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TMI Blog2018 (1) TMI 1335X X X X Extracts X X X X X X X X Extracts X X X X ..... of Creditor by permitting it to join the Corporate Insolvency Resolution Process initiated in the matter of ESSL - Corporate Debtor. (b) The applicant shall be entitled to have its voting rights determined as per its proportion. - CA 366 (PB)/2017 and (IB)-102(PB)/2017 - - - Dated:- 23-1-2018 - Chief Justice (Retd.) M.M. Kumar, President and Ms. Deepa Krishan, Hon ble Member (T) For the Appellant: Mr. Krishnendu Datta, Nayan Agarwal, Ms. Padmaja Kaul and Ms. Vishakha Gupta, Advocates For the Respondent: Mr. Sumesh Dhawan, Advocate For the Committee of Creditors : Mr. Ajay K. Jain, Mr. Atanu Mukherjee, Mr. Yash Karan Jain, Advocate ORDER M.M. Kumar, C.J. (President) 1. This is an application filed by ICICI Bank Ltd. u/s. 60(5) of the Insolvency Bankruptcy Code 2016 (for brevity of the Code). The prayer made in the application is that the decision of the Resolution Professional, (C.A. Ms. Ritu Rastogi) dated 6.9.2017 rejecting the claim of the applicant be set aside by directing her to admit its entire claimed amount arising out of Edu Smart Services Pvt. Ltd. (for brevity 'KSSL') Guarantee-'the Corporate Debtor' by treating it as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice inviting proof of claim from the creditors of the Corporate Debtor which were to be filed by 11.07.2017. The Applicant-ICICI submitted its claim to the RP for a sum of ₹ 86,45,00,000/- on 11.07.2017 against the ESSL - Corporate Debtor being a guarantor of Edu Comp Solution. 5. The Resolution Professional - non applicant sent an email to the Applicant-ICICI on 20.07,2017 stating that since the borrower Edu Comp Solution is under CIRP and that the applicant is part of duly constituted COC for Edu Comp Solution, therefore, the amount recoverable by the applicant from ESSL - Corporate Debtor in the present case would be the balance amount after recovery, if any by the Applicant-ICICI. On that basis the RP expressed her inability to verify the claim amount from the books of account of ESSL-Corporate Debtor. A copy of the e-mail dated 20.07.2017 has been placed on record (Annexure E). 6. The Applicant-ICICI sent a reply on 26.07.2017 apprising the RP-non applicant that the liability of the guarantor ESSL-Corporate Debtor and the Edu Comp Solution - Principal debtor is co-extensive and in accordance with the terms of ESSL guarantee the corporate debtor had waived its right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract do not apply in a case where a beneficiary is a trust (Annexure I). 9. The applicant also claims that it has explained to the RP-non applicant various provisions of the Insolvency Code and IBB (Insolvency Resolution Process for Corporate Persons) Regulation 2016. The applicant specifically brought to her notice the provisions of Regulation 8 of the CIRP Regulation which provides that the existence of debt due to the financial creditor must be proved on the basis of record available with information utility or otherwise by relevant documents. The applicant has asserted that the duties of the RP-non applicant under section 18 of the Code read with Regulation 8 and 14 of the CIR Regulation is that once necessary documents evidencing the debt have been furnished by the applicant then she was bound to admit the claimed amount of the applicant. However, the RP-non applicant without applying her mind rejected the claim of the applicant. 10. On 07.08.2017 the RP intimated the applicant through an email that its claim was provisionally taken on record with the right of representation in the COC of the ESSL-Corporate Debtor. It was reported that the first meeting of COC was held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIRP. It has been highlighted that the principal borrower namely Edu Comp Solution for whom the ESSL-corporate debtor had furnished corporate guarantee is also undergoing Insolvency process. The Edu Comp Solution filed CP. No. (IB) No. 101(PB)/2017 under section 10 of the Code which was admitted on 26.7.2017. The Applicant-ICICI is one of the financial creditor of Edu Comp Solution Pvt. Ltd. The Applicant has also filed its claim against Edu Comp Solution in that process. The Committee of Creditor in its first meeting held on 31.07.2017 had requested the IRP/RP not to issue any payment till the time the matter was settled (A-I) in the other process initiated under section 10 in CP. (IB) No. 101(PB)/2017. On the application filed by the IRP/RP this Tribunal passed an order on 21.08.2017 holding that the RP-non applicant must exercise her wisdom particularly when her work is facilitated by moratorium envisaged by Section 14 of the Code (A-2). 13. The RP has raised the plea that the applicant cannot simultaneously raise its claim against principal borrower and corporate guarantor which are under their respective CIRP because it would create anomalies. According to the stand ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received from the principal borrower EDU Comp Solution in its CIRP then it would reduce its claim proportionately to that of the Corporate Debtor. In terms of Regulation 14 of IBBI (Insolvency Resolution Process of Corporate Persons) Regulation 2016 there was no material to access how much amount it would be able to recover from the principal borrower. 16. A rejoinder has also been filed by the applicant reiterating the stand taken in the application and controverting the submission made by the Resolution Professional in her reply. It is reiterated that the liability of the guarantor is coextensive with that of the principal borrower in the sense that the applicant could proceed against both simultaneously. Reliance has been placed on the provision Section 5(8) of the Code and Regulation 36 of the CIRP Regulations. The case of the applicant appears to be that the applicant can be part of COC in the CIRP of the Principal borrower-Edu Comp Solution for the same amount claimed and reliance has been placed on the observation made by the Supreme Court Industrial Investment Bank Ltd. v. Bishwanath Jhunjhunwala (2009) 3 SCC 478. Reliance has also been placed on the observations made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of such transaction shall be taken into account; (h) any counter-indemnity obligation in respect of a guarantee or indemnity, bond, documentary letter of credit or any other instrument issued by a bank or financial institution; (i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clauses (a) to (h) this clause; A perusal of the aforesaid provisions would show that the expression 'Financial Creditor' it means any person to whom inter-alia the Financial Debt is owed. The expression 'Financial Debt' has been defined to mean a debt along with interest disbursed against the consideration for the time value of money and includes, inter-alia, the money borrowed against the payment of interest and many other transaction listed in sub-section 8(a) to 8(i) of section 5. It is relevant to point out that any amount of liability in respect of a guarantor for any of the items referred to (a) to (h) is also to be regarded as Financial Debt. 19. In the present case Edu Comp Solution - Principal Borrower has enjoyed the loan facility advanced by the Applicant - ICICI Bank Ltd. The ESSL - Corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or security against the borrower or any other person, to the extent as permitted under this guarantee; (c) Any legal limitation, disability incapacity, lack of power authority or legal personality of any person or other circumstances relating to the Borrower or the death, bankruptcy, insolvency, liquidation or similar proceedings or change in the name, ownership/constitution, members or status of the borrower, another guarantor or any other person; (d) An irregularity with respect to or enforceability, or of obligations of any other person or security, to the intended that the guarantor obligation hereunder shall remain in full force and this guarantee be construed accordingly as if there were no such irregularity, unenforceability, illegality, or frustration. 22. In view of the above the objections raised by the RP would not merit any detailed consideration and the same are hereby rejected. The aforesaid detailed facts would further show that the parties have provided for the course to be adopted in the guarantee agreement in case of default by the principal borrower in relation to guarantee. It is well settled that the right of the parties under section 128 of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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