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2024 (9) TMI 326 - Tri - Insolvency and BankruptcySeeking an order for initiation of the Insolvency Resolution Process against Personal Guarantor - Whether the present petition for initiation of Insolvency Resolution Process against the Personal Guarantor at the behest of the financial creditor deserves admission or rejection? - HELD THAT - Admittedly, this Tribunal on 05.01.2022 appointed a Resolution Professional and directed him to file his report in terms of Section 99 of IBC, within 10 days from the date of the said order. Subsequently, the Resolution Professional filed his report, inter-alia, recommending for admission of the Petition. Pursuant thereto this Tribunal ordered the resolution professional to furnish a copy of the said report to the personal guarantor and granted opportunity to the personal guarantor to file his objections if any, to the report. In response, the Personal Guarantor filed his objections contending, inter-alia, that the report as filed by the Resolution Professional does not satisfy the requirements envisaged under Section 99 of IBC, besides that the Resolution Professional failed even to verify whether the financial creditor had filed any document evidencing compliance of sub section 4 (b) of Section 95 IBC. The Postal Slip issued by the Postal Authorities for the cover purportedly containing the Demand Notice, discloses that the same was tendered at the post office on 18.10.2021 for despatch to the addressee. The Postal Consignment Track Report at page 66 of the Company Petition, discloses that the above postal consignment has been returned to the addressee with an endorsement dated 20.10.2021 left without instructions and the returned cover has been delivered to the addressee on 22.10.2021 itself. Thus, the Postal Consignment Track Report clearly falsifies the contention of the Financial Creditor that second Demand Notice dated 16.10.2021 has been served on the Personal Guarantor. Here it is also pertinent to note that even while it is the case of the Financial Creditor that the property bearing the address to which the purported Demand Notice has been sent was taken delivery by the Creditor, through the proceedings initiated under section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) much prior to sending the demand notice dated 16.10.2021, strangely, the Financial Creditor chose to send the Demand Notice dated 16.10.2021in the name of the personal guarantor to the very same address, which has been returned with an endorsement that 'no such addressee'. Thus, the creditor herein reduced the compliance of an important statutory requirement in to a mockery. The present application is thoroughly misconceived, devoid of merit, besides contrary to the provisions of the I B Code, 2016. Therefore, the same is liable to be rejected - Petition dismissed.
Issues Involved:
1. Validity of the demand notice served on the Personal Guarantor. 2. Compliance with statutory requirements under Section 95 of the Insolvency and Bankruptcy Code (IBC), 2016. 3. Period of limitation for filing the petition. 4. Role and report of the Resolution Professional. 5. Admissibility of the petition for initiation of Insolvency Resolution Process (IRP) against the Personal Guarantor. Issue-wise Detailed Analysis: 1. Validity of the demand notice served on the Personal Guarantor: The Respondent/Personal Guarantor contended that the Petitioner failed to serve the demand notice in Form-B as required under Section 95(4)(b) of the IBC, 2016. The Tribunal examined the evidence and found that the second demand notice dated 16.10.2021, sent to the Personal Guarantor, was returned with the endorsement "left without instructions." Consequently, the Tribunal concluded that the demand notice was not served on the Personal Guarantor as required by law, rendering the petition invalid. 2. Compliance with statutory requirements under Section 95 of the Insolvency and Bankruptcy Code (IBC), 2016: The Tribunal emphasized the importance of compliance with Section 95(4)(b) and (c) of the IBC, which mandates that an application under Section 95 must be accompanied by details and documents relating to the debts owed, failure to pay the debt within fourteen days of service of the notice of demand, and relevant evidence of such default. The Tribunal found that the Financial Creditor failed to provide proof of service of the demand notice, which is a critical statutory requirement. The Tribunal also noted that the Resolution Professional did not verify the compliance of these requirements, leading to the conclusion that the petition was not maintainable. 3. Period of limitation for filing the petition: The Petitioner argued that the petition was within the period of limitation, citing the Supreme Court's ruling on the extension of limitation periods due to the COVID-19 pandemic. However, the Tribunal did not find this argument sufficient to overcome the lack of compliance with the statutory requirements for serving the demand notice. 4. Role and report of the Resolution Professional: The Tribunal highlighted that the Resolution Professional's report is not binding on the Adjudicating Authority. The Resolution Professional recommended the admission of the petition without verifying the service of the demand notice. The Tribunal criticized the Resolution Professional for "non-application of mind" and failing to perform the duty of verifying statutory compliances by the Financial Creditor. The Tribunal reiterated that the Adjudicating Authority must conduct an independent assessment and not rely solely on the Resolution Professional's report. 5. Admissibility of the petition for initiation of Insolvency Resolution Process (IRP) against the Personal Guarantor: Based on the findings that the demand notice was not served, statutory requirements were not met, and the Resolution Professional's report was unreliable, the Tribunal concluded that the petition was misconceived, devoid of merit, and contrary to the provisions of the IBC, 2016. Consequently, the Tribunal rejected the petition for initiating the Insolvency Resolution Process against the Personal Guarantor. Conclusion: The Tribunal rejected the petition filed by the Financial Creditor for initiating the Insolvency Resolution Process against the Personal Guarantor due to the failure to serve the demand notice, non-compliance with statutory requirements, and the unreliable report of the Resolution Professional. The petition was deemed misconceived and devoid of merit, leading to its dismissal without costs.
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