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2019 (1) TMI 2036 - Tri - Insolvency and BankruptcySeeking directions of this Tribunal to disclose the details and status of the Bank Guarantees/letter of credits issued by the Applicant on behalf of Corporate Debtor - Rule 11 of NCLT Rules, 2016 r/w Section 60 of IBC, 2016 - HELD THAT - The main petition filed by Corporate Applicant is admitted and IRP is appointed. The Applicant being a Financial Creditor will be included in the CoC to be constituted by IRP. Being a member of CoC, the Applicant can gather information through IRP regarding details of Bank Guarantees invoked. The amount covered by Bank Guarantee if invoked will be included in the claim due to the Applicant. Therefore, at present there is no need to direct the Corporate Applicant to furnish the details of Bank Guarantee so invoked by beneficiaries and it is always open to the Applicant to gather information since Corporate Applicant triggered CIRP against it - Application disposed off. Maintainability of application - fraudulent intention to stall the proceedings initiated before DRT - initiation of CIRP u/s 10 of the Insolvency and Bankruptcy Code, 2016 - default in repayment of loans borrowed from various financial creditors - HELD THAT - The Corporate Applicant has to establish for admission of Petition filed under Section 10 of IBC, 2016 that existence of debt, occurrence of default and Corporate Applicant is not disqualified under Section 11 of the Code. If Adjudicating Authority is satisfied that there is debt payable by Corporate Applicant to Financial Creditors and that the Corporate Applicant committed default and that Corporate Applicant is not disqualified under Section 11, then Adjudicating Authority has no option but to admit the Petition, unless it is incomplete, in which case the Corporate Applicant is to be accorded time to rectify the defects - The Adjudicating Authority admits this Petition under Section 10 of IBC, 2016, declaring moratorium for the purposes referred to in Section 14 of the Code, with directions imposed. Seeking directions of this Tribunal to restrain 1st and 2nd Respondents from dissipating with the Secured Assets, pursuant to recovery proceedings initiated by both the Respondents under SARFAESI Act, 2002 - HELD THAT - The prayer sought by the Applicant cannot be granted since Financial Creditors are proceeding against the guarantors for recovery of debt due by Corporate Applicant by sale of the properties given as a security by Guarantors. Since main petition filed by Corporate Applicant under Section 10 is admitted and IRP is appointed, then the reliefs prayed by the Applicant cannot be granted. The Financial Creditors are entitled to proceed against the guarantors. The Corporate Applicant has not right to stop the Financial Creditors to proceed against it for recovery of the debt due from the sale of assets given as security - Petition filed under Section 10 is misconceived and is therefore, dismissed as not maintainable.
Issues Involved:
1. Disclosure of details and status of Bank Guarantees/Letter of Credits. 2. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 10 of the Insolvency and Bankruptcy Code (IBC), 2016. 3. Allegations of the Corporate Debtor filing the petition with unclean hands and fraudulent intentions. 4. Financial creditors' right to proceed against guarantors' properties under SARFAESI Act, 2002. 5. Corporate Debtor's request to restrain financial creditors from dissipating secured assets. Issue-wise Detailed Analysis: 1. Disclosure of Details and Status of Bank Guarantees/Letter of Credits: The application was filed by the Financial Creditor seeking directions for the Corporate Debtor to disclose details and status of Bank Guarantees/Letter of Credits. The Financial Creditor alleged that the Corporate Debtor approached the Tribunal without disclosing these details. The Tribunal noted that the Financial Creditor, being a member of the Committee of Creditors (CoC), could gather the required information through the Interim Resolution Professional (IRP). Therefore, there was no need to direct the Corporate Debtor to furnish these details at present. The application was disposed of accordingly. 2. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 10 of IBC, 2016: The Corporate Debtor filed the petition to initiate CIRP due to default in repayment of loans borrowed from various financial creditors. The Corporate Debtor cited several setbacks, including project delays and economic slowdown, which led to financial difficulties and default. The total debt in default was stated to be Rs. 194,96,56,434/-. The Tribunal admitted the petition, declaring a moratorium and appointing an IRP to carry out the functions under the Insolvency & Bankruptcy Code. 3. Allegations of the Corporate Debtor Filing the Petition with Unclean Hands and Fraudulent Intentions: Financial Creditors alleged that the Corporate Debtor filed the petition with a fraudulent intention to stall proceedings initiated before the Debt Recovery Tribunal (DRT). The Tribunal held that the pendency of proceedings before the DRT is not a bar to initiate CIRP. The Tribunal found that the Corporate Debtor had availed loans, committed default, and was not disqualified under Section 11 of the Code. Therefore, the petition was admitted. 4. Financial Creditors' Right to Proceed Against Guarantors' Properties under SARFAESI Act, 2002: The Financial Creditors initiated recovery proceedings under the SARFAESI Act against the guarantors' properties. The Corporate Debtor filed an application to restrain the Financial Creditors from dissipating secured assets. The Tribunal noted that the Financial Creditors were proceeding against the guarantors' properties, not the Corporate Debtor's properties. The Tribunal held that the Financial Creditors are entitled to proceed against the guarantors and dismissed the application as not maintainable. 5. Corporate Debtor's Request to Restrain Financial Creditors from Dissipating Secured Assets: The Corporate Debtor sought directions to restrain Financial Creditors from dissipating secured assets, arguing that it was a going concern with ongoing and prospective projects. The Tribunal dismissed this request, stating that the Financial Creditors are entitled to proceed against the guarantors' properties for recovery of debt. The Tribunal emphasized that the Corporate Debtor has no right to stop the Financial Creditors from proceeding against the guarantors' properties. Conclusion: The Tribunal admitted the petition for initiation of CIRP under Section 10 of IBC, 2016, declared a moratorium, and appointed an IRP. The applications seeking disclosure of Bank Guarantees/Letter of Credits details and restraining Financial Creditors from dissipating secured assets were disposed of and dismissed, respectively. The Tribunal upheld the Financial Creditors' right to proceed against guarantors' properties under the SARFAESI Act.
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