9911796707
TMI Blog2021 (3) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... ame should be taken note of and adjusted in the other CIRP. There is no bar for the Financial Creditor to proceed against the principal borrower as well as Corporate Guarantor at the same time, either in CIRPs or file claims in both CIRPs - The matter is remitted back to the Adjudicating Authority and the Adjudicating Authority is requested to pass further Orders with regard to the claim made by the Appellant which was required to be considered by the IRP/RP - Appeal allowed by way of remand. - Company Appeal (AT) (Ins) No. 1186 of 2019 - - - Dated:- 8-3-2021 - [ Justice A.I.S. Cheema ] Member ( Judicial ) And [ V. P. Singh ] Member ( Technical ) For the Appellant : Shri Abhijeet Sinha, Shri Atul Sharma, Ms. Renuka Iyer, Shri Manubhav Anand and Shri Aditya Vashisth, Advocates Ms. Aayushi Choudhary, party in person (EARCL) For the Respondent : Shri Abhinav Vashishth, Sr. Advocate with Shri Manmeet Singh, Shri A. Robin Frey, Ms. Priya Siny, Advocates (for RP) JUDGEMENT A.I.S. Cheema, J. 1. This Appeal has been filed by the Appellant against the Impugned Order dated 12th September, 2019 passed by the Adjudicating Authority (National Company Law Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeal. l) The above are broad facts and developments in the present matter regarding which there is no issue as such. 3. Learned Counsel for the Appellant has argued that the law on the issue has now been explained in Judgements passed by the Hon ble Supreme Court as well as this Tribunal in the matter of State Bank of India vs. Athena Energy Ventures Pvt. Ltd. - Company Appeal (AT) (Ins) No.633 of 2020 dated 24th November, 2020. 4. The learned Counsel for the Respondent Resolution Professional, however, is still relying on the Judgement in the matter of Piramal . It is then added and argued that the debt regarding which dispute is raised in the present Appeal has been subsequently noticed by the Resolution Professional (in view of audit observing that the transaction was not in ordinary course and) that the debt is required to be avoided under Section 66 of IBC for which Avoidance Application has already been filed before the Adjudicating Authority. The same is yet to be decided. Learned Counsel for Appellant has stated that guarantee issued even during recovery proceedings made Corporate Debtor/Guarantor liable as was seen in the matter of Ascot Realty Private Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd, it appears appropriate for us to first refer to Judgement in the matter of Piramal. 11.1. The two Appeals Company Appeal (AT) (Ins) No. 346 of 2018 and Company Appeal (AT) (Ins) 347 of 2018 were filed by shareholder against different Orders of Adjudicating Authority by which Orders CIRP was initiated against the two Corporate Guarantors. In that matter, the Principal Borrower was one All India Society for Advance Education and Research which was not a Company. Financial Creditor was M/s. Piramal Enterprises Ltd. which granted amount of ₹ 38 Crores to the Borrower which amount was guaranteed by two Corporate Guarantors Sunrise Naturopath and Resorts Pvt. Ltd. (Corporate Guarantor No.1) and Sun System Institute of Information Technology Pvt. Ltd. (Corporate Guarantor No.2). It appears that two separate Applications under Section 7 of IBC were filed against both the Guarantors and the Application against Guarantor No.2 was admitted on 24th May, 2018 and against Guarantor No.1 on 31st May, 2018. In both the proceedings, same amount was claimed and the debt amount and amount of default and date of default were same. 11.2. Thus, the issues raised in Para 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly for same set of debt and default. The issue was not whether Application can be filed against the Principal Borrower as well as the Corporate Guarantor. The observations made in para 32 of the Judgement that second application for same set of claim and default can not be admitted against the Corporate Guarantor or Principal Borrower was not an issue in the matter of Piramal. 13. Apart from this, the observations in the Judgement in the matter of Piramal do not appear to have noticed Sub-Sections 2 and 3 of Section 60 of IBC. It would be appropriate to reproduce Section 60(1) to (3) which reads as under:- 60. Adjudicating Authority for corporate persons.-- (1) The Adjudicating Authority, in relation to insolvency resolution and liquidation for corporate persons including corporate debtors and personal guarantors thereof shall be the National Company Law Tribunal having territorial jurisdiction over the place where the registered office of the corporate person is located. (2) Without prejudice to sub-section (1) and notwithstanding anything to the contrary contained in this Code, where a corporate insolvency resolution process or liquidation proceeding of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case may be of the Corporate Debtor is pending in any Court or Tribunal, it shall stand transferred to the Adjudicating Authority dealing with insolvency resolution process or liquidation proceeding of such Corporate Debtor. Apparently and for obvious reasons, the law requires that both the proceedings should be before same Adjudicating Authority. 14. It would be appropriate now to refer to the observations made by the Insolvency Law Committee in its Report of February, 2020. Relevant part of the Report has been filed by the Appellant as Annexure C (Diary No.23383). Para 7 of the Report is as follows:- 15. The learned Counsel for the Appellant is relying on the above observations of the ILC to argue that the Creditor cannot be restrained from initiating CIRP against both the Principal Borrower as well as the surety and also maintaining the same. The learned Counsel submitted that when remedy is available against both, Application can be maintained against both and only at the stage of disbursement, adjustment may have to be made. 16. We find substance in the arguments being made by the learned Counsel for Appellant which are in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dance with the Presidency-Towns Insolvency Act, 1909 or the Provincial Insolvency Act, 1920, as the case may be. It is clear that sub-section (4), which states that the Tribunal shall be vested with all the powers of the Debt Recovery Tribunal, as contemplated under Part III of this Code, for the purposes of sub-section (2), would not take effect, as the Debt Recovery Tribunal has not yet been empowered to hear bankruptcy proceedings against individuals under Section 179 of the Code, as the said Section has not yet been brought into force. Also, we have seen that Section 249, dealing with the consequential amendment of the Recovery of Debts Act to empower Debt Recovery Tribunals to try such proceedings, has also not been brought into force. It is thus clear that Section 2(e), which was brought into force on 23.11.2017 would, when it refers to the application of the Code to a personal guarantor of a corporate debtor, apply only for the limited purpose contained in Section 60(2) and (3), as stated hereinabove. This is what is meant by strengthening the Corporate Insolvency Resolution Process in the Statement of Objects of the Amendment Act, 2018. 25. Section 31 of the Act was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this Appellate Tribunal interpreted the law. Ordinarily, we would respect and adopt the interpretation but for the reasons discussed above, we are unable to interpret the law in the manner it was interpreted in the matter of Piramal. For such reasons, we are unable to uphold the Judgement as passed by the Adjudicating Authority. (We mention that in above para 13 in the Judgement of Athena Energy where we have referred to (2018) 17 SCC 394 it is from SCC Online Web Edition). 8. For above reasons discussed by us in the matter of Athena Energy , we find that the present Appeal is required to be allowed. We do not find that there is bar for the Financial Creditor to proceed against the principal borrower as well as Corporate Guarantor at the same time, either in CIRPs or file claims in both CIRPs. 9. (A) For the above reasons, the present Appeal is allowed. Impugned Order is quashed and set aside. We find that the claim submitted by the Appellant was required to be considered by the IRP/RP in the CIRP proceedings. The matter is remitted back to the Adjudicating Authority and the Adjudicating Authority is requested to pass further Orders with regard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
