Moratorium is also applicable on personal guarantor

The SARFAESI Act was enacted for enforcement of security. Section 13(1) of the said Act provides that any security interest created in favour of any secured creditor may be enforced, without the intervention of the court or tribunal, by such creditor in accordance with the provisions of this Act. However, Section 14(1)(c) of the Code provides that the Adjudicating Authority shall by order declare moratorium for prohibiting, any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the SARFAESI Act. The Appellate Authority had analysed provisions of the Code and held that once the Resolution Plan is approved by the Committee of Creditors under section 30(4) and if the same meets as per the requirements of Section 30(2) and once approved by Adjudicating Authority as provided vide section 31(1), is not only binding on Corporate Debtor, but also on its employees, members, creditors, guarantors and other stakeholders involved in Resolution Plan, including Personal Guarantor. Read less