The personal guarantor was held liable for the outstanding loan of ₹238.34 crores, despite the ongoing Corporate Insolvency Resolution Process (CIRP) proceedings against the corporate guarantor.
The Debts Recovery Tribunal, Delhi Bench headed by the Presiding Officer Mr. Shiv Kumar held that while no recovery could be made from the corporate guarantor (Defendant No. 1) due to ongoing CIRP proceedings, the personal guarantor (Defendant No. 2) was held liable to pay the outstanding loan amount, with recovery to be made from their assets if payment was not made within 30 days.
In the matter of TA-26/2022, the applicant, a financial institution, sought recovery of dues from the borrower, co-borrower, and corporate guarantors in relation to a loan disbursed for the construction of the 'SRS Royal Hills Phase-II' residential project in Faridabad. The borrower had approached the applicant for a ₹140 crore loan, which was sanctioned on March 29, 2016, for a period of 37 months, including a 22-month moratorium. The loan agreement was supported by hypothecation deeds, guarantees from personal and corporate guarantors, and creation of charges over certain properties. Despite the moratorium, the borrower defaulted on repayments from January 2017, prompting the applicant to issue multiple reminders, demand letters, and legal notices seeking payment.
As the borrower failed to honour the loan repayment obligations, the applicant filed an Original Application before the Debts Recovery Tribunal (DRT) seeking recovery of the outstanding amount. The corporate guarantors, however, did not appear or file written statements, and the case proceeded ex parte. The applicant presented evidence, including loan agreements and guarantees, through an affidavit, which the Tribunal found credible. Despite the absence of rebuttal from the defendants, the evidence sufficiently proved the applicant's claims, leading the Tribunal to pass an order for recovery.
However, the Tribunal acknowledged that Corporate Insolvency Resolution Process (CIRP) proceedings were initiated against the corporate guarantor, Defendant No. 1, and thus no recovery could be ordered against them at this stage. The Tribunal directed that any amounts recovered from CIRP proceedings be adjusted toward the loan dues. The focus shifted to Defendant No. 2, a personal guarantor, who was ordered to pay the outstanding amount of ₹238.34 crore, along with interest at 14.30% per annum from the date of filing until full realization. In the event of non-payment within 30 days, the Tribunal authorized the recovery of dues through the sale of Defendant No. 2's assets.
The Tribunal also directed the issuance of a recovery certificate, to be sent to the Recovery Officer, and scheduled a hearing for December 30, 2024. The final order and recovery certificate were to be sent to all concerned parties free of cost.
Ms. Gayatri, Advocate represented the Applicant.
Defendants are ex parte since 17.08.2022 and Defendant no. 1 is before NCLT, Chandigarh.
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