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2022 (5) TMI 805 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantors to Corporate Debtors - irrevocable Deed of Guarantee signed between the SBI led Consortium and the Personal Guarantor - existence of debt and dispute or not - HELD THAT - In this application filed by the Financial Creditor, a Deed of Guarantee dated 25.04.2014 is executed between the SBI led Consortium and the Personal Guarantor. Clause 24 of the Deed of Guarantee states that this Guarantee shall be irrevocable and the obligations of the Guarantors hereunder shall be discharged except by performance and then only to the extent of such performance, such obligation shall not be conditional on the receipt of any prior notice by the Guarantors or by the Borrower and the demand notice by the Lenders shall be sufficient notice to or demand on the Guarantors. Therefore, CIRP can be proceeded against the Personal Guarantor as an irrevocable Deed of Guarantee has been signed between the SBI led Consortium and the Personal Guarantor. Based on the judgment of Hon'ble Supreme Court in Lalit Kumar Jain vs. Union of India Ors. 2021 (5) TMI 743 - SUPREME COURT , the Personal Guarantor cannot be discharged from his liability upon the approval of Resolution Plan under section 31 of IBC, 2016. Therefore, the liability of the Personal Guarantor continues and the Financial Creditor is in condition to realize the default amount from the Personal Guarantor. This is a fit case for admission and proceed against the Personal Guarantor/Respondent and initiate Corporate Insolvency Resolution Process - Petition admitted - moratorium declared.
Issues Involved:
1. Initiation of Insolvency Resolution Process against Personal Guarantor under Section 95 of IBC, 2016. 2. Validity of Deed of Guarantee and its implications. 3. Liability of Personal Guarantor post-approval of Corporate Debtor’s Resolution Plan. 4. Procedural directions for the Resolution Professional. Detailed Analysis: 1. Initiation of Insolvency Resolution Process against Personal Guarantor under Section 95 of IBC, 2016: The application was filed by the Financial Creditor (State Bank of India) under Section 95 of the Insolvency and Bankruptcy Code, 2016, read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019. The Financial Creditor sought to initiate insolvency proceedings against the Personal Guarantor for a default amount of Rs. 176,45,58,095.31, which includes principal and accrued interest. The Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor was already ordered on 09.11.2020, making the NCLT the competent forum for this application as per Section 60(2) of IBC, 2016. 2. Validity of Deed of Guarantee and its Implications: The Deed of Guarantee was executed on 25.04.2014 by the Personal Guarantor in favor of the SBI-led Consortium. The Personal Guarantor also provided indemnity to restructure financial liabilities up to Rs. 1286.39 crores. The Tribunal noted that the Deed of Guarantee was irrevocable, and the obligations of the Guarantor would be discharged only by performance. The demand notice by the Financial Creditor was sufficient to invoke the guarantee. 3. Liability of Personal Guarantor Post-Approval of Corporate Debtor’s Resolution Plan: The Respondent argued that the liability towards the personal guarantee would be reduced upon approval of the Corporate Debtor’s resolution plan. However, the Tribunal referred to the Supreme Court's judgment in Lalit Kumar Jain vs. Union of India & Ors., which held that the approval of a resolution plan does not discharge a personal guarantor of their liabilities under the contract of guarantee. The liability of the Personal Guarantor continues independently of the Corporate Debtor’s resolution plan. 4. Procedural Directions for the Resolution Professional: The Tribunal directed the initiation of the Insolvency Resolution Process against the Personal Guarantor, declaring a moratorium on all debts. The appointed Resolution Professional (RP), Mr. Sunil Kumar Agarwal, was instructed to publish a public notice inviting claims from creditors within 21 days. The RP was also tasked with preparing a list of creditors and a repayment plan in consultation with the debtor. The repayment plan should include justification, payment of fees to the RP, and other specified matters. The RP must submit the repayment plan along with a report to the Tribunal within 21 days from the last date of submission of claims. If a creditors' meeting is deemed necessary, the RP must follow the procedural requirements under Sections 106 to 111 of IBC, 2016. Order: The Tribunal admitted the application under Section 95 of IBC, 2016, initiating the Insolvency Resolution Process against the Personal Guarantor. A moratorium was declared, and the RP was directed to proceed with the necessary steps, including publishing notices, preparing a list of creditors, and formulating a repayment plan. This comprehensive analysis covers all relevant issues and procedural directions as outlined in the judgment.
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