Union Bank of India Vs K M R Enterprises (NCLT Hyderabad)
NCLT Hyderabad held that partnership firm are not included under the definition of personal guarantor covered under section 5(22) of the IBC, 2016. Accordingly, insolvency proceedings u/s. 95 of IBC against partnership firm cannot be initiated.
Facts- The present petition is filed by Union Bank of India (“Creditor”) against M/s KMR Enterprises the personal Guarantor to the corporate debtor M/s. Smaat India Private Limited under section 95 of the Insolvency and Bankruptcy Code, 2016 r/w Rule 7(2) Insolvency and Bankruptcy Rules, 2019, seeking to initiate Insolvency Resolution Process against Personal Guarantor to the Corporate Debtor for a total outstanding amount of Rs. 71,84,02,803.07 /-.
Conclusion- It is crystal clear that the provisions of IBC as on date are applicable only to Corporate Persons and Personal Guarantors to the Corporate Debtor. To answer the question as to who can be called as personal guarantor, we are use fully to refer to section 5(22) of IBC, 2016 which defines Personal Guarantor as an individual who is the surety in a contract of guarantee to a Corporate Debtor. It is important to note that partnership firm was not included under the definition of Personal Guarantor.
