Tanya Gupta
Published on: March 11, 2022, at 20:18 IST
In the Case of Alchemist Asset Reconstruction Vs. Mr. Deepak Puri, National Company Law Tribunal (NCLT), New Delhi Bench of Justices Sh. Hemant Kumar Sarangi and Ramalingam Sudhakar declined the Financial Creditor’s Application which was filed Under Section 95 of the Insolvency and Bankruptcy Code (IBC), 2016 against the Corporate Debtor’s Personal Guarantor on the Ground that the Proceedings against him shall Abate after the Death of the Personal Guarantor.
The Financial Creditor filed an Application Under Section 95 of the Insolvency and Bankruptcy Code through the Resolution Professional seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor’s (Moser Baer India Limited) Personal Guarantor.
Notice was issued on this Application.
It came to the Notice of the Resolution Professional During the Course of Inquiry Under Section 99 of the Insolvency and Bankruptcy Code that the Corporate Debtor’s Personal Guarantor has passed away.
The Application’s Rejection was recommended by the Resolution Professional on the Grounds that the Proceedings have to be closed as they will be subsided, due to the Death of the Personal Guarantor.
A Person who Stood as a Guarantee to the Corporate Debtor is the Guarantor Under Section 5(22), the Resolution Professional stated. Thus, the Proceedings against him will Abate on the Demise of Personal Guarantor.
He further stated that there is no Nature of Recovery under the Insolvency and Bankruptcy Code. Thus, Closing the Proceedings would be appropriate in this Case.
Resolution Professional’s Reasoning was Accepted by the Tribunal. Thus, the Application was rejected Under Section 95 of the Code for initiation of Insolvency Resolution Process (IRP) against the Personal Guarantor.
It was held that upon the Death of the Personal Guarantor, the question of continuing the Proceedings against such a Dead Individual does not arise, and the Proceedings Under Section 95 are Terminated.
Also Read: What is National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT)?