2024 (2) TMI 1523 - Tri - IBC

Seeking to initiate Insolvency Resolution Process for the Personal Guarantor - validity of the personal guarantee agreement and limitation - HELD THAT - The issue/objections raised by the Ld. Counsel for the Personal Guarantor will be considered after the submission of the report by the Resolution Professional and response of the Personal Guarantor on the same. Shri Ram Ratan Kanoongo as proposed by the Financial Creditor in Part-IV of the Form-C who is registered with IBBI as Insolvency Professional having Registration No. IBBI/IPA-001/IP-P00070/ 2017-18/10156 is appointed as the Resolution Professional in the present matter. Written consent is given by the said RP through Affidavit dated 20.12.2021 which is annexed as Exhibit -18 of the petition. Petition disposed off.

Summary

ISSUES PRESENTED and CONSIDERED1. Whether the Company Petition filed by the Bank of Baroda seeking to initiate the Insolvency Resolution Process for Mr. Farooq Ali Khan, the Personal Guarantor, is valid under the I&B Code, 2016.2. Whether the objection raised by the Personal Guarantor regarding the validity of the personal guarantee agreement and limitation is sustainable.3. Whether the appointment of the Resolution Professional and commencement of interim-moratorium under the I&B Code, 2016 are in accordance with the law.ISSUE-WISE DETAILED ANALYSISIssue 1: Validity of Company Petition- The Company Petition was filed under Section 95(1) of the I&B Code, 2016 seeking to initiate the Insolvency Resolution Process for Mr. Farooq Ali Khan due to a default amount of Rs. 2,58,60,17,543.61.- The Hon'ble Supreme Court's judgment in Dilip B Jiwrajka vs. Union of India emphasized that no judicial adjudication is involved at the initial stages of the IBC process until the Adjudicating Authority decides whether to accept or reject the application.- The Tribunal appointed a Resolution Professional to examine the application and submit a report for approval or rejection, in line with Section 99(1) of the Code.- The interim-moratorium under Section 96(1)(a) commenced upon filing the application and will end upon admission.Issue 2: Objection Raised by Personal Guarantor- The Personal Guarantor raised objections regarding the validity of the personal guarantee agreement and limitation.- The Tribunal deferred consideration of these objections until after the Resolution Professional's report and the Personal Guarantor's response.- This approach aligns with the principles of natural justice and procedural fairness as mandated by the I&B Code.Issue 3: Appointment of Resolution Professional and Interim-Moratorium- The Tribunal appointed Shri Ram Ratan Kanoongo as the Resolution Professional, as proposed by the Financial Creditor, in accordance with the IBBI regulations.- The Resolution Professional is tasked with examining the application and submitting a report within ten days of appointment.- The commencement of the interim-moratorium upon filing the application and its implications were duly noted by the Tribunal.- The Resolution Professional is directed to serve a copy of the report on the Personal Guarantor, with further consideration of the case scheduled for 20.03.2024.SIGNIFICANT HOLDINGS- The Tribunal's decision to appoint a Resolution Professional and defer consideration of objections until after the report aligns with the procedural requirements of the I&B Code.- The Tribunal's adherence to the principles of natural justice and procedural fairness in the adjudicatory process is evident in its handling of the objections raised by the Personal Guarantor.- The Tribunal's actions in appointing the Resolution Professional and initiating the interim-moratorium demonstrate a commitment to following the prescribed legal framework under the I&B Code, 2016.