Guarantor Cannot Enjoy 'Right Of Subrogation' Even After CIRP Against Principal Debtor Gets Concluded: NCLT Hyderabad
Live LawThe National Company Law Tribunal, Hyderabad Bench, comprising of Dr. N. Venkata Ramakrishna Badarinath Shri Veera Brahma Rao Arekapudi, while adjudicating a petition filed in State Bank of India v Shri. Ghanshyam Surajbali Kurmi, has held that a guarantor cannot enjoy a right of subrogation even after the Corporate Insolvency Resolution Process of the Principal Debtor gets concluded. The Financial Creditor had also issued a demand notice dated 16.08.2021 to the Personal Guarantor, demanding payment of the amount in default and had subsequently filed a petition under Section 95 of the IBC, seeking initiation of the Insolvency Resolution Process against the Personal Guarantor. It was observed that "therefore, we are also of the view that conclusion of Corporate Insolvency Resolution Plan does not bar Financial Creditor against Guarantor, and Financial Creditor can always approach this Adjudicating Authority as envisaged under the Code." It was held that the Financial Creditor is also at liberty to initiate Interim Resolution Process against the Personal Guarantor as the resolution plan approved by Adjudicating Authority is not for recovery but revival.