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Proceedings U/S 95 Of The IBC Shall Abate On Death Of The Personal Guarantor: NCLT, New Delhi

LIVELAW NEWS NETWORK
11 March 2022 3:45 AM GMT
Proceedings U/S 95 Of The IBC Shall Abate On Death Of The Personal Guarantor: NCLT, New Delhi
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NCLT, New Delhi bench consisting of Justice Ramalingam Sudhakar and Sh. Hemant Kumar Sarangi in the case of Alchemist Asset Reconstruction Company v. Mr. Deepak Puri rejected an application filed by the Financial Creditor u/s 95 of the IBC, 2016 against the Personal Guarantor of the Corporate Debtor on the ground that after death of the Personal Guarantor, the proceedings against him...

NCLT, New Delhi bench consisting of Justice Ramalingam Sudhakar and Sh. Hemant Kumar Sarangi in the case of Alchemist Asset Reconstruction Company v. Mr. Deepak Puri rejected an application filed by the Financial Creditor u/s 95 of the IBC, 2016 against the Personal Guarantor of the Corporate Debtor on the ground that after death of the Personal Guarantor, the proceedings against him shall abate.

The Financial Creditor, through the Resolution Professional filed an application u/s 95 of the IBC to initiate CIRP against the Personal Guarantor of the Corporate Debtor, Moser Baer India Limited. Notice was subsequently issued on this application.

At the time of enquiry u/s 99 of the IBC, it came to the notice of the RP that the Personal Guarantor of the Corporate Debtor passed away. The RP recommended rejection of the application on the ground that the proceedings against the Personal Guarantor have to be closed as they will abate, consequent to the death of the Personal Guarantor.

The RP quoted Section 5(22) of the Code and stated that since the Personal Guarantor is an individual who stood as a guarantee to the Corporate Debtor, therefore, on his demise the proceedings against the Personal Guarantor would abate. He also stated that the proceedings under IBC is not in the nature of recovery and thus it would be appropriate to close the proceedings on death of the Personal Guarantor.

The Tribunal accepted the reasoning of the RP and rejected the application u/s 95 of the Code for initiation of IRP against the Personal Guarantor. It held that on the demise of the Personal Guarantor, the question of continuing the proceedings against such a dead person will not arise and the proceedings u/s 95 shall abate.

Case Title: Alchemist Asset Reconstruction Company v. Mr. Deepak Puri

Counsel for the Applicant: Mr. Nakul Mohta and Mr. Devansh Srivastava, Advs.

Counsel for the Respondent: Mr. Palash Singhai, Adv. alongwith Mr. Saran Mohan Garg, RP

ClickHere To Read/Download Order

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