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Judgment
SL. No.,"Particulars of the Credit Facilities availed
by the Corporate Debtor",Limit (in crores)
1),Term Loan,Rs.83.00
2),Working Capital by way of Cash Credit,Rs.20.00
3),Bank Guarantee,Rs.0.90
,TOTAL,Rs.103.90
With regard to the above contention it is pertinent to throw light on the following provisions/regulations from the Code:,,
(a) Firstly, as defined in section 5 (22) â€" personal guarantor refers to an individual who gives surety in a contrcat of guarantee on behalf of the Corprate Debtor.",,
(b) Secondly, as per regulation 3 (1)(a)(e) of Application to Adjudicating Authorty for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor",,
Regulation, 2019, clearly defines that a personal guarantor to a Corporate Debtor is a person against whom guarantee has been invoked and there is outstanding dues",,
left, partly or fully. The definition does not include the ‘legal heirs’.",,
(c) Last but not the least as envisaged in section 238 of the Code and opined by Hon’ble Apex Court in a catena of Judgments. It is apparent that section 238 has,,
over riding effects on laws inconsistent with the Code or any instrument having effect by virtue of such laws.,,
When a section 95 application is filed the assets of the Personal Guarantor is hit by moratorium and if we put the legal heirs of the deceased,,
Personal Guarantor into the shoes of the Personal Guarantor then their personal assets will also get automatically hit by moratorium, which will cause",,
grave prejudice to the rights of the third party. However, there is no provision in the code which envisages that the concept of legal heirs stepping into",,
the shoes of the deceased Personal Guarantor.,,
In this instant case the petitioner can take appropriate steps to recover the guaranteed amount from the assets/estates of the deceased Personal,,
Guarantor rather than the personal assets of the legal heirs of the Personal Guarantor. Further, the legislature is very much clear in defining the term",,
‘Personal Guarantor’, the Code talks about the estate/assets of the Personal Guarantor only.",,
Therefore, we hold that the instant application cannot be maintained against the legal heirs of the Personal Guarantor under the Code, and the",,
remedies may lie elsewhere. Hence, clause 21 and clause 24 (k) of the Personal Guarantee Agreements dated 14 January, 2016 and April 24, 2018 is",,
inconsistent with the definitions of the Personal Guarantor as defined in the Code.,,
In this view of the matter, C.P. (IB) No.363/KB/2021 is dismissed. The Petitioner is, however, at liberty to pursue other recovery measures",,
available means under the law.,,
A certified copy of this order may be issued, if applied for, upon compliance with all requisite formalities.",,
File to be consigned to the records.,,