Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

TMI Blog

Home

2023 (4) TMI 779

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... 4-2023 - [ Justice Ashok Bhushan ] Chairperson And [ Barun Mitra ] Member ( Technical ) For the Appellant : Mr. Gaurav Mitra, Mr. Ishan Roy Chowdhury, Ms. Lavanya Pathak, Mr. Akshat Singh, Mr. Bhanu Gupta, Mr. Sanampreet Singh, Advocates For the Respondents : Mr. Harshit Khare, Advocate for SBI JUDGMENT ASHOK BHUSHAN, J. This Appeal has been filed by the Appellant challenging order dated 01.12..2022 passed by National Company Law Tribunal, Mumbai Bench, Court-IV, by which an Application under Section 95 sub-section (1) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the Code ) filed by State bank of India (Respondent herein), the Adjudicating Authority has declared commencement of moratorium under Section 96(1)(a) of the Code and has appointed an Insolvency Resolution Professional ( IRP ) as Resolution Professional ( RP ). The Appellant, a personal guarantor of Corporate Debtor, M/s Uttam Galva Metallics Limited aggrieved by the said order, filed this Appeal. 2. We have heard Shri Gaurav Mitra, learned Counsel for the Appellant and shri Harshit Khare, learned Counsel appearing for State Bank of India ( SBI ). 3. The learned C .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... e Appellant. On 01.12.2022, the Adjudicating Authority has rejected the objection of the Appellant regarding territorial jurisdiction. 5. We have considered the submissions of learned Counsel for the parties and have perused the record. 6. Section 60 of the Code is part of Chapter VI, which deals with Adjudicating Authority for Corporate Persons. Section 60, sub-section (1), (2) and (3), which are relevant for the present case, are as follows: 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 a 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 a corporate debtor is pending before a National Company Law Tribunal, an application relating to the insolvency resolution or liquidation or bankruptcy of a corporate g .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... tional Company Law Tribunal. The purpose and object of the sub-section 2 of Section 60 of the Code is that when proceedings are pending in a National Company Law Tribunal, any proceeding against Corporate Guarantor should also be filed before such National Company Law Tribunal. The idea is that both proceedings be entertained by one and the same NCLT. The sub-section 2 of Section 60 does not in any way prohibit filing of proceedings under Section 95 of the Code even if no proceeding are pending before NCLT. 8. The use of words a and such before National Company Law Tribunal clearly indicates that Section 60(2) was applicable only when a CIRP or Liquidation Proceeding of a Corporate Debtor is pending before NCLT. The object is that when a CIRP or Liquidation Proceeding of a Corporate Debtor is pending before a NCLT the application relating to Insolvency Process of a Corporate Guarantor or Personal Guarantor should be filed before the same NCLT. This was to avoid two different NCLT to take up CIRP of Corporate Guarantor. Section 60(2) is applicable only when CIRP or Liquidation Proceeding of a Corporate Debtor is pending, when CIRP or Liquidation Proceeding are not pen .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... order of transfer from the Principal Bench, will not preclude the jurisdiction of NCLT Chandigarh Bench for Application against the personal guarantor. The Application against the personal guarantor by virtue of Section 60 sub-section (1) has to be filed before the Adjudicating Authority under whose jurisdiction, registered office of the Corporate Debtor is situated. There is no dispute between the parties that registered office of the Corporate Debtor is situated in the State of Haryana and it is the NCLT Chandigarh, which has jurisdiction to consider any Application against the personal guarantor, such as Appellant. Before the Adjudicating Authority, this objection was raised and noticed. However, the said objection was overruled. In paragraph 4 of the impugned order, following has been observed: 4. The bench has a considered view that following the order of admission into CIRP of the Corporate Debtor, this Bench having jurisdiction to appoint a Resolution Professional in the Personal Guarantor of the Corporate Debtor. 10. In paragraph 7, it was noted that CIRP against the Corporate Debtor was initiated on 11.07.2018, which proceeding was admitted and thereafter insolve .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... be paid a sum of Rs.183,14,79,002 against its total admitted claims of Rs.527,01,19,307, thereby leaving the residual debt o fRs.343,86,40,305, which the Respondent seek to recover from the Appellant. (xi) Since, the Respondent could not recover entire amount of its claims in the CIRP of the Corporate Debtor, the Respondent with an intent to recover the residual debt, decided to file for insolvency of the Appellant and accordingly on 23.06.2021, a petition a filed under Section 95 by Respondent against the Appellant for the initiation of the Insolvency Resolution Process before the Mumbai bench. (xii) The Adjudicating Authority vide order dated 01.12.2022 allowed the petition after duly considering the arguments raised by the Appellant with respect to the jurisdiction of the Adjudicating Authority. 11. From the facts which have been brought on record by the State Bank of India, it is clear that on the date when Section 95 Application was filed before the Adjudicating Authority, i.e., 23.06.2021, no insolvency resolution was pending against the Corporate Debtor before NCLT Mumbai. Hence, Section 60 sub-section (2) could not have been invoked. 12. In view of the fo .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

Quick Updates:Latest Updates