2022 (6) TMI 10 - AT - Insolvency and Bankruptcy

CIRP - Company/ corporate debtor under liquidation - non-receipt of limited notice or receipt of defective limited notice - whether the Order of the Adjudicating Authority has to be set aside on the ground that limited Notice under Section 95(1) of the Code was not issued to the Personal Guarantor seeking his appearance? - whether the Demand Notice issued by the Respondent Bank is defective? - HELD THAT - It is the main case of the Appellant that the limited Notice contemplated under Section 95(1) of the Code was never served upon them. The material on record shows that the Personal Guarantor was represented on that date and therefore it cannot be said that the Appellant was not aware of the proceedings. The object behind the issuance of the limited Notice to the Personal Guarantor is to appear before the Adjudicating Authority following the Principle of Natural Justice. The documentary evidence on record establishes that the Demand Notice dated 06/10/2021 was received by the Appellant on 12/10/2021. It is the contention of the Learned Counsel for the Appellant that this Demand Notice, though received by them was sans the annexures and therefore is a defective one. The same was communicated to the Respondent Bank on 24/10/2021 and the Bank had once again sent another copy on 24/11/2021. The ratio laid down by this Tribunal in Chandresh Jajoo Vs. Siemens Financial Services Pvt. Ltd. Anr. 2022 (5) TMI 1364 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI , is squarely applicable to the facts of this case wherein it is observed that there was no reason to direct for issuance of any limited Notice to the Appellant as he was aware of the proceedings . Morever the stage of admission of the Application has not yet come and at that stage, the Appellant can raise all the objections before the Adjudicating Authority opposing the admission of the said Application. Needless to add, the Adjudicating Authority will consider the pleas and pass Orders under Section 100 in accordance with law. Last contention of the Learned Counsel for the Appellant is that Section 95 Application cannot be adjudicated by Bench No. III of the NCLT since the Liquidation Proceedings of the Corporate Debtor was Pending before Bench No. VI of the NCLT. It is not understood as to why the Appellant has not brought the same to the Notice of the Bench or exercise his right by filing an Application before the Principal Bench under Rule 16 of the NCLT Rules, 2016. Appeal dismissed.

Summary

Issues:
1. Appeal against Impugned Order declaring Interim Moratorium under Insolvency and Bankruptcy Code.
2. Allegation of incomplete Demand Notice and initiation of Personal Insolvency against the Appellant.
3. Failure to ensure limited Notice under Section 95(1) of the Code and jurisdictional issues regarding the Adjudicating Authority.

Analysis:
1. The Appeal challenges an Order declaring an Interim Moratorium under the Insolvency and Bankruptcy Code against the Appellant, a Personal Guarantor of a company undergoing Liquidation. The Appellant contests the validity of the Demand Notice and the subsequent initiation of Personal Insolvency proceedings by the Respondent Bank.

2. The Appellant's Counsel argues that the Demand Notice issued by the Bank lacked necessary documents as mandated under Rule 7(1) of the Insolvency and Bankruptcy Rules. Despite the Appellant's objections and requests for complete documentation, the Bank allegedly failed to provide the required annexures, raising concerns about the adequacy of the Demand Notice.

3. The main issue revolves around the failure to issue a limited Notice under Section 95(1) of the Code to the Personal Guarantor, as emphasized in previous judgments. The Tribunal highlights the importance of providing advance notice to the Guarantor to ensure awareness of the proceedings and adherence to principles of natural justice. The Respondent Bank contends that the Appellant was duly served with the necessary documents and had prior knowledge of the proceedings, negating the claim of inadequate notice.

4. Additionally, jurisdictional concerns are raised regarding the adjudication of the Section 95 Application by Bench No. III of the NCLT while Liquidation Proceedings of the Corporate Debtor were pending before Bench No. VI. The Tribunal notes the Appellant's failure to address this issue formally through the prescribed channels, emphasizing the importance of procedural compliance in such matters.

5. Ultimately, the Tribunal dismisses the Appeal, citing the Appellant's awareness of the proceedings, receipt of necessary documents, and the absence of objections raised during the stipulated period. The Tribunal refrains from expressing an opinion on the merits of the case, underscoring the Appellant's opportunity to contest the Application's admission before the Adjudicating Authority.