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2023 (11) TMI 51 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Financial Creditor had invoked the Corporate Guarantee on 25.08.2020, which is falling under the period specified under Section 10-A of the IBC, 2016 - HELD THAT - Before the AA, in Form I, Part IV, the Appellant had clearly stated that the Bank Guarantee was invoked on 25.08.2020. Since the Corporate Guarantee was invoked on 25.08.2020, the debt became due for payment thereafter. As per the provisions of Section 10-A of IBC, 2016, CIRP cannot be initiated for defaults arising in 12 months period beginning 25.03.2020. Since the Deed of Guarantee was invoked on 25.08.2020, CIRP cannot be initiated for default in repayment as the default arises in the period excluded by provisions of Section 10A of IBC, 2016. The AA has rightly held that the default falls within the specified period in Section 10-A of the IBC, 2016 and the Application U/s 7 of IBC, 2016 is non maintainable. Appeal dismissed.
Issues:
The appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016 against the Order dated 09.03.2023, invoking a Corporate Guarantee for a loan raised by the Borrower for a Celebrity Football Match in Dubai. Summary: Issue 1: Invocation of Corporate Guarantee The Financial Creditor invoked the Corporate Guarantee against the Corporate Guarantor for non-repayment by the Borrower, leading to the initiation of Corporate Insolvency Resolution Process (CIRP). The Adjudicating Authority dismissed the application as not maintainable due to falling within the period specified under Section 10-A of the IBC, 2016. Details: The Financial Creditor argued that the invocation date was different from what was considered by the Adjudicating Authority, presenting evidence to support the claim. Issue 2: Interpretation of Invocation Date The Respondent's Counsel pointed out discrepancies in the invocation date submitted by the Appellant, highlighting that the formal notice for invocation of the Guarantee was issued on 25.08.2020, not on an earlier date as claimed by the Appellant. Details: The Respondent's Counsel emphasized that the earlier letter dated 11.06.2019 was not a valid invocation of the Guarantee as it was not addressed to the Corporate Guarantor and involved individuals not associated with the Respondent company. Issue 3: Compliance with Section 10-A of IBC, 2016 The Appellate Tribunal analyzed the provisions of Section 10-A, which suspends the initiation of CIRP for defaults arising within a specified period. As the Corporate Guarantee was invoked on 25.08.2020, falling within the excluded period, the Tribunal upheld the Adjudicating Authority's decision of the application being non-maintainable. Details: The Tribunal concluded that since the invocation occurred within the excluded period as per Section 10-A, the initiation of CIRP for default in repayment was not permissible. The decision did not delve into the merits of the claim, ensuring no prejudice to the Appellant's claim in other forums. Conclusion: The Appeal was dismissed, with no order as to costs, based on the invocation date falling within the excluded period under Section 10-A of the IBC, 2016.
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