Sunday 27 March 2022

Mahendra Kumar Jajodia vs. State Bank of India - Therefore, the Adjudicating Authority for personal guarantors will be NCLT, if a parallel resolution process or liquidation process is pending in respect of a corporate debtor for whom the guarantee is given.

Supreme Court (21.03.2022) in Mahendra Kumar Jajodia vs. State Bank of India (Civil Appeal No(s). 1871-1872/2022) stayed the operation of the orders/judgement dated 27.01.2022 of NCLAT State Bank of India Vs. Mahendra Kumar Jajodia [Company Appeal (AT) Insolvency No. 60 of 2022]

Excerpts of the order;

Learned counsel for the appellant has drawn our attention to the following portion of paragraph 108 of the Judgement rendered by this Court on 21.05.2021 in Transferred case No. 245 of 2020 etc. entitled Lalit Kumar Jain vs. Union of India & Ors. reported in 2021(9) SCC 321:

  • “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 NCLT concerned seized of the resolution process or liquidation. Therefore, the Adjudicating Authority for personal guarantors will be 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.” 

 

Issue notice. Until further orders, there shall be stay of the operation of the impugned Order passed by the National Company Law Appellate Tribunal, Principal Bench, New Delhi.

 

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1. Link to NCLAT judgement in State Bank of India Vs. Mahendra Kumar Jajodia

 

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The sole purpose of this post is to create awareness on the "IBC - Case Law" and to provide synopsis of the concerned case law, must not be used as a guide for taking or recommending any action or decision. A reader must refer to the full citation of the order & do one's own research and seek professional advice if he intends to take any action or decision in the matters covered in this post.