2022 (10) TMI 927 - Tri - Insolvency and Bankruptcy

Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantor of the Corporate Debtor - existence of debt and dispute or not - Section 95 of IBC, 2016 - HELD THAT - What the Creditor has to serve is the copy of the application made under sub-section (1) to the Debtor. Reading Rule 7(2) with Rule 3 shows that the application filed under sub-section (1) of Section 95 shall be submitted in Form - C and the Creditor will serve forthwith a copy of the application to the Guarantor and the Corporate Debtor for whom the Guarantor is a Personal Guarantor. Thus, what has to be served is the copy of application which has been submitted . What is contemplated is that the application in Form C should be submitted and then the Creditor should serve forthwith a copy of the application to the Guarantor and the Corporate Debtor for whom the Guarantor is a Personal Guarantor. The procedure thus prescribed will give the Personal Guarantor, notice of the application already filed before the Adjudicating Authority. Section 95(5) requires the Creditor to provide a copy of the application made under sub-section (1) , to the Debtor. Thus, serving advance copy is not contemplated. Section 99(4) of IBC, empowers the Resolution Professional to seek further information or explanation in connection with the application as may be required from the Debtor or the Creditor or any other person, who, in the opinion of the Resolution Professional, may provide such information. Hence it is not as if, the Debtor is not provided an audience before the submission of the report - in the present case, there is no violation of principles of natural justice by not giving an opportunity to the Debtor for making his submissions before the appointment of IRP - no notice is required for the Respondent at the stage of appointment of IRP. This Tribunal is of the considered opinion that there is no hurdle to entertain this application under Section 95 of IBC, 2016, since the application is found to be complete. Petition admitted - moratorium declared.

Summary

Issues:
1. Application filed by Central Bank of India against Personal Guarantor and Corporate Debtor seeking to initiate Corporate Insolvency Resolution Process (CIRP) under Section 95 of IBC, 2016.
2. Interpretation of Sections 95, 97, 98, 99, and 100 of IBC, 2016 regarding the rights of the parties involved in the insolvency resolution process.
3. Consideration of principles of natural justice and the requirement of notice before the appointment of the Interim Resolution Professional (IRP).
4. Appointment of Insolvency Resolution Professional (IRP) and submission of the IRP report as per the provisions of IBC, 2016.

Detailed Analysis:
1. The application was filed by Central Bank of India against the Personal Guarantor and Corporate Debtor to initiate CIRP under Section 95 of IBC, 2016. The application was considered complete, and Mr. Madasa Kumar was appointed as the Insolvency Resolution Professional (IRP) by the Tribunal.

2. The Tribunal analyzed the provisions of Sections 95, 97, 98, 99, and 100 of IBC, 2016 regarding the rights of the parties involved in the insolvency resolution process. It was clarified that the Respondents do not have a right of audience at a stage before appointing the IRP. The judgment of the Bombay High Court in a similar case was referenced to emphasize the procedural timeline and the absence of a specific timeline for the submission of the IRP report.

3. The principles of natural justice were considered in light of the requirement of notice before the appointment of the IRP. The Tribunal held that notice before the appointment of IRP is not mandated by the law, and the debtor is provided with an opportunity to be heard before the submission of the IRP report. The judgment of the Supreme Court in Lalit Kumar Jain case was cited to support the conclusion that no notice is required for the Respondent at the stage of appointment of IRP.

4. The appointment of Mr. Madasa Kumar as the IRP was formalized by the Tribunal. The IRP was directed to submit a report within 10 days for the approval or rejection of the application. The order was communicated to the Petitioner, Financial Creditor, Respondent No. 1, and the Registry for necessary compliance.

This detailed analysis covers the legal judgment issued by the National Company Law Tribunal, Amaravati Bench, regarding the application filed under Section 95 of IBC, 2016 for initiating the Corporate Insolvency Resolution Process against the Personal Guarantor and Corporate Debtor. The judgment clarifies the procedural aspects, rights of the parties, and the appointment of the Insolvency Resolution Professional in compliance with the provisions of the Insolvency and Bankruptcy Code, 2016.