2024 (9) TMI 1605 - Tri - IBC

Initiation of Insolvency Resolution Process against the Applicant/Debtor who is the Personal Guarantor of M/s. Sarthak Creation Private Limited - grounds for admission of the application recorded in the Report is that the Personal Guarantor admit its liability therefore Insolvency Resolution Process can be initiated - HELD THAT - This application has not enclosed the relevant documents of demand notice of invocation and the notice under SARFESI Act. The application is barred by limitation period in preferring the application within the relevant period considering the date of NPA and demand notice of Bank of Baroda stated to have been issued on 19.11.2015. Petition dismissed.

Summary

Issues:
Initiation of Insolvency Resolution Process against the Personal Guarantor of a Corporate Debtor under the Insolvency and Bankruptcy Code, 2016.

Detailed Analysis:

1. Background and Application:
The application was filed under Section 94(1) of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Insolvency Resolution Process against the Applicant/Debtor, who is the Personal Guarantor of a Corporate Debtor for a significant amount owed to Bank of Baroda. The Corporate Debtor had defaulted on its credit facilities, leading to the present application.

2. Facts of the Case:
The Corporate Debtor, incorporated in 2005, had availed substantial financial facilities, for which the applicant had executed personal guarantees. The Corporate Debtor defaulted on its payments, leading to the classification of its loan account as a Non-Performing Asset by Bank of Baroda. The Financial Creditor issued a demand notice to the Personal Guarantor for the outstanding amount.

3. Appointment of Resolution Professional:
Upon the application, the Authority appointed a Resolution Professional who recommended the admission of the application, citing the admission of liability by the Personal Guarantor. The Resolution Professional's report highlighted that the amount demanded remained unpaid by the Applicant.

4. Hearing and Objection:
During the hearing, the Financial Creditor, represented by Learned PCS, raised no objection to the admission of the Applicant/Guarantor for the initiation of the Insolvency Resolution Process.

5. Report of Resolution Professional:
The Resolution Professional recommended accepting the application based on the Respondent's admission of the Guarantee Agreement and the demand for the outstanding amount. The report indicated the non-payment of the demanded amount by the Applicant.

6. Decision and Barred Application:
After considering the arguments and documents, the Tribunal found the application lacking relevant documents and being barred by the limitation period for filing. Consequently, the application was rejected, and the order was passed accordingly.

In conclusion, the Tribunal rejected the application for initiating the Insolvency Resolution Process against the Personal Guarantor due to the absence of essential documents and being time-barred. The judgment highlighted the importance of timely filing and submission of necessary evidence in insolvency proceedings under the Insolvency and Bankruptcy Code, 2016.