Case Law Details
Bank of Baroda Vs Divya Jalan (NCLT Kolkata)
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, P. (IB) No.363/KB/2021 is dismissed. The Petitioner is, however, at liberty to pursue other recovery measures available means under the law.
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