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TMI Blog2022 (7) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... mitting 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. It was further held that though the legislature itself has provided in Section 99 (10) that a copy of the report of the Resolution Professional should be furnished to the debtor or creditor, thus complying with the requirement of the principles of natural justice, it would be in the fitness of things and in furtherance of principles of natural justice that the parties are also heard before the decision is taken by the Adjudicating Authority one way or the other under Sub-section (1) of Section 100 of IBC, 2016 - it is evident from a reading of the Section along with the Rule, that what the Creditor has to serve is the copy of the application made under sub-section (1) to the Debtor. 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This Petition is filed by the State Bank of India (Financial Creditor) against the Personal Guarantor/Respondent No. 1 Corporate Debtor/Respondent No. 2 seeking to initiate Corporate Insolvency Resolution Process (CIRP). But the application is filed under Section 95 of IBC, 2016 and the prayer is also against the Personal Guarantor of the Corporate Debtor. Hence, this Application can be treated as having been filed only against Respondent No. 1 and that Respondent No. 2 is only formally added. 2. The facts as stated in the Synopsis are as follows: The Corporate Debtor/Respondent No. 2 has availed various credit facilities from the Petitioner/Financial Creditor from time to time which are as follows: Limits Amount Sanctioned Amount Disbursed CC (Hyp) 38.00 38.00 SLC 5.00 5.00 Total FBWC Limits 43.00 43.00 Term Loans 9.00 9.00 Total TL Limits 9.00 9.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys of receipt of directions under sub-section (1) of Section 97 of IBC, communicate to the Adjudicating Authority in writing either: (a) Confirming the appointment of the resolution professional; or (b) Rejecting the appointment of the resolution professional and nominating another resolution professional for the insolvency resolution process. Under Sub-Section (3) of Section 97 of IBC Where an application under section 94 or 95 is filed by the debtor or the creditor himself and not through the resolution professional, the Adjudicating Authority shall direct the Board, within seven days of the filing of such application, to nominate a resolution professional for the insolvency resolution process. Under Sub-Section (4) of Section 97 of IBC The Board shall nominate a resolution professional within ten days and then the Adjudicating Authority under Sub-Section (5) shall by order appoint the Resolution Professional. Under Section 99, such Resolution Professional shall submit his report and based on that report, under Section 100, the Adjudicating Authority, shall pass an order either admitting or rejecting the Application. It is only under Section 100(3) that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a and Company Appeal (AT) (Insolvency) No. 317 of 2021 between Mr. Ajit Bhagwan Kulkarni vs. State Bank of India dated 12.08.2021 was also relied upon by the Respondent's Counsel therein, in support of the contention that no notice is required to be given to the Personal Guarantor at the stage of appointment of Interim Resolution Professional (IRP). Considering that the legislature has provided in Section 99 (10) of IBC, that a copy of report of the IRP be furnished to the Debtor as complying with the requirement of the principles of natural justice, the High Court of Bombay felt that an opportunity need to be given under Section 100 (1) of IBC, 2016 in furtherance of the principles of natural justice. Since no notice is mandated under Section 100, Bombay High Court observed that notice before admission under Section 100(1) would serve the principles of natural justice, but it did not say that notice before admission is required. The NCLAT judgment in Mr. Ravi Ajit Kulkarni's case considered the contention raised therein that the debtor did not get opportunity to seek replacement of IRP, since he did not have notice of the fact of appointment of IRP. The Supreme Court consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Section 98 provides for replacement of the Resolution Professional and hence the Guarantor should have an opportunity to seek replacement of Resolution Professional and hence he should be heard before appointment of IRP was also considered and held that going through Section 98 of IBC, 2016, it is found that Section 98 is not stage specific. Section 98 itself shows that the section could be resorted to even at stages like implementation of repayment plan which would be a stage beyond Section 116, where implementation and supervision of repayment plan is provided for. It was held that the argument, that before report of Resolution Professional the Debtor must get a chance to seek replacement of Resolution Professional and thus notice was required to be given, has no substance. It is clearly held that, it is only after the Resolution Professional is appointed by the Adjudicating Authority under Section 97(5), that the step under Section 98 is contemplated. From the judgement of the NCLAT, it clear that notice before appointment of IRP is not required to be given to the Respondent. That apart, the principles of natural justice, which were considered by the Bombay High Court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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