# In the matter of Gouri Shankar Jain Vs. Punjab National Bank & Anr. W.P No. 10147 (W) of 2019

> HC judgment dated 2019-11-13. Citation: TCN-2019-HC-00008. The petitioner, Gouri Shankar Jain, sought a direction from the High Court at Calcutta to remove…

- **Court:** HC
- **Order date:** 13 Nov 2019
- **Citation:** TCN-2019-HC-00008
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/high-courts-chandigarh-bench/gouri-shankar-jain-vs-punjab-national-bank-anr-wp-no-10147-ad8e4004

## Summary

### Background

The petitioner, Gouri Shankar Jain, sought a direction from the High Court at Calcutta to remove his name from the list of defaulters maintained by Credit Information Bureau (India) Limited (CIBIL), now known as Trans Union CIBIL Limited. The petitioner was a guarantor for credit facilities availed by Divya Jyoti Sponge Iron Private Limited from Punjab National Bank (the first respondent). The company faced insolvency proceedings under the Insolvency and Bankruptcy Code, 2016, and a Resolution Plan was approved by the National Company Law Tribunal (NCLT) on March 13, 2018. The petitioner argued that the Resolution Plan extinguished the company's liabilities, thereby extinguishing his personal guarantee. The bank, however, issued a notice under Section 13(2) of the

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## Facts

Gouri Shankar Jain, the petitioner, was a director of Divya Jyoti Sponge Iron Private Limited. The company availed credit facilities from various banks, including Punjab National Bank (PNB), the first respondent. These credit facilities were secured by the personal guarantee of the petitioner. The company defaulted on payments, leading PNB to initiate Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, before the National Company Law Tribunal (NCLT), Kolkata. NCLT admitted the application on August 23, 2017, finding the company had defaulted on a payment of Rs. 29,33,65,793.94 as of June 30, 2012. A Resolution Professional was appointed, and a Resolution Plan was approved on March 13, 2018. The Resolution

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## Issues and analysis

### Issue 1: Whether the liability of a guarantor of a debt of a corporate debtor stands reduced/extinguished …

**Ratio:** The liability of a guarantor is co-extensive with that of the principal debtor, as

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**Reasoning:** The court reasoned that the financial creditor's actions in initiating CIRP under Section

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**Interpretation:** The court interpreted Section 128 of the Contract Act, 1872, to mean that the

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**Application:** In this case, the court applied the ratio to the facts by stating that the

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## Parties

- **Judges:** Debangsu…
- **Appellants:** Gouri Shank…
- **Respondents:** Divya Jyoti…; Punjab National…

## Timeline

- **2017-08-23 — CIRP Application…**: National Company Law Tribunal (NCLT), Kolkata, admitted the application under Section 7…
- **2018-03-13 — Resolution Plan…**: NCLT, Kolkata, approved the Resolution Plan for…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 2(e) — Application](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-2)

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