The National Company Law Appellate Tribunal (NCLAT) recently held that assets of personal guarantors cannot be liquidated while a moratorium is being imposed on the alienation of a corporate debtor’s assets by the National Company Law Tribunal (NCLT).
In State Bank of India v Mr V Ramakrishnan and M/s Veesons Energy Systems Pvt Ltd, Veesons had access to certain loan facilities from State Bank of India (SBI) for which its director, Ramakrishnan, had provided a personal guarantee and mortgaged some of his personal assets as collateral security.
Subsequently, Veesons defaulted on repayment of the loan, which prompted SBI to invoke its right and issue a notice under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act), against Ramakrishnan to recover the outstanding dues that was challenged before the Madras High Court and dismissed.
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The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.
