# In the matter of Kiran Gupta Vs. State Bank of India & Anr., W.P.(C) 7230/2020 & CM. APPL. 24414/2020(stay)

> HC judgment dated 2020-11-02. Citation: TCN-2020-HC-00008. The case involves a writ petition filed by Kiran Gupta, the guarantor, against State Bank of India…

- **Court:** HC
- **Order date:** 2 Nov 2020
- **Citation:** TCN-2020-HC-00008
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/high-courts-chandigarh-bench/kiran-gupta-vs-state-bank-of-india-anr-wp-48de9f28

## Summary

### Background

The case involves a writ petition filed by Kiran Gupta, the guarantor, against State Bank of India (SBI) and IBBI. SBI initiated proceedings under the SARFAESI Act against Kiran Gupta, the guarantor, while insolvency proceedings were already initiated against the principal borrower, Metenere Ltd., under the IB Code before the NCLT, Delhi. The petitioner challenged the bank's action, arguing that SARFAESI proceedings against the guarantor should be stayed during the pendency of insolvency proceedings against the principal borrower. The petitioner initially challenged various notifications issued by the Union of India, but later confined the relief to the action of the Bank of initiating proceedings against the petitioner under the SARFAESI Act when insolvency

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## Facts

Kiran Gupta is the wife of the promoter of the principal borrower and stood as a guarantor for repayment of loans obtained by the principal borrower from State Bank of India (SBI). The principal borrower is Metenere Ltd. SBI filed an insolvency petition against Metenere Ltd. under the IB Code before the NCLT, Delhi. During the pendency of the insolvency proceedings, SBI issued a notice dated 06.09.2018 under Section 13(2) of the SARFAESI Act to Kiran Gupta, the guarantor. This was followed by a Possession Notice dated 16.07.2019, under Section 13(4) of the SARFAESI Act. These notices were challenged by Kiran Gupta by filing S.A.No.118/2019 before the Debts Recovery Tribunal-II, Delhi (DRT-II). S.A. No.188/2019 was withdrawn due to negotiations/settlement talks. A fresh

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## Issues and analysis

### Issue 1: Whether a bank/financial institution can institute or continue with proceedings against a guarantor …

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

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**Reasoning:** The court relied on the Supreme Court's judgment in State Bank of India v. V.

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**Interpretation:** The court interpreted Sections 14 and 31 of the IB Code to mean that the

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**Application:** The court applied the ratio and reasoning to the facts of the case, holding

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## Parties

- **Judges:** HIMA K…; Subramonium…
- **Appellants:** KIRAN G…
- **Respondents:** Metenere…; State Bank of…
- **Advocates:** Sandeep…; Amit Singh…; +6 more

## Timeline

- **2018-09-06 — Notice under Section…**: SBI issued a Notice under Section 13(2) of the SARFAESI Act to the petitioner, who stood…
- **2019-07-16 — Possession Notice under Section 13(4) of…**: Issuance of a Possession Notice under…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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