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In Recent case of Lakshmi Pat Surana Vs. Union Bank of India: (I89) IBC154/2020 - March, 2020-NCLAT

In Recent case of Lakshmi Pat Surana Vs. Union Bank of India: (I89) IBC154/2020 - March, 2020-NCLAT

The learned counsel for the Appellant takes a forceful stand that the Corporate Debtor as a Corporate Person being a company under the Companies Act, 2013 and had given surety but in relation to a Contract or Guarantor or Corporate suffice it to make a pertinent mention that a corporate debtor had guaranteed surety in regard to this Contract where debtor firm was a proprietor concern. Besides these, a corporate debtor cannot stay away from his liability to pay the debt to the financial creditor/ bank and also that the corporate debtor had taken guarantee in respect of Section 5(8) of the IBC, 2016 and M/s Mahaveer Construction had borrowed the money against the payment of interest from the bank. 


Being a corporate person or company, the corporate debtor is registered under the Companies Act, 2013 had guaranteed ‘surety’ in regard to ‘contract’ with ‘debtor firm’ or ‘proprietory concern’ as the case may be. As per Section 145 of the Indian Contract Act, 1872, in respect of every ‘Contract of Guarantee’, there is an implied promise of the ‘Principal Debtor’ to indemnify/ protect the surety. 

It may not be out of place for the Appellate Tribunal to make a relevant mention that the ‘Financial Debt’ includes a ‘debt’ owed to a creditor by ‘principal’ and ‘guarantor’. When the principal sum has been claimed/ demanded certainly, it will come with the scope of ‘default’ under Section 3, 12 of the IBC. 2016. The proceedings under Section 7 of the IBC, 2016 can be triggered by a ‘financial creditor’ who had taken a guarantee in respect of ‘debt’ against ‘guarantor’ for failure to repay the money borrowed by the ‘principal borrower’. M/s Surana Metals Ltd. is the ‘Corporate Debtor’ and the proprietor/ owner of the firm of M/s Mahaveer Construction is the ‘Appellant’. 


By virtue of a deed of guarantee, corporate debtor being a ‘Corporate Person’ owes a debt to the bank. Here, the ‘Corporate Debtor’ is the Guarantor and in the year 2008, undertook to repay the debt in case of default by the Principal Borrower. ‘Corporate Debtor’ according to Section 3(8) of the IBC, 2016 means a Corporate Person who owes a debt of any person.          


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