Excelsior Correspondent
JAMMU, Jan 18: National Company Law Tribunal (NCLT) has said that it has jurisdiction and all the powers to entertain or dispose of any proceedings or applications by or against the Corporate Debtor or Corporate person and also the claims by or against any of its subsidiaries situated in India. Further, the Tribunal has the exclusive jurisdiction to decide all the questions relating to any claim by or against the Corporate Debtor, including the Corporate Guarantors and Personal Guarantors and is vested with the powers of the Debt Recovery Tribunal as well for any purpose if and when required to be exercised.
A bench of NCLT comprising of Rohit Kapoor (Member Judicial) and Harish Chander Suri (Member Technical) has mentioned this in an order passed in an application under Section 95 of the Insolvency and Bankruptcy Code, 2016 by the State Bank of India’s Stressed Assets Management Branch against Manoj Toshniwal (Respondent/Guarantor) seeking to initiate Insolvency Resolution Process.
It was submitted that the Applicant/Financial Creditor by issuing a notice dated 15.12.2018 under Section 13(2) of the SARFAESI Act, 2002 to the principal borrower as well as guarantors demanded a sum of Rs 1554,13,93,164.90 plus interest due from 15.12.2018 with further interest at the contracted rate until payment but in spite of said notice, neither the principal borrower nor the Personal Guarantor being the respondent paid up the dues of the Applicant/Financial Creditor.
Accordingly, the applicant bank filed an Original Application under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993, before the Debts Recovery Tribuanl-1 in the year 2019 for recovery of the outstanding dues for a sum of Rs 13,65,19,84,971.00 as on 28.02.2019 with further interest and costs and expenses from the Corporate Debtor and their Guarantors and the Original Application is pending before the DRT-I, Kolkata.
It was further submitted that the Guarantor is jointly and severally liable like the Corporate Debtor pursuant to the deed of guarantee executed by the Guarantor, and also as per Section 128 of the Indian Contract Act, 1872 the Guarantor is liable to pay the total outstanding dues together with further interest, liquidated damages and outstanding interest.
However, counsel appearing for the Respondent/Guarantor submitted that this application under Section 95 (1) was not maintainable as the same against the Corporate Guarantor or Personal Guarantor can only be maintainable if either the Corporate Debtor is under CIRP or if the Corporate Debtor is under liquidation.
After going through the scheme of IBC dealing with Corporate Debtor and their Guarantors, the NCLT observed, “the proceedings under Section 95(1) of the Code to initiate insolvency resolution process or bankruptcy, can be initiated and continued against the Corporate Guarantors including Personal Guarantors, and it has also been made clear that the National Company Law Tribunal shall be vested with the powers of the Debt Recovery Tribunal as well”.
“Section 60(5) loudly speak that the National Company Law Tribunal has the jurisdiction and all the powers to entertain or dispose of any proceedings or applications by or against the Corporate Debtor or Corporate person, including any claim made by or against the Corporate Debtor or Corporate person, and also the claims by or against any of its subsidiaries situated in India and even any question of priorities or any question of law or facts arising out of or in relation to the insolvency resolution or liquidation proceedings or the Corporate Debtor or Corporate person under this Code”, the bench said.
The bench further said, “so in a way the National Company Law Tribunal has the exclusive jurisdiction and enjoys all the powers to decide all the questions relating to any claim by or against the Corporate Debtor, including the Corporate Guarantors and Personal Guarantors and is vested with the powers of the Debt Recovery Tribunal as well, for any purpose if and when required to be exercised”.
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