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TMI Blog2022 (10) TMI 1013X X X X Extracts X X X X X X X X Extracts X X X X ..... so, there is no evidence placed on record to show that the said letter of comfort was signed in pursuance of any resolution passed by the Board of Directors of the respondent/corporate debtor. Thus, it can be safely said that the said letter of comfort, if any, issued, is not in conformity with the provisions of Section 179(3)(f) and Section 185 of the Companies Act, 2013. The present respondent/corporate debtor, taken from any angle, cannot be termed as a corporate guarantor on the basis of alleged letter of comfort. Therefore, the present petition is not maintainable against the respondent/corporate debtor and the same is dismissed on the ground of maintainability - Petition dismissed. - CP ( IB ) No. 12 / Chd / HRY / 2021 - - - Dated:- 21-10-2022 - HON BLE MR. HARNAM SINGH THAKUR , MEMBER ( JUDICIAL ) And HON BLE MR. SUBRATA KUMAR DASH , MEMBER ( TECHNICAL ) For the Petitioner / Financial Creditor : Mr. Manish Jain , Advocate : Mr. Anuj Agarwala , Advocate : Mr. Nitin Kant Setia , Advocate For the Respondent / Corporate Debtor : Mr. Anand Chhibbar , Senior Advocate : Mr. Arora Vishwas Kumar , Advocate JUDGMENT PER : HARNAM SINGH THAKUR , MEMBER ( JU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the continuous defaults made by the borrower in repayment of the loan amount, as per the schedule, the financial creditor in accordance with the Reserve Bank of India, directives and guidelines, classified in its books the account of the borrower as Non-Performing Asset ( NPA ) on 04.02.2020. 4. Thereafter, the financial creditor recalled the loan facility vide Notice dated 11.02.2020 (Annexure 10) and invoked the corporate guarantee furnished by the corporate debtor. It is stated that the financial creditor, on several occasions, called upon the borrower and the corporate guarantor to repay the entire loan amount, however, the corporate debtor failed to comply with its obligation to repay the entire loan amount to the financial creditor in complete violation of the corporate guarantee. Resultantly, the account of the borrower remains NPA in the books of the financial creditor. Thus, the financial creditor is constrained to file the present petition on account of the failure of the corporate debtor to pay the financial debt due to the financial creditor on behalf of the borrower to the tune of Rs.14,48,48,132.15 as on 31.12.2020 as the corporate debtor is a guarantor to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of Article 5 of Schedule I of Indian Stamp Act and Letter of Comfort is not a stamped document, which is being relied upon as corporate guarantee by the financial creditor. It is further mentioned that Section 35 of the Indian Stamp Act, 1899, states that any document which is either not duly stamped, as mandated under the provisions of the Indian Stamp Act, 1899, cannot be tendered as evidence. Thus, such documents cannot be taken into consideration. 8. It is also contended that provisions of Section 179(3)(f) of the Companies Act, mandates that passing of resolution by the company, in the meeting of Board of Directors, in order to grant loan or give guarantee or provide security in respect of loans, and the letter of comfort is not backed by any due resolution from the Board of Directors, which is mandatory in accordance with Section 179(3)(f). Further, it is contended by the respondent that in order to conform a guarantee, there is a need of a contract of guarantee in accordance with the provision of the Indian Contract Act and accordingly, there is a need for proposal, acceptance and consideration as the basic ingredients of a contract. However, in the present case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corporate guarantee, then how the respondent/corporate debtor could have given the corporate guarantee. 10. It is also submitted by the respondent/corporate debtor that during the sanctioning of the loan, a detailed board resolution was passed by the borrower, which in detail mentions about the securities and or the personal/corporate guarantees to be provided to the financial creditor against the sanction of the loan. However, it nowhere mentions or even whispers in respect to the alleged guarantee given by the respondent. Thus, it is prayed that the present company petition be dismissed with exemplary costs. 11. We have heard the learned counsel for the parties and have carefully perused the contentions taken on behalf of the parties in the short written submissions placed on record. 12. During the course of arguments, it is contended by learned counsel for the respondent that the present petition is maintainable against the respondent/corporate debtor, who is otherwise a corporate guarantor as per letter of comfort. In support of the arguments, learned counsel for the petitioner has relied upon a decision of the Hon ble Supreme Court in Laxmi Pat Surana versus Union Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the letter of comfort, and a close textual analysis of its terms, the letter of comfort contained 2 enforceable contractual promises, breach of which gave rise to a liability in damages where the shares were sold without the plaintiff being given 90 days notice. xxxx xxxx xxxx xxxx 14. Through the rejoinder, filed vide Diary No.00063/5 dated 05.07.2021, it is pointed out by learned counsel for the petitioner that petitioner/financial creditor had issued no due certificate to the respondent/corporate debtor in relation to its own Loan Account No.4329TL0100000031, vide letter dated 18.01.2021, (executed on 05.02.2021), which reveals that while obtaining no due certificate, the corporate debtor agreed and acknowledged that it continues to remain liable to the bank/financial creditor for loan granted to the borrower by virtue of the guarantee provided by the corporate debtor. It is further submitted that the factum of this letter has been concealed by the respondent/corporate debtor and not brought to the notice of this Bench. 15. It is also submitted by learned counsel for the petitioner that as per Section 26 of the Indian Contract Act, 1872 (for short herein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in the present issue of maintainability of the petition is whether letter of comfort allegedly issued by the respondent/corporate debtor amounts to contract of guarantee. 19. After giving thoughtful consideration to the rival contentions raised by learned counsel for the parties, we are of the view that the said letter of comfort, which is undated, without seal and authorization on behalf of the respondent-company, cannot be termed as letter or contract of guarantee, particularly in presence of the corporate guarantee on behalf of Strawberry Star India P. Ltd., as mentioned in the sanction letter dated 22.08.2017 (Page 36 of the petition). For ready reference, Section 126 of the Contract Act, is reproduced hereinbelow:- 126. Contract of guarantee , surety , principal debtor and creditor - A contract of guarantee is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the surety ; the person in respect of whose default the guarantee is given is called the principal debtor , and the person to whom the guarantee is given is called the creditor . A guarantee may be eithe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se in hand because no inference can be drawn from the said letter that there was intention, if any, to create the liability of guarantee in favour of the petitioner/financial creditor by the respondent/corporate debtor. Rather, it is held in Para 79 of the said judgment that there is no absolute rule as to whether a letter of comfort can create a legal relationship. The relevant para of the judgment is reproduced as under:- 79. Based on the consideration of several judicial pronouncements including those noted hereinabove, Butterworths has clearly stated that there is no absolute rule as to whether a letter of comfort can or cannot create a legal relationship. 21. Although, it is argued by learned counsel for the respondent/corporate debtor that no performa is prescribed for deed of guarantee and even guarantee can be oral as per Section 126 of the Contract Act, yet this contention of learned counsel for the petitioner is not much convincing because no doubt the guarantee may be oral but once it is reduced into writing either in the form of letter or contract then it must fulfil all the ingredients of contract of guarantee and should be signed by surety, principal debtor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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