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TMI Blog2022 (4) TMI 527X X X X Extracts X X X X X X X X Extracts X X X X ..... a decision either admitting or rejecting the application within 14 days from the date of submission of the report. That apart on a careful examination of section 100, before the adjudicating authority takes a decision to either admit or reject the application upon receipt of report from the resolution professional, the parties to the insolvency resolution process are required to be heard. Reading Rule 7(2) with Rule 3 shows that the application filed under sub-section (1) of Section 95 shall be submitted in Form-C and that the Creditor will serve forthwith a copy of the application to the Guarantor and the Corporate Debtor for whom the Guarantor is a Personal Guarantor. Thus, what has to be served is the copy of application which has been submitted . What is contemplated is that the application in Form C should be submitted and then the Creditor should serve forthwith a copy of the application to the Guarantor and the Corporate Debtor for whom the Guarantor is a Personal Guarantor. The procedure thus prescribed will give the Personal Guarantor notice of the application already filed before the Adjudicating Authority. Section 95(5) requires the Creditor to provide copy of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 2. The facts, briefly are as follows: Respondent No. 1 is a suspended Director of the Corporate Debtor. Respondent No. 2 was sanctioned various credit facilities by the Financial Creditor and Respondent No. 1 stood as Guarantor for the said credit facilities to an extent of ₹ 43 Crores, during the year 2012. The same were renewed, enhanced and revised to ₹ 29.08 Crores from time to time, during the years 2012 to 2019. Respondent No. 2, after fully availing the said credit facilities, failed to adhere to the repayment terms of the sanctioned credit facilities, resulting in the Loan accounts becoming irregular. Respondent No. 1 stood as Personal Guarantor by executing a Personal Guarantee Agreement dated 21.08.2012, 07.10.2014 and 06.10.2017, guaranteeing the repayment of the aforesaid credit facilities. Applicant initiated action under the SARFAESI Act by issuing a notice to the Corporate Debtor as well as Personal Guarantors. Since, Respondent No. 2 failed to adhere to the terms of the repayment, an application in CP (IB) No. 381/9/HDB/2019 was filed and admitted to CIRP vide order dated 22.11.2019. The cause of action for this Petition arose first on 04.07.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce can be given to the Respondents at a stage before appointing the IRP. In support of the said reasoning, a judgment of the Bombay High Court in Writ Petition (L.) No. 21271 21272 of 2021 between Surendra B. Jiwrajka vs. Omkara Assets Reconstruction can be looked into. It was held by the Bombay High Court that from an analysis of the provisions contained in sections 95 to 100 of IBC, it can be seen that a definite time-line has been provided at each stage of the proceeding. That apart, the interim moratorium in terms of Section 96, which commences from the date of the Application, remains in force till the date of admission of such application under section 100 of IBC. Though time-lines have been prescribed at each stage of the proceeding, leading to acceptance or rejection of the application under section 100, no such time-line has been prescribed for submission of report by the resolution professional though section 100 provides that the adjudicating authority shall take a decision either admitting or rejecting the application within 14 days from the date of submission of the report. That apart on a careful examination of section 100, before the adjudicating authority takes a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was relied upon by the NCLAT and it was observed that the Supreme Court discussed in Para 81 of the judgment in Lalit Kumar Jain, that it was evident that the method adopted by the Central Government to bring into force different provisions of IBC had a specific design which was to fulfill the objectives underlying the code, having regard to its priorities. The NCLAT has considered Section 95(5) of IBC, 2016 which requires the Creditor to provide copy of the application under sub-section (1) to the debtor and felt that it has to be read with Rule 3(1)(g) which is as under: Rule 3(1)(g): serve means sending any communication by any means, including registered post, speed post, courier or electronic means, which is capable of producing or generating an acknowledgement of receipt of such communication: Provided that where a document cannot be served in any of the modes, it shall be affixed at the outer door or some other conspicuous part of the house or building in which the addressee ordinarily resides or carries on business or personally works for gain.' It held that, it is evident from reading the Section along with the Rule that what Creditor has to serve is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution Professional submits a report. Section 99(2) of IBC gives an opportunity to the debtor to prove repayment of debt claimed as unpaid by the creditor. Section 99(4) of IBC, empowers the Resolution Professional to seek further information or explanation in connection with the application as may be required from the Debtor or the Creditor or any other person, who, in the opinion of the Resolution Professional, may provide such information. Hence it is not as if, the Debtor is not provided an audience before the submission of the report. Hence I do not see any violation of principles of natural justice by not giving an opportunity to the Debtor for making his submissions before the appointment of IRP. As observed by the Supreme Court in the judgment of Lal it Kumar Jain case, it is in its wisdom that the legislature has enacted various provisions which are unambiguous and do not leave any scope for interpretation, with regard to the issuance of notice and giving the right of audience to the Debtor at the stage of appointment of IRP. It can be noted that the judgment of Bombay High Court in Surendra B. Jiwrajka vs. Omkara Assets Reconstruction case was carried to the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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