# In the matter of Vineet Saraf vs. Rural Electrificaiton Corporation Ltd.

> HC judgment dated 2023-07-21. Citation: TCN-2023-HC-00048. The case involves a writ petition filed by Vineet Saraf seeking to quash a demand notice issued by…

- **Court:** HC
- **Order date:** 21 Jul 2023
- **Citation:** TCN-2023-HC-00048
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/high-courts-new-delhi/vineet-saraf-vs-rural-electrificaiton-corporation-ltd-36cc0922

## Summary

### Background

The case involves a writ petition filed by Vineet Saraf seeking to quash a demand notice issued by Rural Electrification Corporation Ltd. (REC Ltd.) under Rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019. The demand notice pertains to the personal guarantees invoked by REC Ltd. for a purported total outstanding debt of Rs. 1211,91,94,259 related to a loan obtained by FACOR Power Ltd. (FPL), for which Vineet Saraf stood as a personal guarantor. The loan agreement was initially dated 22.05.2009 and subsequently amended. FPL defaulted, leading REC Ltd. to initiate Corporate Insolvency Resolution Process (CIRP) against Ferro Alloys Corporation Ltd.

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## Facts

Vineet Saraf stood as a personal guarantor for a loan obtained by FACOR Power Ltd. (FPL) from Rural Electrification Corporation Ltd. (REC Ltd.). The loan agreement was dated 22.05.2009 and subsequently amended. FPL defaulted on the loan, leading REC Ltd. to initiate Corporate Insolvency Resolution Process (CIRP) against Ferro Alloys Corporation Ltd. (FACOR). A resolution plan was approved by NCLT Cuttack and later dismissed by NCLAT. REC Ltd. assigned the loan to FACOR, but the assignment agreement excluded personal guarantees. REC Ltd. then issued a demand notice to Vineet Saraf under Rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019, seeking to

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## Issues and analysis

### Issue 1: Whether the assignment of the underlying debt by REC Ltd. to FACOR, while excluding the personal …

**Ratio:** The legal principle revolves around the interpretation of the law of guarantees,

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**Reasoning:** The court reasons that the concerned NCLT must carefully examine the law on assignment,

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**Interpretation:** The interpretation involves determining whether the exclusion of personal

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**Application:** The court applies the legal principles to the specific facts of the case,

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## Parties

- **Judges:** Purushaindra…
- **Appellants:** VINEET…
- **Respondents:** FACOR Powe…; RURAL ELECTRIFICAT…
- **Other parties:** Kohi…

## Timeline

- **2009-05-22 — Loan Agreeme…**: The initial date of the loan agreement between FACOR Power Ltd. and Rural Electrification…
- **2017-05-01 — CIRP Init…**: REC Ltd. initiated Corporate Insolvency Resolution Process (CIRP) against Ferro Alloys…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 95 — Application by creditor to initiate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-95)

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