2024 (7) TMI 15 - Tri - Insolvency and Bankruptcy

Maintainability of application - forum shopping - Personal Guarantor to the Corporate Debtor failed to make repayment of its dues - Personal Guarantor or a Co-Borrower - HELD THAT - The Respondent in the loan application form dated 12.08.2016 has been described as the Co-Borrower and not the Personal Guarantor. It is also observed that the applicant, has approached other legal forums including this Adjudicating Authority. The Applicant had initiated Arbitration proceedings under the Arbitration and Conciliation Act, 1996. The Applicant has also initiated the proceedings under Section 138 of Negotiable Instrument Act, 1881 which evidences that applicant has approached all the possible forums for remedy therefore the applicant is indulging in the forum shopping and hence the applicant has not approached this Adjudicating Authority with clean hands. The Application seeking initiation of the Personal Insolvency Resolution Process against the Personal Guarantor is rejected.

Issues Involved:
1. Whether the Respondent is a Personal Guarantor or a Co-Borrower.
2. Maintainability of the Petition under Section 95 of the Insolvency and Bankruptcy Code (IBC), 2016.
3. Validity of the Arbitral Award and its impact on the insolvency proceedings.
4. Allegations of forum shopping by the Applicant.

Detailed Analysis:

1. Whether the Respondent is a Personal Guarantor or a Co-Borrower:
The primary contention revolves around the classification of the Respondent as a Personal Guarantor or a Co-Borrower. The Applicant, Intec Capital Limited, filed the application under Section 95(1) of the Insolvency and Bankruptcy Code, 2016, against the Respondent, alleging that she acted as a Personal Guarantor for the Corporate Debtor, M/s. IAP Company Private Limited. The Respondent argued that she was a Co-Borrower and not a Personal Guarantor, as evidenced by the loan agreement and other related documents. The tribunal noted that the loan agreement and the sanction letter referred to the Respondent as a Co-Borrower, and there was no mention of her being a Personal Guarantor. The tribunal concluded that the Respondent was not a Personal Guarantor based on the documents presented.

2. Maintainability of the Petition under Section 95 of the Insolvency and Bankruptcy Code (IBC), 2016:
The tribunal examined whether the petition under Section 95 of the IBC was maintainable against the Respondent. The Respondent contended that she had not signed any guarantee deed or agreed to act as a surety. The tribunal found that the Respondent was consistently referred to as a Co-Borrower in the loan agreement and other documents. Consequently, the tribunal held that the petition under Section 95 was not maintainable against the Respondent as she did not qualify as a Personal Guarantor under the IBC.

3. Validity of the Arbitral Award and its impact on the insolvency proceedings:
The Respondent challenged the validity of the arbitral award dated 28.12.2018, claiming it was obtained fraudulently without her knowledge and in violation of the moratorium imposed under Section 14 of the IBC. The tribunal acknowledged that the arbitral award had been challenged in the District Court, Saket, New Delhi, and noted the Respondent's contention that the award was obtained without proper notice. The tribunal did not delve into the merits of the arbitral award but recognized the ongoing legal challenge.

4. Allegations of forum shopping by the Applicant:
The Respondent accused the Applicant of forum shopping, citing multiple legal proceedings initiated by the Applicant, including arbitration, proceedings under Section 138 of the Negotiable Instruments Act, 1881, and the current insolvency petition. The tribunal observed that the Applicant had approached various legal forums and concluded that the Applicant was indulging in forum shopping. The tribunal emphasized that the Applicant had not approached the Adjudicating Authority with clean hands.

Conclusion:
The tribunal dismissed the application seeking the initiation of the Personal Insolvency Resolution Process against the Respondent. The interim moratorium period under Section 96 of the IBC ended with the pronouncement of the order. The Resolution Professional, Mr. Manoj Kumar Anand, was discharged from his duties. The tribunal directed the Registry to send a copy of the order to the Insolvency and Bankruptcy Board of India (IBBI) for their records. No order as to costs was made.

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