N The Matter of

UNIVERSITY MOOT COURT SELECTIONS, GRAND INTRA, 2020
MEMORIAL ON BEHALF OF THE PETITIONER
T-61
UNIVERSITY MOOT COURT COMPETITION, GRAND INTRA, 2020
IN THE HON’BLE SUPREME COURT OF INDIA
UNDER THE SPECIAL LEAVE PETITION
ENSHRINED UNDER ARTICLE 136 OF THE CONSTITUTION OF INDIA
SPECIAL LEAVE PETITION (CIVIL) ****/2020
IN THE MATTER OF:
PROFESSOR …………………..…………………………………………….PETITIONER
Vs.
ROYAL BANK OF SPRAIN AND OTHERS…………..………………RESPONDENTS
ON SUBMISSION TO THE SUPREME COURT OF INDIA
MEMORIAL FOR THE PETITIONER
1
TABLE OF CONTENTS
LIST OF ABBREVIATION .................................................................................................... III
INDEX OF AUTHORITIES....................................................................................................IV
STATEMENT OF JURISDICTION..................................................................................... VIII
STATE MENT OF FACTS .....................................................................................................IX
STATEMENT OF ISSUES .....................................................................................................XI
SUMMARY OF ARGUMENTS ........................................................................................... XII
ARGUMENTS ADVANCED ................................................................................................... 1
[ISSUE I]: RBS DOES NOT HAVE THE LOCUS TO INITIATE PARALLEL
PROCEEDINGS AGAINST HAPL AND PROFESSOR BY WAY OF CP(IB)-
11(ND)/2019 AND CP(IB)-22(ND)/2020. ............................................................................ 1
[I.A]: No locus to initiate Parallel Proceedings for Same Set of Claims. .......................... 1
[I.B]: Parallel proceeding is inconsistent with the Object of the Code. ............................. 2
[I.C]: Multiplicity of proceeding should be Avoided as Far as Possible. .......................... 3
[ISSUE II]: THE APPROVAL OF THE RESOLUTION PLAN BY THE NCLT

PROHIBITS THE INITIATION OF PROCEEDINGS AGAINST PROFESSOR IN CP(IB)-
22(ND)/2020. ......................................................................................................................... 4
[II.A]: Essentials of Section 95 not fulfilled. ..................................................................... 4
[II.B]: The act of initiating Insolvency Proceeding after Approval of Resolution Plan
would result in Unmerited Loss to Professor..................................................................... 5
[ISSUE III]: THE OBLIGATIONS OF PROFESSOR UNDER THE DEED OF

GUARANTEE DATED 15.08.2018 STANDS DISCHARGED UNDER APPLICABLE
LAW. ..................................................................................................................................... 6
[III.A]: Discharge of Principal Debtor results in Discharge of Guarantor. ....................... 7
[III.A.1]: Conjoint reading of Sections 134 and 128 would discharge the Guarantor. .. 7
[III.A.2]: Not Discharging Guarantor would have an absurd effect on object of IBC. . 8
[III.B]: Notwithstanding anything hereinabove state it is Arbitrary to sue guarantor for

entire amount. .................................................................................................................... 9
I
[ISSUE IV]: THE NOTIFICATION DATED 15.11.2019 AND THE SECTIONS
NOTIFIED THEREIN UNDER, THE GUARANTOR RULES AND THE GUARANTOR
REGULATIONS ARE ALL ULTRA VIRES THE IBC AND THE CONSTITUTION OF
INDIA. ................................................................................................................................. 10
[IV.A]: There is no Intelligible Differentia in enforcing the provisions under part iii only
qua the ‘personal guarantors’. .......................................................................................... 10
[IV.A.1]: There is an unconstitutional usurpation of legislative power by the executive.

...................................................................................................................................... 10
[IV.A.2]: Impugned Notification is manifestly arbitrary and suffers from complete non-
application of mind. ..................................................................................................... 11
[IV.A.3]: The rules and regulations, when enforced only in respect of personal
guarantors to corporate debtors, are manifestly arbitrary and violative of Article 14. 12
[IV.B]: There is no provision under part iii of IBC expressly dealing with insolvency
resolution of ‘personal guarantors of corporate debtors. ................................................. 13
[IV.C]: Provisions of part iii of IBC have the absurd and peculiar effect of staying the
CIRP process of HAPL which could not have been the intent of the Legislature. .......... 14
[ISSUE V]: THE HON’BLE DELHI HIGH COURT HAS THE JURISDICTION TO
ENTERTAIN THE W.P. (C) 3911/2020. ............................................................................ 15
[V.A]: DELHI HIGH COURT CAN RIGHTLY EXERCISE ITS POWER OF JUDICIAL REVIEW OVER
ADMINISTRATIVE ACTION. ............................................................................................... 15
[V.A.1]: That High Courts have inherent power of Judicial Review. ......................... 15
[V.A.2]: That there is violation of Fundamental Right. ............................................... 16
The Hon’ble High Court has the territorial jurisdiction............................................... 16
[V.A.3]: Scope of Article 226 and 227 of Indian Constitution.................................... 16
[V.A.4]: Power of Judicial Review can be exercised over Tribunal. .......................... 17
[V.B]: Impugned Rules and Regulation is in Public Law Domain.................................. 18
[V.C]: Non-existence of Alternative Efficacious Remedy. ............................................. 19
PRAYER ...............................................................................................................................XIV
II
LIST OF ABBREVIATION
¶ Paragraph
AIR All India Reporters
SCC Supreme Court Cases
SC Supreme Court
V Versus
Ltd Limited
Ors Others
SCR Supreme Court Reports
US United States
UN United Nations
Art Article
s section
ICA Indian Contract Act
NCLT National Company Law Tribunal
NCLAT National Company Law Appellate Tribunal
CD Corporate Debtor
ARPL Arturo Rex Pvt. Ltd.
HAPL Heist Artillery Private Limited
RBS Royal Bank of Sprain
Pvt Private
HC High Court
Ker Kerala
CoC Committee of Creditors
IBC Insolvency and Bankruptcy Code
CIRP Corporate Insolvency Resolution Process
III
INDEX OF AUTHORITIES
Cases
Air India Statutory Corporation v United Labor Union (1997) 9 SCC 377............................ 17
Ajay Hasia v Khalid Mujid AIR 1981 SC 487. ........................................................................ 12
AK Gopalan v State of Madras AIR 1950 SC 27. ................................................................... 15
Amrit Lai Goverdhan Lalan v State Bank of Travancore AIR 1968 SC 1432. ......................... 6
Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147. ................................ 19
Aypunni Mani v Devassy Kochouseph And Ors AIR 1966 Ker 203.......................................... 9
Babu Rao Ramchandra Rao v Babu Manaklal Nehmal AIR 1938 Nag 413. ............................ 8
Balkrishnan Ram v Union of India (2020) 2 SCC 442. ........................................................... 18
Budhan Chaudhary v State of Bihar AIR 1955 SC 191 .......................................................... 12
Committee of Creditors of Essar Steel Ltd v Satish Kumar Gupta 2019 SCC OnLine SC 1478.
................................................................................................................................................ 5
DDA v Joint Action Committee (2008) 2 SCC 672.................................................................. 17
Dr Vishnu Kumar Agarwal v M/S Piramal Enterprises Ltd 2019 SCC Online NCLAT 542. . 1,
6
EP Royappa v State of TN AIR 1974 SC 555. ......................................................................... 12
Essen Deinki v Rajiv Kumar (2002) 8 SCC 400. ..................................................................... 17
Food Corporation of India v SEIL Ltd (2008) 3 SCC 440. ..................................................... 19
Gaso Transport Services (Bus) Ltd v Martin Adala Obene (1994) IV KALR 5 13. ................. 3
Gouri Shankar Jain v Punjab National Bank 2019 SCC OnLine Cal 7288. ............................. 4
ICICI Bank v Era Infrastructure Ltd (CP No (IB)-1151(PB)/2018). ........................................ 1
IL and FS Financial Services Limited v Golden Glow Estates Private Limited Company (CA-
918 (PB)/2019 IB-1038(PB) 2018). ....................................................................................... 1
Income Tax Appellate Tribunal v CIT (1996) 7 SCC 454. ...................................................... 17
Indian Express Newspapers (Bom) (P) Ltd v Union of India (1985) 1 SCC 641. ................... 10
Jekkannu Sami Aiyar v Muthukumara Ramaswami Chettiar (1923) 44 MLJ 171. ................... 7
Kahn Singh v Tek Chand AIR 1968 J&K 93. ............................................................................ 7
Kailash Chander Sharma v State of Haryana 1989 Supp (2) SCC 696. ................................. 16
Kamal K Singh v Union of India and Ors 2019 SCC OnLine Bom 5609. .............................. 20
Kaupthing Singer and Friedlander Limited (2011) UKSC 48. ................................................. 6
Kihoto Hollohan v Zachillhu 1992 Supp (2) SCC 651. ........................................................... 16
IV
KK Saxena v International Commission on Irrigation, Drainage (2015) 4 SCC 670............. 18
Krishna Pillai Rajasekharan Nair v Padmanabha Pillai and Ors (2004) 12 SCC 754. ........... 6
Kundanmal Dabriwala v Haryana Financial Corporation (2012) 171 Comp Cas 94. ............ 4
Kunj Bihari Lal Butail v State of HP (1985) 1 SCC 641. ........................................................ 14
L Chandra Kumar v Union of India (1995) 1 SCC 400. ............................................. 16, 17, 18
Lalit Mishra & Ors v Sharon Bio Medicine Ltd & Ors 2018 SCC OnLine NCLAT 669. .... 6, 8
M/s Embassy Property Developments Pvt Ltd v State of Karnataka &Ors 2019 SCC OnLine
SC 154............................................................................................................................ 19, 20
M/s IFCI v Hi point Investment Finance Private Ltd 2018 SCC OnLine NCLT 30322. .......... 1
M/S Sew Infrastructure Ltd v M/S Mahendra Investment Advisor Pvt Ltd 2020 SCC OnLine
NCLAT 564. .......................................................................................................................... 1
Maneka Gandhi v Union of India AIR 1978 SC 597............................................................... 12
Manjula Manjari Dei v Director of Public Instruction AIR 1952 Ori 344 ............................. 16
Minerva Mills Ltd v Union of India (1980) 3 SCC 625. .......................................................... 15
Mrs Mamatha v AMB Infrabuild Pvt Ltd 2018 SCC OnLine NCLT 6634. ............................... 3
Nilabati Behera @ Babita Behera v State of Orissa (1993) 2 SCC 746. ................................ 18
Noble resources Ltd v State of Orissa (2006) 10 SCC 236. .................................................... 19
Oshi Foods Limited v State Bank of India AIR 1997 (2) MPLJ 643. ........................................ 2
Per Chancellor Kent in Brinkerhoff v Brown (1822) 6 Johns Ch 136. ...................................... 3
R v Minister of Health (1943) 2 ALL ER 591. .......................................................................... 2
Rajasthan SEB v Mohan Lal AIR 1967 SC 1857 .................................................................... 15
Ram Krishna Dalmia v Justice SR Tendolkar AIR 1958 SC 538. ........................................... 13
RD Shetty v International Airport Authority of India AIR 1979 SC 1628. ............................. 15
Rojer Mathew v South Indian Bank Ltd & Ors 2016 SCC OnLine Ker 37624. ...................... 18
Sanjeev Shriya v State Bank of India 2017 SCC OnLine All 2717. .......................................... 2
Sheik Suleman v Shivzan Bhikaji (1887) ILR 12 Bom 71. ........................................................ 9
Standard Chartered Bank v Satish Kumar Gupta, RP of Essar Steel Limited & Ors 2019 SCC
OnLine NCLAT 937. ......................................................................................................... 6, 8
State Bank of India v V Ramakrishnan (2018) 17 SCC 394. ............................................... 5, 11
State Bank of India v Videocon Industries Ltd 2019 SCC OnLine NCLT 745. ........................ 3
State of UP v Ashok Kumar Nigam (2013) 3 SCC 372............................................................ 19
State of West Bengal v Anwar Ali Sarkar AIR 1952 SC 284................................................... 12
Sub-Committee on Judicial Accountability v Union of India (1991) 4 SCC 699. ................... 19
Subramania Chettiar v M P Narayanaswami Gounder AIR 1951 Mad 48. ............................. 9
V
Sukhdev Singh v Bhagatram Sardar Singh Raghuvanshi AIR 1975 SC 1331 ........................ 15
Swapan Kumar Choudhary v Tapas Chakarvorty (1995) 4 SCC 478. .................................... 16
Swiss Ribbons (P) Ltd v Union of India (2019) 4 SCC 17. ..................................................... 12
Usha International and Anr v Usha Television Limited 2002 SCC OnLine Del 306................ 3
Statutes
Insolvency and Bankruptcy Code 2016, s 1(3). ....................................................................... 10

Insolvency and Bankruptcy Code 2016, s 101......................................................................... 14
Insolvency and Bankruptcy Code 2016, s 2(e). ....................................................................... 13
Insolvency and Bankruptcy Code 2016, s 2(g). ....................................................................... 13
Insolvency and Bankruptcy Code 2016, s 3(12). ....................................................................... 5
Insolvency and Bankruptcy Code 2016, s 31(1). ................................................................... 4, 5
Insolvency and Bankruptcy Code 2016, s 60(5). ..................................................................... 20
Insolvency and Bankruptcy Code 2016, s 60........................................................................... 11
Insolvency and Bankruptcy Code 2016, s 95(4)(c). .................................................................. 5
The Indian Contract Act 1872, s 128. .................................................................................... 4, 7
The Indian Contract Act 1872, s 135. ........................................................................................ 9
The Indian Contract Act 1872, s 139. ........................................................................................ 8
The Indian Contract Act 1872, s 140. ................................................................................ 2, 6, 8
The Indian Contract Act,1872, s 134. ........................................................................................ 7
The Indian Contract Act1872, s 145. ......................................................................................... 8
Constitutional Provisions
The Constitution of India 1950, art 12. .................................................................................... 15

The Constitution of India 1950, art 214. .................................................................................. 18
VI
The Constitution of India 1950, art 323A. ............................................................................... 17
The Constitution of India 1950, art 323B. ............................................................................... 17
Books
Avtar Singh, Contract and Specific Relief Act (12th edn EBC) 648. ........................................ 7
Bhagabati Prosad Banerjee & Bhaskar Prosad Banerjee, Judicial Control of Administrative
Action (1st edn, Wadhwa and Company Law Publishers, 2001) 120. ................................. 11
HS Cunningham and HH Shepherd, The Indian Contract Act, No. IX of 1872 (FS Collis ed, 3rd
edn, Thacker, Spink & Company, 1878). .............................................................................. 7
IP Messy, Administrative Law (9th edn, EBC) 295. ................................................................ 17
Pollock and Mulla, Indian Contract and Specific Relief Acts (9th edn, LexisNexis 1972) 629.
................................................................................................................................................ 9
Robert Joseph Pothier, A Treatise on the Law of Obligations or Contract (RH Small, 1826).. 7
Articles
Vinti Agrawal, ‘Corporate Guarantee: Computation of Guarantee Fees at Arm's Length Price’,
Christ University Law Journal (2016) 5 Christ University Law Journal 19. ......................... 4
Reports
Law Commission of India, 13th Report (Contract Act,1872) para 109..................................... 9

Ministry of Corporate Affairs, Report of Insolvency Law Committee (2020) para 6.4. .......... 14
VII
STATEMENT OF JURISDICTION
The Petitioner i.e. Professor, personal guarantor to Heist Artillery Private Limited, has
approached the Hon’ble Supreme Court of India under Art. 136 of the Constitution of India.
ARTICLE 136: SPECIAL LEAVE TO APPEAL BY THE SUPREME COURT
1) Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant
special leave to appeal from any judgment, decree, determination, sentence or order in any
cause or matter passed or made by any court or tribunal in the territory of India.
(2) Nothing in clause (1) shall apply to any judgment, determination, sentence or order passed
or made by any court or tribunal constituted by or under any law relating to the Armed Forces.
VIII
STATE MENT OF FACTS
Heist Artillery Private Limited (“HAPL”) is a company registered under the laws of India is
the leading manufacturer of defence equipment and related activities in the Union of India,
based out of New Delhi. HAPL was conceptualized by Mr. Professor and Mr. Berlin (also
directors and shareholders of HAPL). Initially, the business of HAPL was confined to
manufacture of local weaponry for the State and the Police. However, with constant effort
Professor and Berlin, HAPL quickly gained face as the biggest defence and arms
manufacturing unit in whole of India and opened new unit to deal exclusively with purchase
order across the world in Manesar.
In view of requirement for funds, Professor and Berlin approached the Royal Bank of Sprain
(“RBS”), headquartered in New Delhi in order to avail certain loan facilities. Upon an
assessment of the credit worthiness of HAPL and its directors/guarantors, RBS agreed to
sanction vide the Term Loan Agreement dated 15.05.2018 a business loan to the tune of Rs.
6,00,00,00,000/- (Rupees Six Hundred Crores) to HAPL (“TLA”). As per the terms of the TLA,
the repayment was to be done within the next five years in a phased manner along with
applicable interests. Alongside the said TLA, RBS also insisted upon and secured the
repayment of the loan sanctioned by way of various agreement dated 15.05.2018: namely
Mortgage Deed and Hypothecation deed btw. HAPL and RBS, also, RBS signed two separate
guarantee deed with both Professor and Berlin distinctly.
Till March 2019, HAPL duly paid 1,00,00,00,000. That was only in August 2019 that their
account was declared as NPA by RBS, owing to its default in repayment obligation. Since,
settlement talks failed between two, RBS filed an application under Sec. 7 of IBC before
NCLT, Delhi seeking to initiate the CIRP of HAPL on 25.08.2019. Vide an order dated
20.10.2019, the NCLT admitted the application and issued moratorium under Sec.14 of IBC in
relation to the assets of HAPL, thereby commencing the CIRP of HAPL. An appeal against
this order was dismissed by both NCLAT and Supreme Court.
The NCLT in conformity with Committee of Creditors appoints Ms. Rachel as the Resolution
Professional. Thereafter, claims from all the creditors were invited pursuant to a Public
Announcement. While preparing the Information Memorandum, the RP also examined various
guarantees furnished by promoters/directors of HAPL, including guarantee of Berlin and
Professor. RBS claim of Rs. 5,00,00,00,000/- (Rupees Five Hundred Crores) along with
interest was admitted by the RP – thus making RBS the lead financial creditor in the COC of
HAPL by debt value and voting percentage. On 30.03.2020, the COC approved the Resolution
IX
Plan filed by Arturo Rex Pvt. Ltd., the said Resolution plan was approved by the COC including
RBS in terms of Sec. 30(4) of the IBC. RBS in the said plan reserves its right to invoke
independent contract against the stakeholders and that entire approved amount to the tune of
75% must be paid within 180 days from the approval of Plan by adjudicatory authority.
Thereafter, an application dated 04.04.2020 under Sec. 31(1) was filled by ARPL and RP
before NCLT, which was only approved on 30.05.2020, owing to COVID-19 pandemic.
Meanwhile, certain provisions of Part III of the IBC were notified vide a notification dated
15.11.2019 (w.e.f. 01.12.2019), issued by the Ministry of Corporate Affairs, only insofar as
they relate to personal guarantors to corporate debtors. On 15.06.2020, to the surprise of
Professor and Berlin RBS invoked the deeds of guarantees dated 15.08.2018, in accordance
with which demand notice dated 15.06.2020 was issued to both of them under Sec.95(4)(b) of
IBC read with Rule 7(1) of the ‘Insolvency and Bankruptcy (Application to Adjudicating
Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors)
Rules, 2019’ issued by the Ministry of Corporate Affairs, Government of India (“Guarantor
Rules”) under Form B of the said Guarantor Rules for the entire debt along with interest. Both
of them decided not to respond to notice served to them on 17.06.2020. In pursuant of this,
RBS filed an Application under Section 95 of IBC read with the Guarantor Rules and the
‘Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Personal
Guarantors to Corporate Debtors) Regulations, 2019’ issued by the Insolvency and Bankruptcy
Board of India before NCLT Delhi, seeking to initiate the insolvency resolution process of the
Professor. Thus, an interim moratorium in terms of Section 96 of the IBC came into effect on
22.07.2020, thereafter the NCLT admitted the said Application preferred by RBS and issued a
moratorium under Sec. 101 of the IBC.
On 01.08.2020, the Order dated 22.07.2020 was challenged by the Professor before the Hon’ble
Delhi High Court vide a Writ Petition being W.P. (C) 3911/2020 titled ‘Professor v Royal Bank
of Sprain and Others’. The Government of India (through the Ministry of Corporate Affairs)
and the IBBI were also impleaded as Respondent Nos. 2 and 3 respectively to the said Writ
Petition. Thereafter, the said writ petition which was initially stayed impugned Order, was
eventually dismissed vide the Judgement dated 02.09.2020.
Henceforth, a Special Leave Petition (Civil) was filled by Professor before the Hon’ble
Supreme Court against the Judgment dated 02.09.2020 passed by the Hon’ble Delhi High
Court. On 01.10.2020, addressing various question of law.
X
STATEMENT OF ISSUES
[ISSUE I]
WHETHER RBS HAD THE LOCUS TO INITIATE PARALLEL PROCEEDINGS AGAINST HAPL AND
PROFESSOR BY WAY OF CP (IB)-11(ND)/2019 AND CP (IB)-22(ND)/2020?
[ISSUE II]
WHETHER THE APPROVAL OF THE RESOLUTION PLAN BY THE NCLT PROHIBITS THE INITIATION
OF PROCEEDINGS AGAINST PROFESSOR IN CP (IB)-22(ND)/2020?
[ISSUE III]
WHETHER THE OBLIGATIONS OF PROFESSOR UNDER THE DEED OF GUARANTEE DATED
15.08.2018 STAND DISCHARGED UNDER APPLICABLE LAW?
[ISSUE IV]
WHETHER THE NOTIFICATION DATED 15.11.2019 AND THE SECTIONS NOTIFIED THEREIN UNDER,
THE GUARANTOR RULES AND THE GUARANTOR REGULATIONS ARE ALL ULTRA VIRES THE IBC
AND THE CONSTITUTION OF INDIA?
[ISSUE V]
WHETHER THE HON’BLE DELHI HIGH COURT HAD THE JURISDICTION TO ENTERTAIN THE W.P.
(C) 3911/2020?
XI
SUMMARY OF ARGUMENTS
11(ND)/2019 AND CP(IB)-22(ND)/2020.
The Royal Bank Of Sprain (RBS) in the present case does not have the locus to initiate the
parallel proceedings against HAPL and Professor by way of CP(IB)-11(ND)/2019 and CP(IB)-
22(ND)/2020 for same set of claim when latter is already undergoing CIRP process.
Furthermore, initiation of parallel proceeding would be inconsistent with the object of Code
and multiplicity of proceeding done as a consequence of this should be avoided owing to nature
of legislation.

PROHIBITS THE INITIATION OF PROCEEDINGS AGAINST PROFESSOR IN
CP(IB)-22(ND)/2020.
The Royal Bank of Sprain (RBS) cannot initiate insolvency proceeding against the personal
guarantor to HAPL, Professor under section 95 of the Code after the approval of resolution
plan by the adjudicating authority as the essential of this section is not duly met. Moreover, an
act of initiating such proceeding would have an unjust effect on the guarantor, which is highly
undesirable.
LAW.
The obligation of Professor under Deed of Guarantee dated 15.05.2018 stands discharged under
applicable law on the ground that the discharge of principal debtor would render guarantor
discharged of his liability on the combined reading of different provision of Indian Contract
Act, 1872. Notwithstanding herein above stated it is arbitrary to sue guarantor (i.e. Professor)
for entire debt.
NOTIFIED THEREIN UNDER, THE GUARANTOR RULES AND THE
GUARANTOR REGULATIONS ARE ALL ULTRA VIRES THE IBC AND THE
CONSTITUTION OF INDIA.
XII
The notification dated 15.11.19 and sections notified therein under, via the guarantor rules and
the guarantor regulations are all ultra vires the IBC and the Constitution of India as there is no
intelligible differentia in enforcing the provisions under Part III only qua the ‘personal
guarantors’ and not other classes of debtors as specified under Part III of the IBC; there is no
provision under Part III of IBC expressly dealing with insolvency resolution of ‘personal
guarantors of corporate debtors’ and the Provisions of Part III of IBC have the absurd and
peculiar effect of staying the CIRP process of HAPL (and any other action against Berlin, if
initiated) – which could not have been the intent of the legislature.
[ISSUE 5]: THE HON’BLE DELHI HIGH COURT HAD THE JURISDICTION TO
ENTERTAIN THE W.P. (C) 3911/2020
The Hon’ble Delhi High Court does possess jurisdiction to entertain the W.P (C) 3911/2020
on the ground that it rightly exercises its power of judicial review over administrative action,
that impugned rules and regulation is in public law domain and do fall under exceptional
circumstance and lastly that there is an inherent lack of jurisdiction on part of the tribunal.
XIII
ARGUMENTS ADVANCED
11(ND)/2019 AND CP(IB)-22(ND)/2020.
It is humbly submitted before the Supreme Court that the RBS in the present case does not
have locus to initiate parallel proceedings against the professor and HAPL for the same debt
when the latter is already undergoing CIRP process.
[I.A]: NO LOCUS TO INITIATE PARALLEL PROCEEDINGS FOR SAME SET OF CLAIMS.
This position that there cannot be two parallel proceedings for the same set of debt has been
maintained through various judgments of the courts and tribunals.
The National Company Law Appellate Tribunal in the case of Dr. Vishnu Kumar Agarwal v.
M/s Piramal Enterprises Limited1, held that, “if, for the same set of claim, an application has
been admitted against one of the corporate debtors (i.e. principal borrower or corporate
guarantor(s)), second application by the same financial creditor, for the same set of claim and
default, cannot be admitted against the other corporate debtor.” Further, it was held that, “for
the same set of debt, a claim cannot be filed by a financial creditor in two separate CIRPs of
the principal borrower and the corporate guarantor.” This judgement has been followed by
various adjudicating authority. In the matter of M/s IFCI v. Hi point Investment Finance Private
Ltd. the tribunal held that “no duplicate claim will be maintainable for the same set of debt
claim and default.”2 Similarly, in M/s Sew Infrastructure Ltd. v. M/s Mahendra Investment
Advisor Pvt. Ltd3 and ICICI Bank v. Era Infrastructure Ltd. 4 similar order and same has been
held by the Hon’ble NCLAT.
In the case of IL and FS Financial Services Limited v. Golden Glow Estates Private Limited 5,
where Edelweiss Asset Reconstruction Company Limited had filed a claim in the CIRP of the
principal debtor, which had been admitted in toto, and then also filed a claim in the CIRP of
the corporate guarantor. It was observed by the NCLT, New Delhi, Principal Bench, that the
same would result in duplication of claims and thus Edelweiss would enjoy double
proportionate voting rights in different CoCs. In light of the Piramal Judgment, the claim filed
1
Dr Vishnu Kumar Agarwal v M/S Piramal Enterprises Ltd 2019 SCC Online NCLAT 542.
2
M/s IFCI v Hi point Investment Finance Private Ltd 2018 SCC OnLine NCLT 30322.
3
M/S Sew Infrastructure Ltd v M/S Mahendra Investment Advisor Pvt Ltd 2020 SCC OnLine NCLAT 564.
4
ICICI Bank v Era Infrastructure Ltd (CP No (IB)-1151(PB)/2018).
5
IL and FS Financial Services Limited v Golden Glow Estates Private Limited Company (CA-918 (PB)/2019 IB-
1038(PB) 2018).
1
by Edelweiss in the CIRP of the corporate guarantor, being a repetition of the claim, which was
already admitted in another CIRP, was set aside.
In another case of Sanjeev Shriya v. State Bank of India6, the Allahabad High Court assessed
if proceedings of this nature can be instituted. In this case, the State Bank of India instituted
proceedings against the personal guarantors of the corporate debtor and was participating in
the insolvency resolution process of the corporate debtor. However, their liabilities had not
crystallised. In this context, the court held that “the entire proceeding is still in fluid stage and
for the same cause of action, two split proceedings cannot go simultaneously before the DRT
as well as NCLT.” Further, in Oshi Foods Limited v. State Bank of India7 it was held that unless
and until the liability of the company is determined the guarantors cannot be held liable. It may
be possible to proceed against the guarantors, if the decree is obtained against the company
which is going to be executed. Another point to be considered here, is that the impugned rules
were issued (w.e.f. 01.12.2019) and it is general principal that any legislation (herein
notification) will not have retrospective effect unless contrary intention appears. 8
Bearing in mind the above judgments, it is clear that until the liabilities of the corporate debtor
is crystallized in the CIRP process, there should be no question raised on the liability of the
surety and duplication of claim for the same debt will only result in unjust enrichment of the
creditor which is against the principle of ‘Nemo debet locupletari ex aliena jactura’ hence
concurrent proceeding against the latter is not maintainable.
[I.B]: PARALLEL PROCEEDING IS INCONSISTENT WITH THE OBJECT OF THE CODE.

In R. v. Minister of Health9, it was held that the administrative authorities exercising the
legislative power under the authority of an act of the parliament must do so in accordance with
the terms and object of such statute. One of the objects of the code is to maximize the value of
the assets of the corporate person undergoing insolvency process by completing the process in
the time bound manner. So, initiating insolvency proceeding against the guarantor when CIRP
against the debtor is already going on, would affect the property of debtor because after paying
the principle debt the surety gets into the shoes of the creditor 10 and will ask the debtor for the
payment of debt paid on his behalf through right of subrogation. Therefore, a financial creditor
cannot operate in a manner that imperils the value of the property of the personal debtor.
6
Sanjeev Shriya v State Bank of India 2017 SCC OnLine All 2717.
7
Oshi Foods Limited v State Bank of India AIR 1997 (2) MPLJ 643.
8
CIT v Vatika Township Pvt Ltd (2014) 367 ITR 466 (SC).
9
R v Minister of Health (1943) 2 ALL ER 591.
10
The Indian Contract Act 1872, s 140.
2
Allowing simultaneous initiation of CIRP against both principal borrower and the guarantor
will drastically hamper the framework of the code eventually adding to the pile of burden on
the Adjudicating Authorities.
[I.C]: MULTIPLICITY OF PROCEEDING SHOULD BE AVOIDED AS FAR AS POSSIBLE.
It is a basic principle of law that multiplicity is to be avoided11 whenever possible, practical
and fair. Multiplicity of suits is a term to describe a situation where more than one lawsuit
exists regarding the same transaction or occurrence. The prevention of a multiplicity of suits
has been said to be a "very favorite object" with a court of equity. 12 And consolidation of
proceedings will expedite justice and promote the object of the code which is to complete the
insolvency proceeding in a time bound manner. There have been instances where the courts
have favored consolidation of proceeding in insolvency cases where it was possible. In SBI v.
Videocon Industries Ltd13., the NCLT Mumbai allowed for the consolidation of proceedings
against the debtors and guarantor observing the exercise is beneficial to the stakeholders help
in maximization of the value during liquidation. Also, in Mrs. Mamatha v. AMB Infrabuild Pvt.
Ltd.14, it was held that if two corporate debtors collaborate then application under section 7 of
the code would be maintainable against both the debtors jointly as one.
It is clearly mentioned in the preamble of the code that it aims to consolidate various laws on
insolvency into one so that insolvency process can be completed in a time bound manner
maximizing the value of assets of the debtor. The Code stipulates fixed timelines to ensure
timely resolution for corporate debtors, for the benefit of all stakeholders and allowing
concurrent proceedings against the debtor and the guarantor for the same debt would act in
contrary to the object as undoubtedly two proceedings are not only more time consuming as
separate procedures will be followed for the two, but also create every plausibility of resulting
in two separate payment plans for the same debt. Multiplicity of proceeding should be avoided
as far as possible and all amendments which avoid such multiplicity should be allowed. 15
Permitting parallel proceedings against a personal guarantor and corporate debtor has the
inherent flaw of leading to opening a floodgate of litigation and possibly overwhelming the
NCLTs with multiple insolvency proceedings qua the same debt.
Therefore, no parallel proceedings against the debtor and the guarantor for the same debt should
be maintainable in the present case.
11
Usha International and Anr v Usha Television Limited 2002 SCC OnLine Del 306.
12
Per Chancellor Kent in Brinkerhoff v Brown (1822) 6 Johns Ch 136.
13
State Bank of India v Videocon Industries Ltd 2019 SCC OnLine NCLT 745.
14
Mrs Mamatha v AMB Infrabuild Pvt Ltd 2018 SCC OnLine NCLT 6634.
15
Gaso Transport Services (Bus) Ltd v Martin Adala Obene (1994) IV KALR 5 13.
3
PROHIBITS THE INITIATION OF PROCEEDINGS AGAINST PROFESSOR IN
CP(IB)-22(ND)/2020.
The petitioner humbly submits before the Hon’ble Supreme Court of India that the respondent,
Royal Bank of Sprain [RBS], cannot initiate insolvency proceeding against the personal
guarantor to HAPL, Professor, under section 95 of the Code after the resolution plan in an
insolvency proceeding of principal debtor has been approved by the Adjudicating Authority.
[II.A]: ESSENTIALS OF SECTION 95 NOT FULFILLED.
In the present case, RBS, upon default by Heist Artillery Private Limited [HAPL], instituted
insolvency proceeding against HAPL under Section 7 of the Code 16. Consequently, Arturo Rex
Pvt. Ltd. brought a resolution plan which was accepted with 100% of the COC members 17 and
subsequently was approved by the adjudication Authority under section 31(1) of the Code. 18
It is contended that when a resolution plan is approved by the Adjudicating Authority, it is
binding on the creditors.19 As per Section 31 of the IBC, such an accepted resolution plan
determines the full and final liability of the principal debtor. 20 Hence, the amount due from the
principal debtor to the creditor i.e., principle debt would become zero. Section 128 of the
contract act would find application here which states that the liability of surety is coextensive
with that of surety.21 In Halsbury's Laws of England, it has been stated that “A guarantee is an
accessory contract whereby the promisor undertakes to be answerable to the promise for the
debt, default or miscarriage of another person, whose primary liability to the promise, must
exist”.22 Since, the principle debtor is discharged from the liability, the surety would also stand
discharged from such a liability. In this regard reliance could be made to the case of Kundanmal
Dabriwala v. Haryana Financial Corporation23, wherein the Hon'ble Punjab and Haryana
High Court held that “as the liability of the surety is co-extensive with that of the principal
debtor, if the latter's liability is scaled down in an amended decree, or otherwise extinguished
in whole or in part by statute, the liability of the surety also is pro tanto reduced or
extinguished.”
16
Moot Proposition, ¶ 8.
17
18
19
Insolvency and Bankruptcy Code 2016, s 31(1).
20
Gouri Shankar Jain v Punjab National Bank 2019 SCC OnLine Cal 7288.
21
22
Vinti Agrawal, ‘Corporate Guarantee: Computation of Guarantee Fees at Arm's Length Price’, Christ University
Law Journal (2016) 5 Christ University Law Journal 19.
23
Kundanmal Dabriwala v Haryana Financial Corporation (2012) 171 Comp Cas 94.
4
It is submitted that in order to initiate insolvency proceedings under Section 95 of the Code the
creditor must show existence of default24. Default, as defined in IBC, “means non-payment of
debt when whole or any part or instalment of the amount of the debt has become due and
payable and is not repaid by the debtor or the Corporate debtor, as the case may be.” 25 Since,
in the present case, after approval of resolution plan the principle debt became zero absolving
the surety as per Section 128 of the contract act, there was no default on the part of the Professor
as no debt was due upon him. He was absolved from his liability upon approval of resolution
plan, according to which all the creditors were paid to the tune of 75% of the debt HAPL owed
to them as full and final payment against their claim.26
Therefore, since Section 95 of the Code woks on the premise of existence of a debt, proceeding
initiated by RBS under Section 95 is not maintainable.
[II.B]: THE ACT OF INITIATING INSOLVENCY PROCEEDING AFTER APPROVAL OF
RESOLUTION PLAN WOULD RESULT IN UNMERITED LOSS TO PROFESSOR.

A cursory reading of Section 31(1)27 of the IBC suggests that liability of a personal guarantor
stands extinguished upon the approval of a resolution plan as it is binding on the guarantors.
Meaning thereby, a Resolution Plan covers a guarantee given by a guarantor for the purpose of
securing the loan of the corporate debtor. Once a Resolution Plan is sanctioned by the National
Company Law Tribunal under the provisions of the Code of 2016, then such plan takes care of
guarantee. The court also affirmed this in the case of State Bank of India v V. Ramakrishnan.
The court held that, that, “Section 31(1), in fact, makes it clear that the Resolution Plan, which
has been approved, may well include provisions as to payments to be made by such
guarantor”28 which was re-emphasised again in Committee of Creditors of Essar Steel Ltd vs
Satish Kumar Gupta and Satish Kumar Gupta and Ors.29 Therefore, Such guarantee cannot be
enforced dehors the provisions of the Resolution Plan sanctioned under the Code of 2016.
Principle of ‘double dip’ used in the English insolvency law and in the Indian insolvency law
framework. The rule of double dip has its origin in equity. In 2011, the Supreme Court of the
UK, while shedding light on these principles in the matter of Kaupthing Singer and Friedlander
Limited30, noted that while procuring double dividend on substantially the same debt against
the same estate was barred (‘rule against double proof’). Interestingly, in a later case before
24
Insolvency and Bankruptcy Code 2016, s 95(4)(c).
25
26
27
28
State Bank of India v V Ramakrishnan (2018) 17 SCC 394.
29
Committee of Creditors of Essar Steel Ltd v Satish Kumar Gupta 2019 SCC OnLine SC 1478.
30
Kaupthing Singer and Friedlander Limited (2011) UKSC 48.
5
NCLT Chennai, in October 2019, the court did not deny the absence of rule against double
proof in India. The court expounded on the principle in the following words, “The principle is
simple; no person is entitled to something that does not belong to him. No person will not get
a right more than other side has agreed upon in an agreement, likewise no person shall be put
to hardship beyond the obligation he agreed upon.” 31
Also, in the recent judgment of Lalit Mishra & Ors. Vs. Sharon Bio Medicine Ltd. & Ors.32
NCLAT ruled against the basic principles of the Contract Act and denied the right of
subrogation to the promoter personal guarantors. The same was followed by Standard
Chartered Bank v. Satish Kumar Gupta, R.P. of Essar Steel Limited & Ors33. These decisions
of the NCLAT can be viewed as an inequitable and prejudicial treatment against the guarantors
by denying the right of subrogation to them. If the surety is not provided with right of
subrogation, which is not only a statutory right34 under the ICA but also comes under the ambit
of principles of natural justice35, would be very unjust to the surety and would land him in
unexpected and unmerited loss36. The foreign jurisprudence considers the right of subrogation
as one of the ways to cure the ‘unjust enrichment’ under the law of restitution.
In the present case also, RBS is trying to avail unjust enrichment through the insolvency
proceedings of HAPL and Professor. Since, in the case at hand the resolution plan is already
sanctioned by the Adjudication Authority which may include provisions of payment by the
Professor and Berlin as guarantors therefore, applying the principle of double dip, RBS cannot
initiate insolvency proceeding against Professor so as to put him to hardship beyond the
obligation he agreed upon.
LAW.
It is humbly submitted before the Hon’ble Supreme Court of India that the obligation of
professor under deed of guarantor dated 15.08.2018 stands discharged under applicable law on
the ground that the principal debtor stands discharged; Notwithstanding herein above stated it
is arbitrary to sue guarantor (i.e. Professor) for entire debt.
31
Dr Vishnu Kumar Agarwal v M/S Piramal Enterprises Ltd 2019 SCC Online NCLAT 542.
32
Lalit Mishra & Ors v Sharon Bio Medicine Ltd & Ors 2018 SCC OnLine NCLAT 669.
33
Standard Chartered Bank v Satish Kumar Gupta, RP of Essar Steel Limited & Ors 2019 SCC OnLine NCLAT
937.
34
35
Krishna Pillai Rajasekharan Nair v Padmanabha Pillai and Ors (2004) 12 SCC 754.
36
Amrit Lai Goverdhan Lalan v State Bank of Travancore AIR 1968 SC 1432.
6
[III.A]: DISCHARGE OF PRINCIPAL DEBTOR RESULTS IN DISCHARGE OF GUARANTOR.
It is stated that any change occurring in the tripartite agreement between creditor, debtor and
guarantor would affects the liability of guarantor. Owing to the same, discharge of principal
debtor would rightly discharge guarantor from his existing liability.
[III.A.1]: Conjoint reading of Sections 134 and 128 would discharge the Guarantor.
It is most humbly submitted that any release of principal debtor is release of surety. 37 Sec.38134
of the ICA provides that the guarantor shall stand discharged from its liabilities under a contract
of guarantee in case any agreement arrived between the creditor and the principal debtor, by
which the principal debtor is released. By virtue of Sec39.128 of ICA, the liability of the surety
is co-extensive with that of the principal debtor so, if by any contract between the creditor and
the principal debtor, latter is released, or by any act or omission of the creditor, the principal
debtor is discharged, the surety will also be discharged from his liability accordingly. Thus, the
most desirable interpretation of Sec. 128 of the Act would be that a statutory reduction or
extinguishment of principle debtor’s liability by the creditor will operate as pro tanto reduction
or extinguishment of surety’s debt.40
Due reference must be given to the Commentaries on Indian Contract by H.S. Cunningham
and H.H Shephard41, wherein they quote the following passage of Robert Joseph Pothier from
‘Treaties of Law of Obligation or Contract’ when dealing with Sec. 134: 'It results from the
definition of a surety's engagement as being accessory to a principal obligation that the
extinction of the principal obligation necessarily induces that of the surety, it being the nature
of an accessory obligation that it cannot exist without its principal'.42 Similarly, in the case of
Jekkannu Sami Aiyar vs Muthukumara Ramaswami Chettiar43 it was held that the liability of a
surety for a debt ceased to exist when his principal's debt was extinguished.
Thus, the liability of the guarantor is co-extensive with that of the borrower is a proven fact,
and since RBS will recover majority of its due from HAPL on account of the fact its claim
would be discharged pursuant to the admission of Resolution Plan as stated above, resulting in
discharge of principal debtor in toto, the Demand Notice more so, the proceeding against the
37
Kahn Singh v Tek Chand AIR 1968 J&K 93.
38
The Indian Contract Act,1872, s 134.
39
40
Avtar Singh, Contract and Specific Relief Act (12th edn EBC) 648.
41
HS Cunningham and HH Shepherd, The Indian Contract Act, No. IX of 1872 (FS Collis ed, 3rd edn, Thacker,
Spink & Company, 1878).
42
Robert Joseph Pothier, A Treatise on the Law of Obligations or Contract (RH Small, 1826).
43
Jekkannu Sami Aiyar v Muthukumara Ramaswami Chettiar (1923) 44 MLJ 171.
7
Professor of the discharged debt blatantly false and frivolous and an attempt to illegally extract
money from the Petitioner.
[III.A.2]: Not Discharging Guarantor would have an absurd effect on object of IBC.
The discharge of the surety on the release or discharge of the principal debtor must be read in
accordance with Sec. 14044 of ICA which envisages that the surety shall be vested with the
right of subrogation to recover the debt paid to the creditor on behalf of the principal debtor.
Though in IBC, there exist no such provision. 45 On a similar note fair reading of Sec. 145 46 of
ICA states about the surety's normal rights to an indemnity for the principal debtor. If the surety
were compelled to meet the liability, any attempt by him to sue the principal debtor for an
indemnity might be met by the plea that the debt had gone and the principal debtor was no
longer liable. If this were a good answer to the surety he would be deprived, by the unilateral
act of the creditor of a right which he would have expected to have. On the other hand, if the
principal debtor remained liable to indemnify the surety despite his own discharge, the effect
would be to render the discharge nugatory i.e. debt remains as it is, meaning thereby no effect
of resolution thus, defeating the objective of IBC. 47
Moreover, if we consider that principal debtor is no more liable, the surety's remedy would be
affected thereby that should also result in the discharge of the surety by virtue of Sec. 139 48 of
ICA. If the creditor, by any contract with the principal debtor releases him, he cannot place his
remedies at the disposal of the surety without a breach of his arrangement with the principal
debtor to release him. To carry out that arrangement, the surety should have right to take action
against the principal debtor in respect of the debt, engagement or liability. In the case of Babu
Rao Ramchandra Rao v Babu Manaklal Nehmal lays down the principle in a different, though
equally effective manner as follows: “The position of the surety is two-fold: One the one hand
he is liable to pay the debt, on the other hand, when he pays the debt, he stands in the shoes of
the creditor and he is entitled to enforce against the principal debtor all the remedies which
were available to the creditor. If the liability of the surety is so co-extensive with that of the
principal debtor, his right is not less co-extensive with that of the creditor.”49
44
45
Standard Chartered Bank v Satish Kumar Gupta, RP of Essar Steel Limited & Ors 2019 SCC OnLine NCLAT
937.
46
The Indian Contract Act1872, s 145.
47
Lalit Mishra & Ors v Sharon Bio Medicine Ltd & Ors 2018 SCC OnLine NCLAT 669; Standard Chartered
Bank v Satish Kumar Gupta, RP of Essar Steel Limited & Ors 2019 SCC OnLine NCLAT 937.
48
49
Babu Rao Ramchandra Rao v Babu Manaklal Nehmal AIR 1938 Nag 413.
8
Another aspect which must be given due reliance is that the creditor, herein RBS, and principal
debtor, HAPL, made a composition of debt due from the principal debtor in form of resolution
plan50 which states of the decretal amount to the tune of 75% wherein it was unanimously
accepted by the COC, thus, that would lead to novation of contract, thereby releasing surety. 51
Thus, most desired result of above analysis is that the discharge of the surety must be treated
as a necessary consequence of the discharge of principal debtor, herein Professor, personal
guarantor stands discharged by virtue of discharge of its principal debtor i.e. HAPL.
[III.B]: NOTWITHSTANDING ANYTHING HEREINABOVE STATE IT IS ARBITRARY TO SUE
GUARANTOR FOR ENTIRE AMOUNT.
It is most respectfully submitted that due adherence must be given to the co-extensive liability
of the guarantor owing to the above submission. In addition, notwithstanding anything
hereinabove mentioned liability of guarantor should not be liable for entire debt. As, it was
rightly held in the case of Subramania Chettiar v M.P. Narayanaswami Gounder52 by Hon’ble
Madras High Court, that “Surety is liable only for the reduced amount.” Also, Pollock and
Mulla53 preferred the above pronouncement by stating that the judgement by the Madras High
Court is remarkable and to hold the surety liable in solidum would be unjust and arbitrary.
Moreover, the right of surety is well established under Sec. 145 which mentions that there is
an implied promise by the principal debtor to indemnify the surety, and the surety is entitled to
recover from the principal debtor whatever sum he has rightfully paid under the guarantee. Due
reliance was paid upon interpretation of Sec. 128 of ICA in the case of Sheik Suleman v. Shivzan
Bhikaji54 where it was observed that “if an amount recoverable by a plaintiff from a defendant
debtor is diminished in appeal, the surety's engagement, being one of indemnity, would
diminish in like proportion. In addition to it, it can be deduced that the sum recoverable became
zero owing to the decree being reversed, the surety's liability would also be reduced to
nothing that if the latter's liability is scaled down in an amended decree, or otherwise
extinguished in whole or in part by statute, the liability of the surety also is pro tanto reduced
or extinguished.”55 Similar view was taken in the case of Aypunni Mani v Devassy Kochouseph
And Ors.56
50
51
52
Subramania Chettiar v M P Narayanaswami Gounder AIR 1951 Mad 48.
53
Pollock and Mulla, Indian Contract and Specific Relief Acts (9th edn, LexisNexis 1972) 629.
54
Sheik Suleman v Shivzan Bhikaji (1887) ILR 12 Bom 71.
55
Law Commission of India, 13th Report (Contract Act,1872) para 109.
56
Aypunni Mani v Devassy Kochouseph And Ors AIR 1966 Ker 203.
9
Thus, in the light of present circumstance, RBS contended that Professor is liable to pay the
entire debt to the tune of Rs. 5,00,00,00,000/- (Rupees Five Hundred Crores) along with interest
as on the said date57, which is highly unreasonable, illegal and mere attempt on the part of RBS
unjustly enrich itself by making a claim in the Insolvency Process of the Guarantor without
accounting for the amount realized by it.
NOTIFIED THEREIN UNDER, THE GUARANTOR RULES AND THE
GUARANTOR REGULATIONS ARE ALL ULTRA VIRES THE IBC AND THE
CONSTITUTION OF INDIA.
It is humbly submitted before the Hon’ble Supreme Court of India that the notification dated
15.11.19 and sections notified therein under, the guarantor rules and the guarantor regulations
are all ultra vires the IBC and the Constitution of India as there is no intelligible differentia in
enforcing the provisions under Part III only qua the ‘personal guarantors’ and not other classes
of debtors as specified under Part III of the IBC; there is no provision under Part III of IBC
expressly dealing with insolvency resolution of ‘personal guarantors of corporate debtors’ and
the Provisions of Part III of IBC have the absurd and peculiar effect of staying the CIRP process
of HAPL (and any other action against Berlin, if initiated) – which could not have been the
intent of the legislature.
[IV.A]: THERE IS NO INTELLIGIBLE DIFFERENTIA IN ENFORCING THE PROVISIONS UNDER
PART III ONLY QUA THE ‘PERSONAL GUARANTORS’.
It is submitted that Central Government has exercised its rule making power through Ministry
of Corporate Affairs in an unconstitutional manner as the impugned notification has no
intelligible differentia for unreasonable classification and is inconsistent with object of the
code.
[IV.A.1]: There is an unconstitutional usurpation of legislative power by the executive.
It is respectfully submitted that the Hon’ble Supreme Court in landmark case of Indian Express
Newspapers (Bom) (P) Ltd. v. Union of India,58 has held that rules and regulation made by
administrative body can be questioned and struck down by judiciary if same is arbitrary in
nature or there is unconstitutional usurpation of legislative power.
As per the proviso to Section 1(3)59 of the Code Parliament has delegated the power to enforce
different provisions of the Code at different points in time to the Central Government.
57
58
Indian Express Newspapers (Bom) (P) Ltd v Union of India (1985) 1 SCC 641.
59
10
However, in violation of the limited power conferred on it the Ministry of Corporate Affairs
issued a notification bearing S.O. 4126 (E), notifying that the following provisions of the Code
will come into force from 01.12.2019 only in so far as they relate to personal guarantors to
corporate debtors, thus, notifying only parts of the provisions of the Code and limiting the
application of the provisions to certain categories of persons.
Moreover, the provisions of the Code brought into effect by the notification are not severable,
in the sense that they do not specifically or separately deal with or govern insolvency
proceedings against personal guarantors to corporate debtors. The provisions only deal with
individuals and partnership firms. From a bare reading of the provisions it is not possible to
carve out a limited application of the provisions only in relation to personal guarantors to
corporate debtors. Thus, the unlawful attempt of the Central Government to enforce only
certain section in relation to personal guarantors to corporate debtors is an excessive exercise
of legislative power by the Central Government, which is wholly impermissible in law. The
same amounts to an unconstitutional usurpation of legislative power by the executive. It is held
that judiciary is duly concerned and responsible to ensure that rule making must be exercised
reasonably; proving otherwise would render them power to hold such provision as ultra vires
or constitutional.60
It is respectfully submitted that the impugned rules and the impugned regulations have not been
laid before Parliament as required under Section 24161 of the Code, thus not following the due
process of law establish in the Code to lay down the Rules and Regulation, which is indeed
another reason to cater this provision as ultra vires of Code.
[IV.A.2]: Impugned Notification is manifestly arbitrary and suffers from complete non-
application of mind.
It is humbly submitted that the Central Government has failed to bring into effect Section 243 62
of the Code, which would have repealed the Presidency Towns Insolvency Act, 1909 and the
Provincial Insolvency Act, 1920 which dealt with initiation of insolvency proceedings against
an individual. After enactment of the Code, insolvency proceedings against personal guarantors
to corporate debtors would lie before the Hon'ble NCLT, in terms of Section 60 63 of the Code,
although they would be governed by the aforesaid two Acts.64
60
Bhagabati Prosad Banerjee & Bhaskar Prosad Banerjee, Judicial Control of Administrative Action (1st edn,
Wadhwa and Company Law Publishers, 2001) 120.
61
Insolvency and Bankruptcy Code 2016, s 241.
62
63
64
State Bank of India v V Ramakrishnan (2018) 17 SCC 394.
11
With the enforcement of the impugned provisions, rules and regulations, insolvency
proceedings can now be initiated against personal guarantors to corporate debtors under Part
III of the Code, and also the two aforementioned Act since Section 243 of the Code has not
been brought into force. Thus, the impugned notification has the absurd effect of creating two
self-contradictory legal regimes for insolvency proceedings against personal guarantors to
corporate debtors. This is contrary to the legislative intent of repealing the both the Acts,
accordingly the notification is arbitrary and liable to set aside.
[IV.A.3]: The rules and regulations, when enforced only in respect of personal guarantors
to corporate debtors, are manifestly arbitrary and violative of Article 14.
It is humbly submitted that the Constitution of India guarantees Right to Equality to every
person.65 Equality is primarily a guarantee against arbitrariness in state action. 66 Justice
Bhagwati in E. P. Royappa case67 observed that “equality is antithetic to arbitrariness” and
held that, “where an act is arbitrary, it is implicit in it that it is unequal both according to
political logic and constitutional law.” The doctrine of reasonable classification has been
evolved as a rule for testing or determining whether a particular State action was arbitrary or
not.68 There are two conditions to be fulfilled in order to pass the test of reasonable
classification: a) The classification must be founded on an intelligible differentia which
distinguishes those that are grouped from others are left out of the group. b) The differentia
must have a rational relation to the object sought to be achieved by the Act. 69
It is contended that there is no intelligible differentia or rational basis on which personal
guarantors to corporate debtors have been singled out for being covered by the impugned
provisions, particularly when the provisions of the Code do not separately apply to one sub-
category of individuals, i.e. personal guarantors to corporate debtors. Rather, Part III of the
Code does not apply to personal guarantors to corporate debtors at all.
It is also stated that in the landmark judgement of Swiss Ribbons (P) Ltd. v. Union of India70,
the Hon'ble Supreme Court has upheld the difference in procedure for operational creditors and
financial creditors on the basis of inherent differences between the two classes of creditors,
which require them to be treated separately, however, impugned notification dated 15.11.2019,
provide a single procedure for the insolvency resolution process of a personal guarantor,
65
The Constitution of India 1950, art 14.
66
Maneka Gandhi v Union of India AIR 1978 SC 597.
67
EP Royappa v State of TN AIR 1974 SC 555.
68
Maneka Gandhi v Union of India AIR 1978 SC 597.
69
State of West Bengal v Anwar Ali Sarkar AIR 1952 SC 284; Budhan Chaudhary v State of Bihar AIR 1955 SC
191; Ajay Hasia v Khalid Mujid AIR 1981 SC 487.
70
Swiss Ribbons (P) Ltd v Union of India (2019) 4 SCC 17.
12
irrespective of whether the creditor is a financial creditor or an operational creditor. Treating
financial creditors and operational creditors on an equal footing in Part III of the Code is in
clear contrast to Part II of the Code, which provides different sets of procedure for different
class of creditors. Thus, the act of clubbing financial creditors and operational creditors in
relation to procedure for insolvency resolution of Personal Guarantors to Corporate Debtors
amounts to treating unequals equally and amounts to collapsing the classification that is
carefully crafted by the Legislature in Part II of the Code. The same is therefore manifestly
arbitrary and violative of Article 14 of the Constitution.
It is submitted that the Impugned Rules, being a subordinate piece of legislation, could not have
traversed beyond the parent statute in defining the term “guarantor” as ‘a debtor who is a
personal guarantor to a corporate debtor and in respect of whom guarantee has been invoked
by the creditor and remains unpaid in full or part’ when there is no definition whatsoever in the
parent statute which defines the term “guarantor”. It is pertinent to note that Section 239 (1) of
the Code, although empowers Respondent to make rules to carry out the provisions of the Code,
the Rules framed thereunder cannot define a term that is not defined in the Code, when the
same is likely to result in class legislation for one category of guarantors, i.e., Personal
Guarantors to Corporate Debtors which is barred by Article 14. 71 Therefore, the Impugned
Rules insofar as they amount to making a class legislation with respect to Personal Guarantors
to Corporate Debtor are ultra vires the Parent Statute and are liable to be struck down.
[IV.B]: THERE IS NO PROVISION UNDER PART III OF IBC EXPRESSLY DEALING WITH
INSOLVENCY RESOLUTION OF ‘PERSONAL GUARANTORS OF CORPORATE DEBTORS .
It is humbly submitted before this court that Part III of the Code governs “Insolvency
Resolution and Bankruptcy for Individuals and Partnership Firms”. It does not anywhere deal
with a personal guarantor of a corporate debtor. Further, Section 2(g) 72 of the Code defines an
individual to mean “individuals, other than persons referred to in clause (e)” and Section
2(e)73 relates to personal guarantors to corporate debtors. Thus, a combined reading of both the
section and Part III of the Code would show that personal guarantors to corporate debtors are
not covered by Part III of the Code as it deals only with individuals and partnership firms, and
personal guarantors to corporate debtors stand specifically excluded from the definition of
individuals. This is further apparent from Section 9574 of the Code, which permits a creditor to
71
Ram Krishna Dalmia v Justice SR Tendolkar AIR 1958 SC 538.
72
Insolvency and Bankruptcy Code 2016, s 2(g).
73
Insolvency and Bankruptcy Code 2016, s 2(e).
74
13
invoke insolvency resolution process against an individual only in relation to a partnership
debt. Thus, there is no provision in Part III of the Code which permits the initiation of the
insolvency resolution process against a personal guarantor to a corporate debtor. Accordingly,
the notification, which alludes to the contrary, is ultra vires and liable to be set aside.
Similarly, Rule 7 read with Rule 3(e) of the Impugned Rules purport to permit a demand notice
and application under Section 95 to be issued against a guarantor, which is defined under Rule
3(e) as a debtor who is a personal guarantor to a corporate debtor, which is apparently contrary
to Section 95 of the Code, which only permits the creditor to apply under Section 95(1) in
respect of a partnership debt. Thus, combined evaluation of impugned rules suggest that it is
ultra vires IBC and liable to be set aside.
[IV.C]: PROVISIONS OF PART III OF IBC HAVE THE ABSURD AND PECULIAR EFFECT OF
STAYING THE CIRP PROCESS OF HAPL WHICH COULD NOT HAVE BEEN THE INTENT OF THE
LEGISLATURE.
It is humbly submitted before the Court that Hon’ble Supreme Court in case of Kunj Bihari Lal
Butail v. State of HP75 held that the rules formed by executive would be ultra vires if is
inconsistent and repugnant to the parent Act. that Section 9676 and Section 10177 of the Code
when applied in the manner enforced by the notification dated 15.11.2019 are manifestly
arbitrary as they result in the absurd consequence of staying the insolvency proceedings against
the corporate debtor, as soon as insolvency proceedings are initiated against the personal
guarantor. Section 96 of the Code envisages an interim-moratorium in relation to the debt
immediately on filing of an insolvency application before the Adjudicating Authority, while
Section 101 envisages a moratorium on admission of the application by the Hon'ble NCLT.
Under both provisions, all pending proceedings or legal actions in respect of the debt are
deemed to have been stayed, and no new proceedings in respect of the debt can be initiated.
Since the 'debt' for which insolvency proceedings are initiated against the personal guarantor
is indeed the 'debt' of the Corporate Debtor (Principal Debtor), all legal proceedings with
respect to the said 'debt' against Corporate Debtor, including the CIRP against the Corporate
Debtor, are deemed to have been stayed. This is a totally absurd consequence arising out of the
application of Part III of the Code to personal guarantors of corporate debtors, which could
never have been the intent of the legislature. 78
75
Kunj Bihari Lal Butail v State of HP (1985) 1 SCC 641.
76
77
78
Ministry of Corporate Affairs, Report of Insolvency Law Committee (2020) para 6.4.
14
[ISSUE V]: THE HON’BLE DELHI HIGH COURT HAS THE JURISDICTION TO
ENTERTAIN THE W.P. (C) 3911/2020.
It is humbly submitted before the Hon’ble Supreme Court of India that Delhi High Court does
possess jurisdiction to entertain the W.P (C) 3911/2020 on the ground that it rightly exercises
its power of judicial review over administrative action, that impugned rules and regulation is
in public law domain and do fall under exceptional circumstance and lastly that there is an
inherent lack of jurisdiction on part of the tribunal.
[V.A]: DELHI HIGH COURT CAN RIGHTLY EXERCISE ITS POWER OF JUDICIAL REVIEW OVER
ADMINISTRATIVE ACTION.
It is respectfully submitted that Hon’ble Delhi High Court has an inherent power of judicial
review by virtue of Article 226 and Article 227 over tribunal within its territorial limits.
[V.A.1]: That High Courts have inherent power of Judicial Review.
Judicial Review comprises the power of a court to hold unconstitutional and unenforceable any
law or order based upon such law or any action by a public authority which is inconsistent or
in conflict with the basic law of the land.79 The Constitution of India through Article 1380 does
envisage power of judicial review as it states that laws inconsistent with or in derogation of the
fundamental rights to be held void, wherein law does includes` rule, regulation, notification,
having in the territory of India the force of law made by state. The word “state” herein used
includes Government of India or any other authority under control of Government. 81 IBBI can
be covered under the ambit of “other authority under control of Government” as it has been
invested with statutory power to make rules and regulations having the force of law. 82 Thus,
drawing parallel from above we submit that power of judicial review over the notification dated
15.11.2019 brought forth by Ministry of Corporate Affairs (Government of India) 83, falls under
the purview of Judicial Review.
Judicial review means overseeing by the judiciary of the exercise of power by the other
coordinate organs of the government with a view to ensure that they remain confined to the
limits drawn upon their powers by the Constitution. In the landmark case of Minerva Mills v.
Union of India84, the Hon’ble Supreme Court held that judicial review is the basic feature of
79
AK Gopalan v State of Madras AIR 1950 SC 27.
80
81
82
Rajasthan SEB v Mohan Lal AIR 1967 SC 1857; Sukhdev Singh v Bhagatram Sardar Singh Raghuvanshi AIR
1975 SC 1331; RD Shetty v International Airport Authority of India AIR 1979 SC 1628.
83
84
Minerva Mills Ltd v Union of India (1980) 3 SCC 625.
15
the constitution. On a similar note in the case L. Chandra Kumar v. Union of India85that judicial
review is a part of the basic structure of the Constitution and the power of judicial review of
vested in the High Courts under Article 226 and Article 227 cannot be abridged or ousted.
Thus, in the present case High Court of Delhi should rightly exercise its power of judicial
review over the notification.
[V.A.2]: That there is violation of Fundamental Right.
It is humbly submitted that High court has the power to issue direction, order, or writs,
including the writs in the nature of habeas corpus, mandamus, prohibition, quo warranto, and
certiorari to any person, authority, government or public officials for enforcement of
fundamental rights under its own local jurisdiction.86 In the light of prevailing circumstances,
the rules and regulations, when enforced only in respect of personal guarantors to corporate
debtors as proved in the above issue, are manifestly arbitrary and violative of Article 14. It is
the duty of the Courts to examine each case with respect to the prevailing situation, looking at
the fundamental rights violation alleged.
The Hon’ble High Court has the territorial jurisdiction
This Hon'ble Court has the territorial jurisdiction to entertain the present writ petition, since
the petitioner resides in Delhi, and the Impugned Notification, Rules and Regulations have
been passed by the Respondents having their principal place of business in Delhi. The
Petitioner has not filed any other petition seeking the same/similar relief.
[V.A.3]: Scope of Article 226 and 227 of Indian Constitution
The Judicial Review power vested with the High Court is provided under article 226 and 227 87
which empowers it to issue directions, orders or writs for the enforcement of fundamental rights
and for any other purpose. The jurisdiction of the High Court under Art. 226 for the
enforcement of fundamental rights, is mandatory whereas for the enforcement of ordinary legal
rights it is discretionary.88The power of judicial review of the High Court under this Art.is
constitutional and therefore, no measure of finality given by the legislature to any action or
decision can take away this power.89 The jurisdiction is supervisory in nature. It can strike
down an impugned rule and direct the authorities to reframe it, though not frame it. 90The High
85
L Chandra Kumar v Union of India (1995) 1 SCC 400.
86
87
88
Manjula Manjari Dei v Director of Public Instruction AIR 1952 Ori 344; Kailash Chander Sharma v State of
Haryana 1989 Supp (2) SCC 696.
89
Kihoto Hollohan v Zachillhu 1992 Supp (2) SCC 651.
90
Swapan Kumar Choudhary v Tapas Chakarvorty (1995) 4 SCC 478.
16
Court, being a court plenary jurisdiction, has an inherent power to do complete justice 91 and it
can be rightly said that its arm is long enough to reach wherever injustice is done. A person
can enforce a legal right founded upon a contract or a statute or instrument having the force of
law.92In the present case, the notification dated 15.11.2019 issued by Ministry of Corporate
Affairs, whereby certain provision under part III of the IBC were notified comes within the
ambit of law as defined in Art. 13.
The Constitution of India by virtue of Article 227 invests High Court with the power of
superintendence over administrative agencies exercising adjudicatory powers. The judicial
review power envisaged herein is revisional in nature and can be exercised for want of
jurisdiction or errors of law. 93 An administrative policy laid down by its rule-making power
or in exercise of its rule making powers, can be reviewed if: (a)It is unconstitutional (b)It is
beyond the power of the parent act or regulation (c)The delegate has acted beyond the power
of delegation (d)It is contrary to statutory policy or a larger policy. 94
Executive decisions cannot be termed as policy decisions, and there is also no presumption of
its constitutionality.95 In the present case wherein Government has brought an impugned
notification by virtue of exercising the delegated power envisaged in them through Sec. 1(3)
of IBC and since the abusive use of such delegated power and unconstitutionality of
notification hereinabove is proved, therefore High Court can exercise its power of judicial
review over administrative action.
[V.A.4]: Power of Judicial Review can be exercised over Tribunal.
It is most humbly submitted that High Court of Delhi in the present case has power of judicial
review over the action of tribunal. As it was rightly held in the case of L. Chandra v. Union of
India96 by firmly relying on R.K. Jain case, wherein it was suggested that the possibility of an
appeal from the Tribunal on questions of law to a Division Bench of a High Court within whose
territorial jurisdiction the Tribunal falls, be pursued, held that having regard to both the
aforesaid contentions, we hold that all decisions of Tribunals, whether created pursuant to
Article 323A97 or Article 323B98 of the Constitution, will be subject to the High Court’s writ
91
Income Tax Appellate Tribunal v CIT (1996) 7 SCC 454.
92
Air India Statutory Corporation v United Labor Union (1997) 9 SCC 377.
93
Essen Deinki v Rajiv Kumar (2002) 8 SCC 400.
94
DDA v Joint Action Committee (2008) 2 SCC 672.
95
IP Messy, Administrative Law (9th edn, EBC) 295.
96
97
The Constitution of India 1950, art 323A.
98
The Constitution of India 1950, art 323B.
17
jurisdiction under Articles 226/227 of the Constitution, before a Division Bench of the High
Court within whose territorial jurisdiction the particular Tribunal falls. 99
In Rojer Mathew v. South Indian Bank Ltd. &Ors.100 the Constitution Bench of Hon’ble
Supreme Court, clearly held that, “though these tribunals may be manned by retired judges of
High Courts and Supreme Court, including those established under Articles 323Aand 323Bof
the Constitution, they cannot seek equivalence with the High Court or the Supreme Court.”
The High Court is a Constitutional Court constituted under Article 101 214 of the Constitution
and is courts of record within the meaning of Article102 215. Therefore, in this case supremacy
of High Court over any tribunal was established.
The existence of an efficacious alternative remedy does not completely ousted jurisdiction of
High Court as it is rule of prudence and not rule of law. Merely because the Court may not
exercise its discretion, is not a ground to hold that it has no jurisdiction.103
[V.B]: IMPUGNED RULES AND REGULATION IS IN PUBLIC LAW DOMAIN.
Traditionally, the jurisdiction under Article 226 was considered as limited to ensuring that the
judicial or quasi-judicial tribunals or administrative bodies do not exercise their powers in
excess of their statutory limits. But in view of the use of the expression “any person” in Article
226(1), courts recognized that the jurisdiction of the High Court extended even over private
individuals, provided the nature of the duties performed by such private individuals, are public
in nature. Therefore, the remedies provided under Article 226 are public law remedies, which
stand in contrast to the remedies available in private law. The Court in NilabatiBehera @
BabitaBehera v. State of Orissa104 observed that public law proceedings serve a different
purpose than private law proceedings.
In the age of globalisation and liberalization of economy, the public law and private law
distinction seems arbitrary. Any action violating public interest must be brought within the
controlling power of the constitutional judiciary. In the case K.K Saxena v. International
Commission on Irrigation, Drainage,105 the court had held that the decisions having public
element can be judicially reviewed under the writ jurisdiction and public element would
certainly include if the administrative action is violative of law or fundamental rights
99
100
Rojer Mathew v South Indian Bank Ltd & Ors 2016 SCC OnLine Ker 37624.
101
102
103
Balkrishnan Ram v Union of India (2020) 2 SCC 442.
104
Nilabati Behera @ Babita Behera v State of Orissa (1993) 2 SCC 746.
105
KK Saxena v International Commission on Irrigation, Drainage (2015) 4 SCC 670.
18
guaranteed by the Constitution.106 To further strengthen the position it has also been held that
arbitrary acts of the state cannot be excluded from the ambit of judicial review merely on the
ground that it is a “contractual matter”.107 While exercising writ jurisdiction, the court acts not
only as a court of law but also as a court of equity therefore contractual disputes involving
public law elements are amenable to writ jurisdiction.108 The correctness of the impugned
notification can be called into question only in a superior court which is vested with the power
of judicial review over administrative action.
Therefore, the impugned notification in the present case is violative of Article 14 guaranteed
by the constitution as proved above and thereby righty comes within the ambit of law having
public element, consequently giving High Court the power of judicial review of the same.
[V.C]: NON-EXISTENCE OF ALTERNATIVE EFFICACIOUS REMEDY.
It is submitted that one of the well-recognized exceptions to the self-imposed restraint of the
High Courts, in cases where a statutory alternative remedy of appeal is available, is the lack of
jurisdiction on the part of the statutory/quasi-judicial authority, against whose order a judicial
review is sought. English Courts and primarily on Anisminic Ltd. v. Foreign Compensation
Commission109, culled out a distinction between cases where a statutory/quasi -judicial
authority exercised a jurisdiction not vested in it in law and cases where there was a wrongful
exercise of the available jurisdiction. In all these cases discussed, an “error of jurisdiction” was
always distinguished from “in excess of jurisdiction”. To make it clearer, it was held
in Anisminic that the real question was not whether an authority made a wrong decision but
whether they enquired into and decided a matter which they had no right to consider.
In the landmark case of Embassy Property110 it was held by Hon’ble Supreme Court stated
“The NCLT, being a creature of a special statute to discharge certain specific functions, cannot
be elevated to the status of a superior court having the power of judicial review over
administrative action.” Judicial review flows from the concept of a higher law, namely the
Constitution.111Moreover, The NCLT is not even a Civil Court, which has jurisdiction by virtue
of Section 9 of the Code of Civil Procedure to try all suits of a civil nature excepting suits, of
which their cognizance is either expressly or impliedly barred. Therefore, NCLT can exercise
only such powers within the contours of jurisdiction as prescribed by the statute, the law in
106
Noble resources Ltd v State of Orissa (2006) 10 SCC 236.
107
State of UP v Ashok Kumar Nigam (2013) 3 SCC 372.
108
Food Corporation of India v SEIL Ltd (2008) 3 SCC 440.
109
Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147.
110
M/s Embassy Property Developments Pvt Ltd v State of Karnataka &Ors 2019 SCC OnLine SC 154.
111
Sub-Committee on Judicial Accountability v Union of India (1991) 4 SCC 699.
19
respect of which, it is called upon to administer and wherever there is a lack of jurisdiction
High Court may not hesitate in exercising the power of judicial review available under Art.
226.112
The only provision which can probably throw light on upon the jurisdiction of NCLT in current
scenario would be Sub-section (5) of Section 60113, as it speaks about the jurisdiction of the
NCLT. Clause (c) of Sub-section (5) of Section 60 is very broad in its sweep, in that it speaks
about any question of law or fact, arising out of or in relation to insolvency resolution. But
however, a decision taken by the government or statutory or quasi-judicial authorities in
relation to a matter which is in the realm of public law cannot be treated as one “arising out of
or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor”
under Section 60(5) of IBC and the same can be corrected only by way of judicial review of
administrative action.114 Similarly in the case of Kamal K Singh v. Union of India and Ors.115,
Bombay High Court stated that if the orders of a court or tribunal subordinate to the High Court
had resulted in a failure of justice, then writ of certiorari can be issued irrespective of the
availability of alternate and equally efficacious remedies to the petitioner.
In the present case the remedy sought by the petitioner is to review constitutionality and vires
of impugned notification. The tribunals are not vested with power to adjudge the matter
concerning judicial review of administrative action. Thus, the demand notice dated 05.06.2020
issued 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 and consequential proceeding is without jurisdiction, being issued pursuant to an
unlawful provision. Since NCLT chose to exercise a jurisdiction not vested in it in law, the
High Court of Delhi was justified in entertaining the writ petition, on the basis that NCLT was
corum non judice.
112
M/s Embassy Property Developments Pvt Ltd v State of Karnataka &Ors 2019 SCC OnLine SC 154.
113
114
ibid.
115
Kamal K Singh v Union of India and Ors 2019 SCC OnLine Bom 5609.
20
PRAYER
In light of the questions presented, arguments advanced and authorities cited, the Petitioner most
humbly and respectfully prays before this Hon’ble Court, that it may please to adjudge and declare
that –
1. The RBS does not have locus to initiate parallel proceeding against HAPL and
Professor by way of CP (IB)-11(ND)/2019 and CP (IB)-22(ND)/2020.
2. The approval of the Resolution Plan by the NCLT prohibits the initiation of
proceedings against Professor in CP (IB)-22(ND)/2020.
3. The obligations of Professor under the Deed of Guarantee dated 15.08.2018 stand
discharged under applicable law.
4. The notification dated 15.11.19 and sections notified therein under the guarantor
rules and the guarantor regulations are all ultra vires the IBC and the Constitution
of India.
5. The Hon’ble Delhi High Court does possess jurisdiction to entertain the W.P (C)
3911/2020.
AND/OR
Pass any other order which the bench deems fit in the best interest of Justice, Equity and Good
Conscience, and for this act of kindness the Counsels on behalf of the Petitioner as in duty
bound shall forever pray.
Respectfully Submitted
-Counsel for the Petitioner
XIV

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UNIVERSITY MOOT COURT SELECTIONS, GRAND INTRA, 2020

MEMORIAL ON BEHALF OF THE PETITIONER

UNIVERSITY MOOT COURT COMPETITION, GRAND INTRA, 2020

IN THE HON’BLE SUPREME COURT OF INDIA

UNDER THE SPECIAL LEAVE PETITION

ENSHRINED UNDER ARTICLE 136 OF THE CONSTITUTION OF INDIA

SPECIAL LEAVE PETITION (CIVIL) ****/2020

IN THE MATTER OF:

ROYAL BANK OF SPRAIN AND OTHERS…………..………………RESPONDENTS

ON SUBMISSION TO THE SUPREME COURT OF INDIA

MEMORIAL FOR THE PETITIONER

LIST OF ABBREVIATION .................................................................................................... III

STATEMENT OF JURISDICTION..................................................................................... VIII

STATE MENT OF FACTS .....................................................................................................IX

STATEMENT OF ISSUES .....................................................................................................XI

SUMMARY OF ARGUMENTS ........................................................................................... XII

ARGUMENTS ADVANCED ................................................................................................... 1

[I.C]: Multiplicity of proceeding should be Avoided as Far as Possible. .......................... 3

[ISSUE II]: THE APPROVAL OF THE RESOLUTION PLAN BY THE NCLT

[II.A]: Essentials of Section 95 not fulfilled. ..................................................................... 4

[ISSUE III]: THE OBLIGATIONS OF PROFESSOR UNDER THE DEED OF

[III.A]: Discharge of Principal Debtor results in Discharge of Guarantor. ....................... 7

[III.B]: Notwithstanding anything hereinabove state it is Arbitrary to sue guarantor for

[IV.A.1]: There is an unconstitutional usurpation of legislative power by the executive.

[V.A.2]: That there is violation of Fundamental Right. ............................................... 16

The Hon’ble High Court has the territorial jurisdiction............................................... 16

[V.A.3]: Scope of Article 226 and 227 of Indian Constitution.................................... 16

[V.A.4]: Power of Judicial Review can be exercised over Tribunal. .......................... 17

[V.B]: Impugned Rules and Regulation is in Public Law Domain.................................. 18

[V.C]: Non-existence of Alternative Efficacious Remedy. ............................................. 19

AIR All India Reporters

SCC Supreme Court Cases

SCR Supreme Court Reports

ICA Indian Contract Act

NCLT National Company Law Tribunal

NCLAT National Company Law Appellate Tribunal

ARPL Arturo Rex Pvt. Ltd.

HAPL Heist Artillery Private Limited

RBS Royal Bank of Sprain

CoC Committee of Creditors

IBC Insolvency and Bankruptcy Code

CIRP Corporate Insolvency Resolution Process

Insolvency and Bankruptcy Code 2016, s 1(3). ....................................................................... 10

The Constitution of India 1950, art 12. .................................................................................... 15

Law Commission of India, 13th Report (Contract Act,1872) para 109..................................... 9

ARTICLE 136: SPECIAL LEAVE TO APPEAL BY THE SUPREME COURT

STATE MENT OF FACTS

PROFESSOR BY WAY OF CP (IB)-11(ND)/2019 AND CP (IB)-22(ND)/2020?

WHETHER THE OBLIGATIONS OF PROFESSOR UNDER THE DEED OF GUARANTEE DATED

15.08.2018 STAND DISCHARGED UNDER APPLICABLE LAW?

[ISSUE II]: THE APPROVAL OF THE RESOLUTION PLAN BY THE NCLT

[I.B]: PARALLEL PROCEEDING IS INCONSISTENT WITH THE OBJECT OF THE CODE.

RESOLUTION PLAN WOULD RESULT IN UNMERITED LOSS TO PROFESSOR.

GUARANTOR FOR ENTIRE AMOUNT.

PART III ONLY QUA THE ‘PERSONAL GUARANTORS’.

INSOLVENCY RESOLUTION OF ‘PERSONAL GUARANTORS OF CORPORATE DEBTORS .

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