2022 (4) TMI 999 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantors to Corporate Debtor - existence of debt and dispute or not - Lack of proper documents - HELD THAT - It is pertinent to mention that as per Annexure A the Applicant (Financial Creditor) has executed a Power of Attorney in the name of Mr. Dashrath Pandurang Sadaye to appear and to cause any proceeding against any person, firm, society, company, corporation, association or body corporate for adjudication as insolvent or bankrupt or for winding up. However, the Letter of Authority dated 10/12/2020 authorising Mr. Sudhir Kumar Senapati, Advocate to act on behalf of the Financial Creditor has been signed by one Mr. R.L. Chauhan, Deputy General Manager, SAMB. Kolkata. It is not clear as to who is the Authorized Representative for the Financial Creditor. The affidavit filed in support of the CP(IB)/46(KB)2021 is signed by Mr. Dashrath Pandurang Sadaye, whereas the authorization given to the Ld. Counsel is by another person. Hence, this Petition lacks proper authorisation from the Financial Creditor. Since the Application is incomplete, the Resolution Professionals' Report in this matter at this stage, need not be called for. In taking the decision, the fact is also noted that the Interim Moratorium in case of section 95 application kicks in from the date of the filing of the application. It should not appear that an incomplete application can also ensure that the interim moratorium should kick in from the date of filing, else wrong signals could be sent out to others. Petition dismissed.

Summary

Issues:
Initiation of Insolvency Resolution Process against a Personal Guarantor under the Insolvency and Bankruptcy Code, 2016.

Analysis:
1. The Tribunal considered an Application filed under section 95(1) of the Insolvency and Bankruptcy Code, 2016, for initiating the Insolvency Resolution Process against a personal guarantor. The Applicant, a banking company, extended credit facilities to the principal borrower, which were not repaid as per the agreement terms.

2. The Applicant had initiated proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, but the principal borrower was admitted under Corporate Insolvency Resolution Process (CIRP) and undergoing liquidation. The personal guarantor had executed guarantees to secure the repayment obligations of the principal borrower.

3. The Applicant issued a Demand Notice to the personal guarantor, but no response was received. The Applicant filed the instant petition under the Code for recovery of dues, as the liability of the personal guarantor and the principal borrower was coextensive.

4. The Tribunal noted that the Application lacked proper authorization from the Financial Creditor. The Power of Attorney and authorization for representation were signed by different individuals, leading to inconsistencies. Additionally, certain details required in the petition were not adequately filled.

5. Due to the incompleteness of the Application, the Tribunal dismissed the petition. However, the Applicant was granted liberty to file a fresh application in accordance with the law. The interim moratorium was ceased, and necessary directions were given to the Registry for dissemination of the order.

This detailed analysis provides insights into the legal judgment regarding the initiation of the Insolvency Resolution Process against a personal guarantor under the Insolvency and Bankruptcy Code, 2016. The Tribunal's decision was influenced by the lack of proper authorization and incomplete application, leading to the dismissal of the petition while allowing the Applicant to reapply with the necessary corrections.