9911796707
TMI Blog2024 (4) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... wed the initiation of Corporate Insolvency Resolution Process ("CIRP" in short) of the Corporate Debtor in its capacity as Corporate Guarantor. Aggrieved by this impugned order, the present appeal has been preferred by the suspended Director of the Corporate Debtor. 2. The salient facts of this case which are relevant to be noticed to decide this matter are as below: * The Respondent No. 1/Financial Creditor - Yes Bank had filed Section 7 application on 13.12.2019 for initiation of CIRP of Appellant/Corporate Debtor - Tulip Hotels in respect of their debt liability as Corporate Guarantor for loan purportedly disbursed by the Financial Creditor to Cox & Kings Ltd. (hereinafter referred to as 'Borrower No. 1') and to Ezeego One Travels and Tours Ltd. (hereinafter referred to as 'Borrower No.2'). * Yes Bank has claimed to have sanctioned a Cash Credit Facility to Borrower No. 1 on 30.05.2017 for Rs.100 cr. To disburse the said loan, a Master Facility Agreement was executed on 06.06.2017. Subsequently, on 26.06.2018, the Cash Credit Facility was enhanced to Rs.350 cr by an Addendum to the Facility Letter and in pursuance thereof a Supplemental Facility Agreement was executed on 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal has been preferred by the Appellant. 3. We have heard Shri Virender Ganda, Learned Senior Counsel appearing for the Appellant and Shri Abhishek Anand appearing for the Respondent No.1. 4. Making his submissions, the Learned Senior Counsel for the Appellant stated that that the Section 7 application filed by one Mr. Rahul Dodeja for the Respondent No. 1 on the basis of Power of Attorney without any supporting Board Resolution of the Financial Creditor is not maintainable. It has also been contended that the Corporate Debtor was not related to Borrowers No.1 and 2 and have no cross holdings in them and never been funded by them. Hence, the question of acting as their Corporate Guarantor did not arise. In any case it was pointed out that the Corporate Debtor had never agreed to issue any Deed of Guarantee. It was further submitted that the alleged Deeds of Guarantee dated 26.04.2019 and 10.07.2019 which has been claimed by the Respondent No.1 to have been executed by the Yes Bank in respect of Borrowers No. 1 and 2 are forged and fabricated documents. It was vehemently contended that there is no Board resolution of the Corporate Debtor company or any authorisation issued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd fabricated documents. The purported mortgage deed was signed by one Hardik Walia who was not authorised to execute such deeds and neither was he related to the Corporate Debtor and hence a police complaint had been registered in the matter. Furthermore, the underlying property with respect to the purported mortgage deeds located in Kollam District in Kerala could not have been mortgaged since an exclusive charge had already been created in favour of IFCI Ltd. in respect of this immoveable property. 7. Refuting the submissions made by the Appellant, the Learned Counsel for Respondent No. 1 submitted that Section 7 application has been filed on behalf of the Respondent No. 1 by Mr. Rahul Dodeja with proper authorisation. It was submitted that Mr. Dodeja was duly authorised by means of power of attorney to act as the authorised representative of the Financial Creditor while filing the Section 7 application. It was also stated that the said power of attorney was issued pursuant to a duly passed Board Resolution of the Financial Creditor. 8. As regards the tenability and validity of the Deeds of Guarantee, it was vehemently contended that the Appellant has raised a frivolous ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Ezeego One Travel & Tours Ltd of 02.05.2017, the revised facility description shows the new term under the head of security as "Corporate Guarantee of Tulip Star Hotels Ltd and Tulip Hotels Pvt Ltd." It was further submitted that the Corporate Debtor had executed a Deed of Mortgage dated 12.02.2018 in favour of Yes Bank with Vistra ITCL acting as the security trustee in respect of facility letter of 02.05.2017. This charge was duly registered with MCA. There was also a Supplementary Deed of Mortgage dated 13.05.2019 with the same security trustee for a sum of Rs.850 cr and a certificate of Modification of Charge was filed with the MCA. Since, neither the charge nor the modification thereof was disputed by the Appellant either with the MCA or before any appropriate legal forum at an earlier stage, the existence of mortgage deeds stands clearly established. It was also strenuously asserted that the notice for invocation of the Corporate Guarantee was properly issued. It is also submitted by the Learned Counsel of the Respondent No.1 that the contention raised by the Appellant that parallel proceedings cannot be taken up against the Principal Borrower and the Corporate Guarantor i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16." If we notice Rule 4(1) supra, an application against the Corporate Debtor under Section 7 of the IBC requires to be made in Form 1 accompanied with relevant documents and records. In the present case, when we look at the Form 1 of Section 7 in Part - I filled in by the Financial Creditor, it has been clearly stated at Sl. No.5 that 'A copy of the Power of Attorney dated July 8, 2019 authorising Mr. Rahul Dodeja to act on the behalf of the petitioner is annexed herewith and marked as Exhibit 2' as is placed at page 90 of the Appeal Paper Book ('APB' in short). When we look at the Power of Attorney, we notice that the same has been issued pursuant to Board Resolution of 12.03.2019 empowering Mr. Rahul Dodeja to file the Section 7 application as is seen at page 103 of the APB. For reasons of removing all ambiguities in this regard, we would like to extract the relevant portions of the Power of Attorney as below: "TO ALL TO WHOM THESE PRESENTS SHALL COME I, Ravneet Gill, Managing Director and Chief Executive Officer (hereinafter referred to as the "MD&CEO") of YES Bank Limited, a banking company within the meaning of section 5(c) of the Banking Regulation Act, 1949 incorporated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... backdrop of the Power of Attorney pursuant to Board Resolution, it may be constructive to now go through the relevant portions of the Sameer Bansal judgement supra of this Tribunal which is to the effect : "14. We may also notice the judgement of the Hon'ble Supreme Court in "Rajendra Narottamdas Sheth & Anr. vs. Chandra Prakash Jain and Anr.-(2022) 5 SCC 600". The Hon'ble Supreme Court has examined the question as to whether an Application under Section 7 of the Code through Power of Attorney Holder for initiating CIRP is permissible. An Application under Section 7 was filed where objection was raised by the Corporate Debtor that Application on the basis of Power of Attorney was not maintainable. Submission of the Counsel for the Appellant was noted in paragraph 9 of the judgment, which is to the following effect : - "Maintainability of the application under Section 7 when filed by a power of attorney holder 9. Mr. Rana Mukherjee, learned Senior Counsel appearing for the Appellants, submitted that the application filed on behalf of the Financial Creditor under Section 7 of the Code was on the basis of a power of attorney. He relied upon a judgment of the NCLAT in Palogix In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y application under section 7 or Section 9 or Section 10 of 'I&B Code'." 14. The NCLAT was of the opinion that general authorisation given to an officer of the financial creditor by means of a power of attorney, would not disentitle such officer to act as the authorised representative of the financial creditor while filing an application under Section 7 of the Code, merely because the authorisation was granted through a power of attorney. Moreover, the NCLAT in Palogix Infrastructure (supra) has held that if the officer was authorised to sanction loans and had done so, the application filed under Section 7 of the Code cannot be rejected on the ground that no separate specific authorisation letter has been issued by the financial creditor in favour of such officer. In such cases, the corporate debtor cannot take the plea that while the officer has power to sanction the loan, such officer has no power to recover the loan amount or to initiate corporate insolvency resolution process, in spite of default in repayment. We approve the view taken by the NCLAT in Palogix Infrastructure (supra). 15. In the present case, Mr. Praveen Kumar Gupta has been given general authorisation by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed documents and the signatory, Shri Ravindra G. Mohite on behalf of the Corporate Debtor in the Deed of Guarantee dated 26.04.2019 and Shri A.S. Anantharaman in the Deed of Guarantee dated 10.07.2019 have denied their signatures on these documents. It has been further contended that there is nothing on record to show that there was any Board Resolution passed by the Corporate Debtor on 26.03.2019 as has been claimed by the Respondent No.1 which authorised the signing and execution of the alleged Deeds of Guarantee. The alleged claim of the Respondent No. 1 that a Board Resolution had been passed on 26.03.2019 is false since no Board meetings were held between 13.02.2019 to 29.05.2019. Thus, when the company records reveal that there was no Board meeting held on that date at all authorising them to sign and execute the alleged Deeds of Guarantee, the same should not have been relied upon by the Adjudicating Authority in fastening any liability on the Appellant. The Appellant having not agreed to provide the Deeds of Guarantee in favour of the Financial Creditor, the Deeds of Guarantee were not in existence. It has also been contended that there was no mention of any Corporate Guara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record at page 281 of the APB as reproduced below: "CERTIFIED TRUE COPY OF THE RESOLUTION PASSED BY THE BOARD OF DIRECTORS OF TULIP HOTELS PRIVATE LIMITED AT ITS MEETING HELD AT REGISTERED OFFICE ON 26TH MARCH 2019 TO ISSUE CORPORATE GUARANTEE IN FAVOUR OF YES BANK LIMITED FOR EXTENDING CREDIT FACILITIES TO COX & KINGS LIMITED: The Board was informed that Cox & Kings Limited, had availed financial assistance from Yes Bank Limited for Rs. 450 Crs. Pursuant to the said Sanction issued by Yes Bank Limited to Cox & Kings Limited, the Company was required to provide Corporate Guarantee in favour of Yes Bank Limited for securing the said facilities. Post discussion, it was: "RESOLVED THAT consent of the Board be and is hereby accorded for providing Corporate Guarantee in favour of Yes Bank Limited for extending Financial Assistance to M/s Cox & Kings Limited, for an amount aggregating to Rs.450 Crs (Rupees Four Hundred Fifty Crores only). RESOLVED FURTHER THAT Mr. Ravindra G. Mohite, Director of the Company, be and is hereby authorized severally to execute the Corporate Guarantee on behalf of the Company and all other documents, deeds, undertakings etc. for the purpose of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine of Indoor Management. 23. Coming to our analysis and findings, we would like to begin by first appreciating the essence and nuances of this doctrine of indoor management. This doctrine proceeds on the premise that third parties who enter into a contract with any company is protected against any irregularities in the internal procedure of the company. Persons transacting with companies are entitled to assume that internal company rules have been complied with even if they are not. In other words, the company's indoor affairs are to be treated as the company's outlook. What happens internally in a company is not a matter of public knowledge and hence an outsider can only presume the intentions of a company and cannot be expected to know the information he/she is not privy to. Only if the compliance or non-compliance with an internal requirement becomes ascertainable from the company's public documents, the protective shield of the doctrine of indoor management disclosure gets ruptured as the countervailing doctrine of constructive notice comes into play. 24. In extending this doctrine to the facts of the present case, we find that the Adjudicating Authority held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Adjudicating Authority for determination of the genuineness of these documents. 26. Thus, to answer the second issue, we hold that in the given circumstances, when there is no cognisance which has been taken by any court of law, civil or criminal, of the Deeds of Guarantee being forged and fabricated, in all fairness, the Respondent No. 1 is fully protected in proceeding on the assumption that the signing and execution of the Guarantee Deeds has taken place in good faith and is therefore a valid and legal document. We are also of the considered opinion that such disputes which involve fraud and forgery in respect of contractual documents cannot be investigated and decided by the Adjudicating Authority which has only been conferred the benefit of summary jurisdiction. Such issues can be raised only in a civil suit and hence any attempt to convert the proceedings under the IBC into civil proceedings akin to a trial cannot meet our approval since it clearly transgresses the legislative intent behind the IBC framework. As regards the alleged handwriting expert's opinion which has been adverted attention to by the Appellant to establish forgery, the Adjudicating Authority in exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It can thus be positively concluded that an act done for the benefit of the principal debtor in the past would constitute a valid consideration for an agreement of guarantee with the surety. 29. The contention of the Appellant that Section 127 of the Contract Act necessitated the disbursement of loan to precede the Deed of Guarantee also does not hold good in view of a catena of judgements passed by the various Hon'ble High Courts wherein it has been held that the language of Section 127 was clear and unambiguous to also cover past transactions and past promises prior to giving a guarantee or surety. Without enlisting the entire catena of judgements, we feel that it would suffice to note the findings of the Hon'ble Delhi High Court in the matter of Poysha Oxygen Pvt. Ltd. Vs Ashwini Suri & Others 2009 (112) DRJ 169 which has been relied upon by the Respondent No.1. The relevant extract from the above judgement is as reproduced below: "20. I am however not only unable to accept the reasoning of the single judge of the Rajasthan High Court but may mention that this court also in Madan Lal Sobti aforesaid though referring to the Ram Narain case, nevertheless held that considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its undertakings is registered u/s 77, any persons acquiring such property, assets, undertakings or part thereof or any share or interest therein shall be deemed to have notice of the charge from the date of such registration. It is not in dispute that a charge in favour of applicant is registered with MCA in the present case. Accordingly, the liability of Corporate Debtor cannot be done away even if their irregularity in the execution of the mortgage deed or creation of mortgage without NOC from existing mortgagee i.e. IFCI pointed out by the Corporate Debtor is believed." 33. If we look at the facts of the present case, it is an undisputed fact that the Appellant has executed a Deed of Mortgage on 12.0.2018 in favour of Yes Bank with Vistra ITCL in respect of facility letter dated 02.05.2017 which charge was registered with MCA. This charge has not been disputed by the Corporate Debtor either with MCA or before any appropriate legal forum. Further, even the Supplementary Deed of Mortgage dated 13.05.2019 was executed, the charge registered with MCA was duly modified and this Modification of Charge has also not been disputed by the Corporate Debtor. It is significant to note that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the lender(s) and/or beneficiary and/or the Borrower whether referred to arbitration or presented before any court, tribunal or any other authority. Any part enforcement of the guarantee shall not amount to discharge of the guarantor(s) from their liability to make the entire payment, if asked upon to do so. (6) In the event of failure by the Guarantor(s) in making any such payment, the Guarantor(s) shall be liable to pay interest at the rate stipulated by the lender(s) on the defaulted amounts till receipt of the said amounts by the lender(s) to its satisfaction, without prejudice to and in addition to any other remedy that the beneficiary/lender(s) may have against the guarantor(s). (7) The Guarantor(s) shall not be entitled to look into or consider any question or dispute which may arise between the beneficiary/lender(s) and the Borrower as to the repayment by the borrower to the lender(s) any sum due and owing by the Borrower to the Lender(s). (8) The Guarantor's liability hereunder shall be irrevocable, continuing and joint and several with that of the Borrower. 7.2. The above clauses make it abundantly clear that the Corporate Debtor is liable to the credit faciliti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "default" has also been defined in Section 3(12) IBC to mean non-payment of debt when whole or any part of instalment of the amount of debt has become due or payable and is not paid by the debtor or the corporate debtor, as the case may be." 37. In terms of the Laxmi Pat Surana judgment supra of the Hon'ble Supreme Court, when the Corporate Debtor gives a guarantee in respect of a loan transaction, the right of the Financial Creditor to initiate action against the Corporate Guarantor gets triggered the moment the principal borrower commits a default. In other words, when default is committed by the principal borrower, the amount becomes due against both the principal borrower and the Corporate Guarantor and hence both become liable to pay the amount when the default is committed. Thus, the default by the principal borrower and the guarantor arises on the same date, unless, the terms of contract of guarantee provides that the liability of the guarantor would arise in terms of the Deed of Guarantee. In the present facts of the case, the Yes Bank had invoked the guarantee vide notice dated 26.08.2019 and 20.11.2019, therefore, the defaults had arisen on the issue of the demand notice ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
