2022 (7) TMI 199 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantors to Corporate Debtors - existence of debt and dispute or not - HELD THAT - It is observed that the Applicant has filed necessary documents to prove about the debts owed to the Financial Creditor submitting the application for insolvency resolution process as on date of the application, the failure to pay within a period of fourteen days of the service of the notice of demand and relevant evidence of the default failure. The Application filed by the FC shows that the Debt owed by the Respondent to the FC is more than Rs. 1.00 Crore. Evidence of default has been filed. Considering the materials/papers filed by the Applicant on record, the Application filed under Section 95 of IBC is found to be complete for the purpose of appointing the Resolution Professional under Section 97 of IBC, 2016 - application admitted - moratorium declared.

Issues Involved:
1. Application for initiating Corporate Insolvency Resolution Process (CIRP).
2. Validity and execution of term loans and guarantees.
3. Classification of loan accounts as Non-Performing Assets (NPA).
4. Invocation of personal guarantees.
5. Jurisdiction and limitation period.
6. Appointment and duties of Resolution Professional (RP).

Issue-wise Detailed Analysis:

1. Application for initiating Corporate Insolvency Resolution Process (CIRP):
The application was filed by the financial creditor under Section 95 with Section 60(2) of the Insolvency and Bankruptcy Code, 2016, read with Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rule, 2019. The application aimed to initiate the CIRP in respect of the personal guarantor of the corporate debtor, Meghalaya Infratech Limited.

2. Validity and execution of term loans and guarantees:
The corporate debtor, a private limited company, initially applied for a term loan of Rs. 95.00 Crores, which was sanctioned by the financial creditor (erstwhile Allahabad Bank, now Indian Bank). The terms and conditions were accepted and acknowledged by the corporate debtor and its directors. Subsequently, a fresh term loan of Rs. 4.50 Crores was sanctioned, bringing the total exposure to Rs. 100.00 Crores. The corporate debtor also secured a term loan of Rs. 73.00 Crores from another financial creditor (erstwhile Corporation Bank, now Union Bank of India), forming a consortium. The respondent (personal guarantor) signed and executed various guarantee deeds in favor of the consortium banks.

3. Classification of loan accounts as Non-Performing Assets (NPA):
Due to non-payment of installments, the loan accounts became irregular and were classified as NPA on 30.04.2015. The financial creditor invoked the personal guarantee on 04.01.2019. Revival letters were executed by the corporate debtor and the guarantors, confirming the term loans and the execution of the consortium loan cum security documents.

4. Invocation of personal guarantees:
Despite the resolution process initiated under CP(IB) No. 13/GB/2019 and the subsequent payment of the resolution amount, the debt of the financial creditor remained unsatisfied. The financial creditor, therefore, sought further resolution of the debt against the personal guarantor. A demand notice was sent to the personal guarantor, and the financial creditor established the debt against the personal guarantor amounting to Rs. 185,39,91,035.07 as of 29.01.2022.

5. Jurisdiction and limitation period:
The petition was filed within the period of limitation, and the tribunal had the jurisdiction to decide the matter. The application was supported by necessary documents, including sanction letters, acknowledgment of sanctions, board resolutions, term loan agreements, and statements of accounts.

6. Appointment and duties of Resolution Professional (RP):
The tribunal appointed Mr. Sandeep Khaitan as the Resolution Professional (RP) and directed him to transact the proceedings with dedication, sincerity, and honesty. The RP was instructed to examine the application within ten days of his appointment and submit a report recommending approval or rejection of the application. The RP was also directed to seek further information or explanation from the debtor, creditor, or any other relevant person, and to record reasons for recommending acceptance or rejection of the application.

Order:
The tribunal found the application complete for the purpose of appointing the RP. Mr. Sandeep Khaitan was appointed as the RP, and he was directed to file the Assignment Declaration within two days. The RP was instructed to examine the application and submit a report within ten days. The matter was listed for further proceedings on 28.07.2022.

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