2023 (4) TMI 779 - AT - Insolvency and Bankruptcy

Initiation of CIRP - personal guarantor of Corporate Debtor - Jurisdiction of NCLT Mumbai Bench to entertain Section 95 Application filed by the State Bank of India - HELD THAT - From the facts which have been brought on record by the State Bank of India, it is clear that on the date when Section 95 Application was filed before the Adjudicating Authority, i.e., 23.06.2021, no insolvency resolution was pending against the Corporate Debtor before NCLT Mumbai. Hence, Section 60 sub-section (2) could not have been invoked. NCLT Mumbai Bench had no territorial jurisdiction to entertain Section 95 Application filed by the State Bank of India against the Appellant. The jurisdiction to entertain Section 95, sub-section (1) Application was only before the NCLT under whose jurisdiction the registered office of the Corporate Debtor is situated, which in the present case happens to be NCLT Chandigarh. Appeal allowed.

Summary

Issues Involved:
1. Territorial Jurisdiction of NCLT Mumbai Bench to entertain the Application u/s 95(1) of the Insolvency and Bankruptcy Code, 2016.

Summary:

1. Territorial Jurisdiction of NCLT Mumbai Bench:
The Appellant challenged the order dated 01.12.2022 by NCLT Mumbai Bench, which commenced the moratorium u/s 96(1)(a) and appointed an Insolvency Resolution Professional (IRP) as Resolution Professional (RP). The Appellant, a personal guarantor of Corporate Debtor M/s Uttam Galva Metallics Limited, argued that the registered office of the Corporate Debtor is in Haryana, thus the NCLT Mumbai Bench lacks territorial jurisdiction to entertain the Application u/s 95(1) filed by SBI. The Appellant contended that the Application should have been filed before NCLT Chandigarh, where the registered office is located, and the Mumbai Bench overstepped its jurisdiction.

The Respondent (SBI) argued that NCLT Mumbai had jurisdiction as it had previously adjudicated on the CIRP of the Corporate Debtor, citing the interwoven connection between the Corporate Debtor and the guarantor. They referred to Section 60 of the Code, emphasizing that the Mumbai Bench had jurisdiction due to previous proceedings.

The Tribunal examined Section 60 of the Code, highlighting that the Adjudicating Authority for insolvency resolution and liquidation for corporate persons and personal guarantors is the NCLT with territorial jurisdiction over the registered office of the corporate person. It was noted that CIRP against the Corporate Debtor was initially handled by NCLT Chandigarh but transferred to NCLT Mumbai for consolidation with another associate company's CIRP, which concluded with the approval of the Resolution Plan on 06.05.2020. As no CIRP was pending against the Corporate Debtor at NCLT Mumbai when the Application u/s 95 was filed, Section 60(2) was deemed inapplicable.

The Tribunal concluded that NCLT Mumbai Bench lacked territorial jurisdiction to entertain the Application u/s 95(1). The appropriate jurisdiction was NCLT Chandigarh, where the registered office of the Corporate Debtor is located. Consequently, the Tribunal set aside the order dated 01.12.2022 and dismissed the Application C.P.(IB)/359(MB)2022 due to lack of territorial jurisdiction, allowing the Respondent to file an Application before the appropriate forum.