KIRAN GUPTA Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) The short question which arises for consideration in this writ petition is as to whether a bank/financial institution can institute or continue with proceedings against a guarantor under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'the SARFAESI Act'), when proceedings under the Insolvency and Bankruptcy Code 2016 (hereinafter referred to "IB Code") have been initiated against the principal borrower and the same are pending adjudication.

(2.) In the instant case, respondent No.4/M/s Metenere Ltd. is the principal borrower. Respondent No.4 (for short 'the Principal Borrower') had obtained loans from the respondent/State Bank of India (for short, 'the Bank'). The petitioner, who is the wife of the promoter of the principal borrower, stood as a guarantor for repayment of the loans. The Bank filed an insolvency petition against the principal borrower under the provisions of the IB Code before the NCLT, Delhi.

(3.) During the pendency of the insolvency proceedings against the principal borrower, the Bank issued a Notice dated 06.09.2018 under Section 13(2) of the SARFAESI Act to the petitioner, who had stood as a guarantor for the principal borrower. The Notice issued under Section 13(2) of the SARFAESI Act was replied to by the petitioner. This was followed by issuance of a Possession Notice dated 16.07.2019, under Section 13(4) of the SARFAESI Act. Both the Notices i.e. one under Section 13(2) and the other under Section 13(4) of the SARFAESI Act were challenged by the petitioner by filing S.A.No.118/2019 before the Debts Recovery Tribunal-II, Delhi (for short 'DRT-II'). In view of the negotiations/settlement talks that were going on between the Bank and the Principal Borrower, S.A. No.188/2019 was withdrawn.