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2022 (9) TMI 12 - Tri - Insolvency and BankruptcyCIRP process - recovery of debt from Corporate Debtor - whether the financial creditors will recover either the dues on the culmination of CIRP into approval of the Resolution Plan or Liquidation of the assets of the Corporate Debtor are yet to be ascertained and in the absence of which, the amount recoverable from the Respondent herein, if any, cannot be crystallized? - HELD THAT - There is no provision in the Code which bars the initiation of Insolvency Resolution Process against the Personal Guarantor until the debt amount which is to be recovered from the Corporate Debtor gets crystallized. Further it is a well settled principle that the liability of surety in the Contract of Guarantee is co- extensive with that of Principal Borrower. Whether the Respondent was coerced to stand as surety to secure the credit facilities sanctioned by the members of the consortium to Corporate Debtor? - HELD THAT - The Law of Contract is very clear with respect to voidable contract that when consent to an agreement is caused by coercion, the agreement which is a contract is voidable at the option of the party whose consent was so caused. Meaning thereby that unless proved otherwise the said agreement would be valid and enforceable and since no action was taken to make the contract void it will remain valid and enforceable as per law. Whether the Applicant has not placed on record the vouchers and other supporting documents in support of the alleged debit entries and other alleged transactions contained in the statements of accounts? - HELD THAT - It is pertinent to mention here that the Applicant has registered the debt with the Information Utility i.e. NESL and the copy of the same is also annexed with the application filed by the Financial Creditor. Further, section 99(3) of the IBC, 2016 states that when the debt is registered with the information utility the debtor shall not be entitled to raise dispute to the validity of such debt. Hence, this contention of the Respondent is also not sustainable. After going through all the documents on record, the Petition filed under the provisions of Section 95 of IBC, 2016, is hereby admitted under section 100 of the IBC, 2016 - Petition admitted - moratorium declared.
Issues Involved:
1. Whether the amounts recoverable from the Personal Guarantor can be crystallized before the culmination of CIRP. 2. Whether the Personal Guarantor was coerced into signing the Personal Guarantee agreement. 3. Whether the Applicant failed to provide supporting documents for the alleged debit entries in the statements of accounts. Issue-wise Detailed Analysis: 1. Crystallization of Amounts Recoverable: The Tribunal addressed the contention that the amounts recoverable from the Personal Guarantor cannot be crystallized until the culmination of the Corporate Insolvency Resolution Process (CIRP). It was clarified that the initiation of Insolvency Resolution Process against the Personal Guarantor is permissible even before the debt amount recoverable from the Corporate Debtor is finalized. The Tribunal emphasized that the liability of the surety in a Contract of Guarantee is co-extensive with that of the Principal Borrower. Therefore, the initiation of the Insolvency Resolution Process against the Personal Guarantor is not barred by the Code. 2. Coercion in Signing the Personal Guarantee Agreement: The Personal Guarantor contended that he was coerced into signing the Personal Guarantee agreement. The Tribunal found this contention implausible and unconvincing, noting that it is unlikely the Respondent would not have realized he was signing important documents for a loan taken by another party. Additionally, no legal action was taken by the Personal Guarantor to void the contract on grounds of coercion. The Tribunal highlighted that under the Law of Contract, an agreement caused by coercion is voidable at the option of the coerced party, but since no action was taken to void the contract, it remains valid and enforceable. 3. Lack of Supporting Documents for Debit Entries: The Respondent argued that the Applicant did not provide vouchers and other supporting documents for the alleged debit entries. The Tribunal noted that the debt was registered with the Information Utility (NESL), and under Section 99(3) of the IBC, 2016, the debtor cannot dispute the validity of such debt. Therefore, this contention was found to be unsustainable. Final Order: Based on the above analysis and the reasons recorded in the Resolution Professional's report, the Tribunal admitted the petition under Section 95 of the IBC, 2016, and initiated the Insolvency Resolution Process against the Personal Guarantor. The moratorium was declared, effective from the date of the order, and will last for 180 days. During the moratorium, any pending legal actions or proceedings in respect of any debt are stayed, and creditors cannot initiate new legal actions or proceedings. The Personal Guarantor is also prohibited from transferring or disposing of any assets. The Resolution Professional was directed to publish a public notice inviting claims from all creditors within seven days of the order's publication. The notice must be published in widely circulated newspapers in English and Vernacular languages. The Resolution Professional is also required to prepare a list of creditors and a Repayment Plan in consultation with the debtor, and submit it to the Tribunal within specified timelines. In conclusion, the Tribunal admitted the petition and initiated the Insolvency Resolution Process against the Personal Guarantor, directing the necessary procedural steps to be taken by the Resolution Professional.
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