In Brief
The Supreme Court held that Section 14 of the Insolvency and Bankruptcy Code, 2016, which provides for a moratorium upon admission of a corporate insolvency petition, does not apply to personal guarantors of the corporate debtor. A plain reading of Section 14 refers only to the corporate debtor and is silent on guarantors. The legislative history shows Parliament deliberately omitted guarantor protections that existed in earlier insolvency laws, indicating intent that guarantors should not be shielded. The Court also noted that a 2018 amendment explicitly excluding sureties from moratorium protection, being clarificatory in nature, has retrospective effect and confirms the original intent. Creditors may therefore continue recovery proceedings against personal guarantors under SARFAESI Act even during the corporate debtor's insolvency resolution.
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