Status as on- 24/08/2022
The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench on 23.08.2022, in the matter Amit Jain vs Siemens Financial Services Pvt. Ltd held that section 10A proceedings are not applicable against the Personal Guarantor under section 95 of the Insolvency and Bankruptcy Code, 2016.
Background Facts:
The Financial Creditor i.e., Siemens Financial Services Pvt. Ltd. advanced a loan of Rs. 2.30 crores to CMI Ltd (Corporate Debtor), and the Appellant was stood as a personal Guarantor. On non-repayment of the said loan, the Corporate Debtor was declared as Non- Performing Assets (NPA) on 11.09.2020. Consequently, the Financial Creditor had filed a petition under section 95 of the said Code for the initiation of the Corporate Insolvency Resolution Process against the Personal Guarantor i.e., Amit Jain. Therefore, the National Company Law Tribunal, New Delhi had initiated CIRP against the Personal Guarantor vide its order dated 03.02.2022 and appointed the Resolution Professional. Afterward, the Personal Guarantor filed an appeal against the said order in National Company Law Appellate Tribunal, New Delhi Bench.
Issue:
Does the personal guarantor in section 95 comes under the ambit of Section 10A of the Insolvency and Bankruptcy Code, 2016?
Analysis/Decision:
The NCLAT, Delhi Tribunal held that Section 10A is only capable of one interpretation which is a suspension of CIRP only for the Corporate Debtor and not for the Personal Guarantor and accordingly, NCLAT dismissed the petition filed by the Personal Guarantor.
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