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2022 (3) TMI 235 - Tri - Insolvency and BankruptcyValidity of possession notice - guarantee given by the Corporate Debtor - filinf of Form-D - Applicant has locus standi to file this Application or not - applicability of Regulation 21-A IBBI (Liquidation Process) Regulations, 2016 - relevancy of joint consortium executed on 14.03.2014 - validity of permission given by the Liquidator to Respondent No. 1 for realizing the schedule property. Whether Form-D is filed in time? - HELD THAT - On the basis of the contentions made in the counter the argument is that the Form-D is fabricated with an ante-date. But the fact remains that the mail is sent on 18.10.2019 on which date the contentions of the Applicant are not known to either Respondent No. 1 or Liquidator/Respondent No. 2. Hence, the question of ante-dating Form-D may not arise. Apart from that, the argument wanes into insignificance, since, the last date for submission of the claim form stands to be on 18.10.2019. The date mentioned as 17.10.2019, as the date of submission of Form-D, in the counter, might be due to the fact that the Form-D was dated as such. When there is no scope found to be existing for ante-dating it, the only conclusion would be that it is due to the reason of the date, on the Form being 17.10.2019. There is no evidence to show that the Liquidator had any reason to conspire with Respondent No. 1 and allow him to ante date the Form - it can be accepted that Form-D is filed by Respondent No. 1 within time. Section 12 of the Limitation Act does not come into play, hence, the objection raised by the Applicant's Counsel in that regard is found as not merited. Whether the Applicant has locus standi to file this Application? - HELD THAT - The Respondents contend that the Applicant does not have locus standi to file this application. But the said point was not reiterated in the arguments. However, the Applicant is an Ex-Director of the Corporate Debtor, hence, if the asset forms the part of the liquidation estate he would be benefited. Hence, he would have locus standi to file the application. Whether Regulation 21-A IBBI (Liquidation Process) Regulations, 2016 is applicable? - HELD THAT - Section 53(1)(b)(i) cannot be read to mean that the said amounts have to be deposited before the liquidation commencement date. It does not mean that the 24 months wages have to be deposited before the liquidation commencement date. It only means, that the workmen's dues pertaining to the period of 24 months prior to liquidation commencement date have to be deposited. No time limit is mentioned. The words liquidation commencement date apply to the period of wages and not to the time of depositing. When there is no limitation specified as on the liquidation commencement date, the Respondent cannot be expected to deposit the amount specified under Section 53. Hence, it can be concluded that Section 21 -A, as it stands by the date of filing of this Application, is not applicable to Respondent No. 1. Whether the joint consortium executed on 14.03.2014 has any relevance to this case? - HELD THAT - It can be seen that the consortium is dated 14.03.2014 and as mentioned in the counter of Respondent No. 1 the Corporate Debtor has acquired the schedule property by way of registered sale deeds in the year 2016 as evidenced by the letter dated 11.11.2017 filed in annexure-6 by the Applicant. By the date of consortium the said property was not in existence. It is also contended that the said consortium pertains only to the movable properties and not the immovable properties. A Perusal of the consortium agreement would support the said contention. Hence, this point is answered by holding that the joint consortium executed on 14.03.2014 has no relevance. Whether the permission given by the Liquidator to Respondent No. 1 for realizing the schedule property needs interference? - HELD THAT - Indubitably, a right or cause of action would enure to the lender (financial creditor) to proceed against the principal borrower, as well as the guarantor in equal measure in case they commit default in repayment of the amount of debt acting jointly and severally. It would still be a case of default committed by the guarantor itself, if and when the principal borrower fails to discharge his obligation in respect of amount of debt, for, the obligation of the guarantor is coextensive and coterminous with that of the principal borrower to defray the debt, as predicated in Section 128 of the Contract Act. As a consequence of such default, the status of the guarantor metamorphoses into a debtor or a corporate debtor if it happens to be a corporate person, within the meaning of Section 3(8) of the Code - It was categorically held that there is no reason to limit the width of Section 7 of the Code despite law permitting initiation of CIRP against the corporate debtor, if and when default is committed by the principal borrower. There need not be any further demur to hold that the CIRP can be initiated in respect of the guarantee given by the Corporate Debtor to the principal Borrower which is a Joint Venture Company. Petition dismissed.
Issues Involved:
1. Whether Form-D is filed in time. 2. Whether the Applicant has locus standi to file this Application. 3. Whether Regulation 21-A IBBI (Liquidation Process) Regulations, 2016 is applicable. 4. Whether the joint consortium executed on 14.03.2014 has any relevance to this case. 5. Whether the permission given by the Liquidator to Respondent No. 1 for realizing the schedule property needs interference. 6. To what result. Issue-wise Detailed Analysis: I. Whether Form-D is filed in time: The tribunal examined whether Form-D was submitted within the stipulated period. The Applicant argued that Form-D was submitted on 18.10.2019, beyond the 30-day limit from the liquidation commencement date of 18.09.2019. The Respondents countered, citing Regulation 47 of IBBI (Liquidation Process) Regulations, 2016, which considers the liquidation commencement date as "zero day," making the last date for submission 18.10.2019. The tribunal accepted the trailing emails confirming submission on 18.10.2019 and concluded that Form-D was filed within the required timeframe. The tribunal dismissed the Applicant's contention regarding ante-dating, finding no evidence of conspiracy or fabrication. II. Whether the Applicant has locus standi to file this Application: The tribunal noted that the Applicant, an Ex-Director of the Corporate Debtor, would benefit if the asset formed part of the liquidation estate. Therefore, the tribunal concluded that the Applicant had locus standi to file the application. III. Whether Regulation 21-A IBBI (Liquidation Process) Regulations, 2016 is applicable: The tribunal analyzed Regulation 21-A(2), which mandates secured creditors to pay certain amounts within 90 days from the liquidation commencement date. The tribunal observed that this provision was introduced on 06.01.2020 and was not applicable to the present case. The tribunal further noted that Section 53(1)(b)(i) does not specify a time limit for depositing the workmen's dues and liquidation costs. Thus, the tribunal concluded that Respondent No. 1 was not required to comply with the amended Regulation 21-A(2) within the specified timeframe. IV. Whether the joint consortium executed on 14.03.2014 has any relevance to this case: The tribunal found that the consortium agreement dated 14.03.2014 pertained only to movable properties and not immovable properties. Additionally, the schedule property was acquired by the Corporate Debtor in 2016, postdating the consortium agreement. Therefore, the tribunal concluded that the joint consortium executed on 14.03.2014 had no relevance to the present case. V. Whether the permission given by the Liquidator to Respondent No. 1 for realizing the schedule property needs interference: The tribunal discussed the Corporate Debtor's role as a Corporate Guarantor and the creation of security by way of mortgage. The tribunal referred to the Supreme Court judgment in Civil Appeal No. 2734 of 2020 (Laxmi Pat Surana vs. Union Bank of India & Another), which established that CIRP can be initiated against a Corporate Debtor for guarantees given for loans. The tribunal found that Respondent No. 1, as a Secured Creditor, was entitled to enforce its security interest. The tribunal dismissed the Applicant's reliance on the Supreme Court judgment in Anuj Jain, Interim Resolution Professional for Jaypee Infratech Limited vs. Axis Bank Limited, distinguishing the factual dissimilarities. The tribunal concluded that the permission given by the Liquidator to Respondent No. 1 did not require interference. VI. To what result: Based on the conclusions drawn under the above points, the tribunal dismissed the application. Accordingly, I.A. No. 54/2020 was dismissed.
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