9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (2) TMI 378 - AT - IBCAuthority or jurisdiction to invoke the corporate guarantee after the initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor - admission of claim filed by the Respondent based on the invoked guarantee - applicability of Section 14 of the Insolvency and Bankruptcy Code (IBC) regarding the moratorium on invocation of guarantees. HELD THAT - This Tribunal while considering the aforesaid issue referred to and relied on judgment of the Hon ble Supreme Court in Ghanshyam Mishra and Sons Pvt. Ltd. vs. Edelweiss Asset Reconstruction Company Limited 2021 (4) TMI 613 - SUPREME COURT as well as judgment of this Tribunal in Edelweiss Asset Reconstruction Company Ltd. vs. Orissa Manganese and Minerals Ltd. 2019 (6) TMI 639 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI . This Tribunal ultimately held that the corporate guarantee could have been invoked prior to commencement of the CIRP. In paragraphs 27 28 29 and 30 of the judgment following has been held that In the instant case the CIRP commencement date of the Corporate Debtor is 27/01/2020 and the Appellant had recalled the entire redemption amount with respect to debentures on 25/03/2020 subsequent to the initiation of CIRP. The Adjudicating Authority recorded that the Corporate Guarantee was invoked on 07/04/2020. The claims were filed by the Appellants on 10/02/2020. This Tribunal is of the earnest view that the Appellants cannot Claim the amounts in the CIRP of the Corporate Debtor who is a Corporate Guarantor on the basis of the Deed of Guarantee which was never invoked as on the date of filing of the Claims. When the Respondent having invoked the guarantee on 18.09.2020 i.e. subsequent to initiation of the CIRP on the basis of said invocation no claim could have been accepted in the CIRP. The Respondent could not have been invoked the guarantee given by the corporate debtor on 18.09.2020. The said invocation cannot be base for any claim to be admitted in the CIRP it having not matured. It is not necessary to examine the contention that the claim of the Respondent has to be treated to have been filed on 23.10.2020 and not on 13.10.2021. Conclusion - i) The invocation of a corporate guarantee after the initiation of the CIRP is prohibited under the moratorium imposed by Section 14 of the IBC. ii) Claims based on such impermissible invocation cannot be admitted in the CIRP. Appeal allowed.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS Invocation of Corporate Guarantee Post-CIRP Initiation The relevant legal framework involves Section 14 of the IBC, which imposes a moratorium prohibiting actions to recover or enforce any security interest created by the corporate debtor. The Court interpreted this provision to mean that the invocation of a corporate guarantee after the initiation of CIRP is not permissible. The Court relied on precedents such as "Ghanshyam Mishra and Sons Pvt. Ltd. vs. Edelweiss Asset Reconstruction Company Limited," which upheld that guarantees could not be invoked post-CIRP initiation. The Court found that the Respondent invoked the guarantee on 18.09.2020, after the CIRP commenced on 10.10.2019, making the invocation impermissible under the moratorium. The Court concluded that the Respondent's claim based on this invocation could not be accepted in the CIRP. Admissibility of the Claim in CIRP The Court examined whether the claim filed by the Respondent was admissible under the IBC regulations. Regulation 13 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, requires claims to be verified as existing on the insolvency commencement date. The Court found that no claim existed on the commencement date, as the guarantee was invoked post-CIRP initiation. Consequently, the claim was not admissible. The Court also addressed the argument regarding the form and timing of the claim submission. The Respondent submitted the claim in Form C on 13.10.2021, but the Court found that the earlier letter dated 23.10.2020 could not be treated as a valid claim since it was based on an impermissible invocation of the guarantee. Significance of the Moratorium The Court emphasized the purpose of the moratorium under Section 14 of the IBC, which is to protect the corporate debtor's assets and prevent new liabilities during the CIRP. The Court referred to the Supreme Court's interpretation in "Rajendra K. Bhutta vs. Maharashtra Housing and Area Development Authority," which highlighted the statutory freeze intended by the moratorium to facilitate unhindered resolution processes. The Court rejected the Respondent's argument that invocation of the guarantee does not constitute an action to enforce a security interest. The Court clarified that any such invocation during the moratorium period is prohibited, aligning with the statutory purpose of the moratorium. Competing Arguments and Court's Reasoning The Appellant argued that the Respondent's invocation of the guarantee was in violation of the moratorium, and no claim was submitted before the approval of the Resolution Plan by the Committee of Creditors (CoC). The Respondent contended that the claim could not be adjudicated by the Resolution Professional and that the invocation of the guarantee was not barred by Section 14. The Court sided with the Appellant, emphasizing that the moratorium prohibits actions to enforce security interests, including the invocation of guarantees. The Court found that the Resolution Professional was correct in not admitting the Respondent's claim based on the post-CIRP invocation. SIGNIFICANT HOLDINGS The Court held that:
The Court concluded by setting aside the Adjudicating Authority's order and rejecting the Respondent's application for claim inclusion in the Resolution Plan.
|
