BANK OF BARODA Vs. FAROOQ ALI KHAN

JUDGEMENT

(1.) Leave granted.

(2.) The question for our consideration is whether the High Court could have justifiably invoked judicial review under Article 226 of the Constitution to interdict personal insolvency proceedings initiated against respondent no.1 under Sec. 95 of the Insolvency and Bankruptcy Code, 2016(Hereinafter 'IBC'.) by holding that his liability as a debtor has been waived. The High Court jurisdiction was invoked against the order of the Adjudicating Authority dtd. 16/2/2024 appointing a resolution professional and directing him to examine the application under Sec. 95 and file a report under Sec. 99 of the IBC. Having considered the facts, legal submissions, and for the reasons to follow, we set aside the judgment and order passed by the High Court and restore the proceedings before the Adjudicatory Authority from the time of its order dtd. 16/2/2024 directing the resolution professional to submit a report as provided under Sec. 99 of the IBC.

(3.) The relevant facts are that respondent no. 1 was a promoter and director of one Associate Decor Limited(Hereinafter 'corporate debtor'). While corporate insolvency resolution proceeding(Hereinafter 'CIRP') has been initiated against the corporate debtor as well, this is not the subject matter of the present appeal, which is restricted to the personal insolvency proceedings against respondent no. 1. Commencing from 2010, the corporate debtor took various loans from the appellant and respondent nos. 3 and 4, who are a consortium of banks. Respondent no. 1 entered into a deed of guarantee for securing these loans on 10/7/2014. Due to default in payments by the corporate debtor, and after initiation of CIRP against it, the appellant issued a demand notice dtd. 11/8/2020 and invoked the deed of personal guarantee calling upon respondent no. 1 and other guarantors to pay an amount of Rs.244.00 crores. However, by letter dtd. 14/12/2020, respondent no. 1 and other guarantors offered Rs.25.00 crores as full and final settlement.