Personal Guarantor’s Acknowledgment of Default Justifies Creditor’s Sec. 95 Plea for Insolvency Process Initiation | NCLT
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- Last Updated on 2 January, 2025
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Case Details: State Bank of India vs. Hemant Bohra - [2024] 169 taxmann.com 664 (NCLT-Jaipur)
Judiciary and Counsel Details
- Deep Chandra Joshi, Judicial Member & Rajeev Mehrotra, Technical Member
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Abhishek Devgan & Vishal Hirawat, Advs. for the Applicant.
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Anju Jain & Hitesh Sachar, Advs. for the Respondent.
Facts of the Case
In the instant case, Personal guarantor had provided his personal guarantee to secure entire credit facilities availed by the corporate debtor. Subsequently, the corporate debtor defaulted on its credit facility repayment, leading to the initiation of the Corporate Insolvency Resolution Process (CIRP).
Subsequently, creditor through Resolution Professional invoked personal guarantee of guarantor by filing application under section 95 of the Insolvency and Bankruptcy Code, 2016 and sought initiation of insolvency resolution process against personal guarantor.
Later, it was noted that personal guarantor had itself acknowledged its personal guarantee and default in repayment of loan.
NCLT Held
The NCLT observed that since non-payment of its liability by corporate debtor led to invocation of personal guarantee and thereby, default of personal guarantor, instant application filed under section 95 was a separate transaction from that of application filed under section 7 against corporate guarantor.
Since parameters laid down under provisions of law were met with, the NCLT held that the application filed by creditor against the initiation of Individual Insolvency Resolution Process of personal guarantor was to be admitted.
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