individuals, whereas the process in relation to corporate debtors, set out in Part II is to be applied to such corporate persons, does not lead to incongruity. On the other hand, there appear to be sound reasons why the forum for adjudicating insolvency processes - the provisions of which are disparate-is to be common, i.e through the NCLT. As was emphasized during the hearing, the NCLT would be able to consider the whole picture, as it were, about the nature of the assets available, either during the corporate debtor's insolvency process, or even later; this would facilitate the CoC in framing realistic plans, keeping in mind the prospect of realizing some part of the creditors' dues from personal guarantors….”

# 14. It is further submitted by the Personal Guarantor that the DRT-II, Chennai in the matter of KEB Hana Bank vs. Mr. Rohit Nath (IBC SR. No. 2643/2020), initiated the Insolvency Proceedings against the Personal Guarantor to the Corporate Debtor, who was not undergoing CIRP /Liquidation. It is added by the Respondent that it clearly establishes the fact that the appropriate forum for the application against Personal Guarantors to Corporate Debtors, who are not undergoing CIRP/Liquidation, is the DRT and not the NCLT.

# 15. That in response to the contentions of the Personal Guarantor, it is argued by the Applicant that the Adjudicating Authority for individuals (Personal Guarantor) shall be, what has been provided under Section 60 of the Code [as amended vide the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018] [effective from 06.06.2018]. The Applicant has submitted that a bare perusal of Section 60 of the Code shows that this Section has following three limbs/situations, under which an Application can be entertained before this Adjudicating Authority :

• “A) Section 60(1) deals with the situation where the Adjudicating Authority will be NCLT having territorial jurisdiction over the place where the registered office of the corporate person is located. {fresh filing}

• B) Whereas Section 60(2) deals with a situation where, the Adjudicating Authority would be NCLT where CIRP or liquidation proceedings of a Corporate Debtor is pending. {pending CIRP against CD}

• C) Section 60(3) which deals with the situation where the Adjudicating Authority would be NCLT which has seized of the matter against the Corporate Debtor and the insolvency resolution process or liquidation or bankruptcy proceeding is already pending against the Corporate Guarantor or Personal Guarantor in any Court or Tribunal shall be transferred to such NCLT dealing with CIRP or liquidation process of such Corporate Debtor. {Transfer}”

# 16. It is further submitted by the Applicant that all the aforesaid three sub-sections of Section 60 are independent of each other and come into effect in three different situations. This can also be deduced from perusal of the judgment passed by the Hon'ble Supreme Court in the matter of Lalit Kumar Jain Vs UOI (Transferred Case (Civil) No. 245/2020). The aforesaid interpretation of Sub-section (1), (2) and (3) of Section 60 can also be drawn from a bare perusal of the judgment passed by the Hon'ble NCLAT on 08.01.2019 in the matter of Ferro Alloys Corporation Limited vs. Rural Electrification Corporation Limited, [Company Appeal (AT) (Insolvency) No. 92 of 2017) which was upheld by the Hon'ble Supreme Court vide order dated 11.02.2019, wherein the Hon'ble NCLAT has categorically held that it is not necessary to initiate CIRP process against the principal borrower before initiating CIRP against the Corporate Guarantor.

# 17. It is added by the Applicant that the Hon'ble NCLAT, while passing the aforesaid Judgment relied upon the landmark judgment in the matter of Bank of Bihar Limited vs. Dr. Damodar Prasad & Anr. (1969) 1 SCR 620, wherein the Hon'ble Supreme Court held that “under Section 128 of the Indian Contract Act, save as provided in the contract, the liability of the surety is co-extensive with that of the principal debtor. The surety became thus liable to pay the entire amount. His liability is immediate. It cannot be deferred until the creditor exhausted his remedies against the principal debtor. Further the Hon'ble Supreme Court held that the Financial Creditor has not only right to recover the outstanding dues by filing a suit, but also has a right to initiate resolution process against the corporate person, whose liability is co-extensive with that of the principal borrower.

# 18. That it is submitted further by the Applicant that the notification relating to Part III was challenged in the matter of Lalit Kumar Jain Vs. Union of India, wherein the Hon'ble Supreme Court in para 99 and 100 of the Judgement held that “……Section 179, which defines what the Adjudicating Authority is for individuals is “subject to” Section 60. Section 60(2) is without prejudice to Section 60(1) and notwithstanding anything to the contrary contained in the Code, thus giving overriding effect to Section 60(2) as far as it provides that the application relating to insolvency resolution, liquidation or bankruptcy of personal guarantors of corporate debtors shall be filed before the NCLT, where proceedings relating to corporate debtors are pending…….”. It is contended by the Applicant that it is clear from the aforesaid analysis that the Parliamentary intent was to treat the personal guarantor differently from other categories of individuals.

# 19. After hearing submissions of both the parties, perusing the documents placed on record and written submissions of the parties, this Bench is of the view that the issue which needs adjudication is that :

• “Whether initiation of the Corporate Insolvency Resolution Process 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 National Company Law Tribunal ?”

# 23. That evidently, the contents of Section 60(1), 60(2) and 60(3) indicate three different situations/circumstances with regard to the jurisdiction of this Adjudicating Authority to entertain application for initiating IR process against the Personal Guarantor. This would be evident from the following analysis of Section 60(1), 60(2) and 60(3) :

• a) That Section 60(1) depicts a situation, where the CIR process or Liquidation process has not been initiated. The same can be inferred from the words “in relation to” insolvency resolution and liquidation for corporate persons, which includes the Pre-CIRP Period.

• b) That Section 60(2) depicts a situation, where the Corporate Insolvency Resolution Process or Liquidation process is already initiated and pending. The same can be inferred from the words “is pending”. Further, the Hon’ble Supreme Court in the matter of Lalit Kumar Jain Vs Union of India & Ors., Transferred Case (Civil) No. 245/2020 dated 21.05.2021, has interpreted Section 60(2) as :

• “95.........Section 60(2) prescribes that in the event of an ongoing resolution process or liquidation process against a corporate debtor, an application for resolution process or bankruptcy of the personal guarantor to the corporate debtor shall be filed with the concerned NCLT seized of the resolution process or liquidation……...”

• c) That Section 60(3) deals with the provision of transfer of proceedings from DRT to NCLT in case the CIR Process and Liquidation is pending against the Corporate Debtor. The same has been summarized by the Hon’ble Supreme Court in the matter of Lalit Kumar Jain (Supra), the relevant extract of which are reproduced below :

• “95.... The same logic prevails, under Section 60(3), when any insolvency or bankruptcy proceeding pending against the personal guarantor in a court or tribunal and a resolution process or liquidation is initiated against the corporate debtor. Thus if A, an individual is the subject of a resolution process before the DRT and he has furnished a personal guarantee for a debt owed by a company B, in the event a resolution process is initiated against B in an NCLT, the provision results in transferring the proceedings going on against A in the DRT to NCLT.”

# 31. While going through the Section 60(1), we have seen that the Adjudicating Authority, in relation to the insolvency resolution and liquidation for corporate persons including corporate debtors and personal guarantors thereof shall be the NCLT having territorial jurisdiction over the place where the registered office of a corporate person is located. Hence, in the case herein, there is a situation where various IB applications for initiation of CIR process against the Corporate Debtor are pending. In our considered view, 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.

# 32. In the light of the aforesaid facts, we would like to summarise that in the case herein, since 

• (i) there are pending IB cases in relation to initiation of insolvency resolution of the Corporate Debtor; 

• ii) Section 60(2) of IBC 2016 is without prejudice to Section 60(1) as held by the Hon’ble Supreme Court in the matter of Lalit Kumar Jain V. Union of India; and 

• iii) Section 179(1) of IBC 2016 is subject to Section 60 of IBC 2016, which includes Sub-Section (1), 

therefore, in our considered view, the jurisdiction in relation to the insolvency resolution (and liquidation) for corporate persons including corporate debtor and personal guarantors thereof shall be the National Company Law Tribunal in terms of Section 60(1) of IBC 2016.

# 33. Hence, we conclude that in a situation where Application(s) in relation to the Corporate Debtor for initiation of CIRP is pending at National Company Law Tribunal (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.

# 34. The Applicant has contended in its Application annexed with documents that the Personal guarantor/debtor has committed prima facie default in making repayment of the loan along with the interest to the Applicant, for which he has given the personal guarantee to the Applicant on behalf of the Corporate Debtor. Hence, we are inclined to proceed in the matter in accordance with the law. As regards, the issue of limited notice to the personal guarantor as held by the Hon’ble NCLAT in the matter of Ravi Ajit Kulkarni V. State Bank of India in Company Appeal (AT) (Insolvency) No. 316 of 2021 vide its judgement dated 12.08.2021, since the Personal Guarantor has already caused appearance on the advance notice, there is no need for issuing further notice.

# 35. It is, therefore, made known to everyone that on filing this Application by the Applicant/Creditor, the interim-moratorium commences as stipulated under Section 96 (1) (a) in relation to all the debts of the personal guarantor and shall cease to have effect on the date of admission of this Application and during the interim- moratorium period, the following are prohibited:

• (a) Any pending legal action or proceeding in respect of any debt of the personal guarantor shall be deemed to have been stayed; and

• (b) The Creditors of the personal guarantor shall not initiate any legal action or proceedings in respect of any debt.

This shall, however, not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.

# 37. Mr. Rakesh Prasad Khandelwal, Resolution Professional (RP) shall exercise all the powers as enumerated under Section 99 of the IBC, 2016 read with the Rules made thereunder. The RP is directed to examine the Application and make recommendations along with the reasons in writing for acceptance or rejection of this Application within the stipulated time as envisaged under the provisions of Section 99 of the IBC, 2016. The RP shall give a copy of the report under Sub-Section (7) of Section 99 to the Applicant/Creditor, as soon as the same is filed before this Authority.

# 38. For the purpose of making report/recommendations, nothing expressed herein shall be construed as an opinion/observation on the reported prima facie default of the personal guarantor.

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