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TMI Blog2025 (2) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 13.11.2014 with the Respondent- Sustainable Agro- Commercial Financial Ltd. guaranting the loan extended by the Commercial Financial Limited to the borrower. The Commercial Financial Limited has extended different amount of term loan to the farmers. The Corporate Guarantee by the Corporate Debtor was for the amount of Rs.2 Crore. On an application filed by the UCO Bank, CIRP process against the Corporate Debtor commenced by order dated 10.10.2019. The Appellant was appointed as an IRP on 13.10.2019/16.10.2019. IRP made publication inviting claims from the creditors. Last date for receiving of the claims was 26.10.2019. The Respondent- Sustainable Agro-Commercial Financial Ltd. issued a letter dated 18.09.2020 to the Chief Executive Director of the Corporate Debtor invoking the corporate guarantee dated 13.11.2014 and asked the Corporate Guarantor to make payment of the amount. The letter dated 18.09.2020 was replied by the Corporate Debtor by letter dated 24.09.2020 informing the Commercial Financial Ltd. that Ankur Kumar Shrivastava has been appointed as IRP by order dated 10.10.2019 of the NCLT and claim form should be submitted to the IRP. After receipt of the letter dated 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordance with the Insolvency Bankruptcy Board of India (Insolvency Regulation Process for Corporate Persons) Regulations, 2016, instead, it has filed claim in Form- C prescribed under some other Regulations. The claim was filed vide letter dated 13.10.2021 while the last date for submission of the claim was 26.10.2019. Also, the CoC approved the Plan on 09.09.2021 and the approved Plan was before consideration of the Adjudicating Authority. The Applicant has submitted that he has sent a letter dated 23.10.2020 to the RP vide registered A.D. and has placed on record the copy of acknowledgement issued by the Post Office in this relation. After considering the facts of the case, we direct the RP to consider the claim of the Applicant under appropriate class and include him as one of the claimants under the class after verification of the amounts claimed to be due. RP shall distribute the amounts allocated to that class accordingly. With these directions, IA-886/2022 is allowed." 2.3. Aggrieved by the order passed by the Adjudicating Authority in IA No.886 of 2022, this Appeal has been filed by erstwhile Resolution Professional. In the Appeal, notices were issued. Reply affidavit as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make the corporate debtor liable. The language of Section 14 of the IBC does not say that Respondent cannot invoke a guarantee. Invocation of guarantee does not tantamount to institution of legal proceeding. If the Respondent would have filed the proceeding for invoking guarantee then Section 14 will come into play. Respondent has not initiated any proceeding after approval of the plan. Claim was filed in time. It was duty of the Resolution Professional to receive and collate the claim. It was expected of the Resolution Professional to put the claim submitted by the Respondent before the Committee of Creditors/ Authority who were required to decide the same. The impugned order passed by the Adjudicating Authority does not suffer from infirmity. 6. Counsel for both the parties in support of respective submissions has relied on various judgments of this Tribunal as well as judgment of the Hon'ble Supreme Court which we shall refer while considering the submissions in detail. 7. From the pleadings brought on the record, following facts are undisputed: - (i) The CIRP against the Corporate Debtor commenced by order dated 10.10.2019. Publication in the newspaper inviting claims from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofessional by filing a reply to the application dated 04.05.2022. Copy of the reply has been brought on the record to Annexure 3 of the Appeal. In Paragraph 3 of the reply, it was pleaded that the corporate guarantee has been invoked on 18.09.2020 and as per Section 14(1)(c) any action to recover or enforce any security interest created by the corporate debtor is prohibited. It is useful to notice paragraph 3:- "3. At the further outset it is submitted before this Hon'ble Tribunal that the alleged claim of the Applicant seems to arise out of the Corporate Guarantee Deed dated 13 November 2014 executed by and between the Applicant herein and the Corporate Debtor, however, the notice invoking Corporate Guarantee was issued by the Applicant only on 18 September 2020 i.e. subsequent to the failure of the principle borrower to repay the said outstanding to the Applicant which is much after initiation of the CIRP of the Corporate Debtor i.e. 10 October 2019. I state and submit that the alleged claim of the Applicant is in violation of various Provisions of the Insolvency Bankruptcy Code, 2016 ("Code") and regulation thereof, the same are detailed herein below: - a. Section 3 (11) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an inclusive definition. By the execution of the guarantee dated 03.11.2014 a security interest is created in favour of Respondent No.1 by which corporate debtor was obliged to secure payment or performance of the obligation. Section 14 of the IBC provides for "Moratorium". Section 14(1) provides as follows:- "14. Moratorium. - (1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely: - (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing off by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The statutory freeze that has thus been made is, unlike its predecessor in the SICA, 1985 only a limited one, which is expressly limited by Section 31(3) of the Code, to the date of admission of an insolvency petition up to the date that the adjudicating authority either allows a resolution plan to come into effect or states that the corporate debtor must go into the liquidation. For this temporary period, at least, all the things referred to under Section 14 must be strictly observed so that the corporate debtor may finally be put back on its feet albeit with a new management." 15. The purpose and object of Moratorium is to save the corporate debtor from any future liability which may arise after initiation of CIRP against the Corporate Debtor and to protect its assets for purposes of resolution. 16. Counsel for the Appellant in support of his submission that after initiation of the CIRP, guarantee given by the corporate debtor could not have been invoked by the Respondent No.1 has relied on judgment of this Tribunal in "IDBI Trusteeship Services Limited vs. Mr. Abhinav Mukherji & Anr.-Company Appeal (AT) (Insolvency) No.356 of 2022". One of the issues which was framed in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured; xxxxxxx (11) "debt" means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt: (12) "default" means non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the debtor or the corporate debtor, as the case may be; xxxxx Whereas a "claim" gives rise to a "debt" only when it becomes "due", a "default" occurs only when a "debt" becomes "due and payable" and is not paid by the debtor. It is for the reason that a financial creditor has to prove "default" as opposed to an operational creditor who merely "claims" a right to payment of a liability or obligation in respect of a debt which may be due. When this aspect is borne in mind, the differentiation in the triggering of insolvency resolution process by financial creditors Under Section 7 and by operational creditors Under Sections 8 and 9 of the Code becomes clear." (Emphasis Supplied) 29. It is clear from the observations made by the Hon'ble Supreme Court in the aforenoted Judgement 'Swiss Ribbons Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CLAT reversed its decision passed in 'Axis Bank' (Supra) and has held that on declaration of moratorium, it was not open to EARC to invoke the Corporate Guarantee and held that the IRP has rightly not accepted the claim of the Appellant/EARC. As the Resolution Plan was already approved in that case, the Hon'ble Supreme Court in 'Ghanshyam Mishra and Sons Private Limited' (Supra) in paragraph 133 has also closed the right of EARC in terms of taking any further action. Therefore, we are of the view that the ratio of the Hon'ble Supreme Court in 'Ghanshyam Mishra and Sons Private Limited' (Supra), is squarely applicable to the facts of this case and hence we are of the considered view that when the 'Corporate Debtor' is a 'Guarantor' and when the 'Corporate Guarantee' has never been invoked prior to the commencement of the CIRP, as on the date of filing of the Claims, the 'Right to Payment' has not accrued." 18. The Judgment in "Ghanshyam Mishra and Sons Pvt. Ltd." (supra) of the Hon'ble Supreme Court as referred above needs to be noticed for answering the question. In "Ghanshyam Mishra and Sons Pvt. Ltd." (supra), one of the appeal which came for consideration by the Hon'ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-2018 EARC had submitted its claim in Form 'C' for an amount of Rs 648,89,62,395. In response to the said email, RP sought a clarification as to whether the corporate guarantee had been invoked by the applicant. RP had not received any response till 21-2-2018 from EARC. Despite repeated requests made by RP, EARC did not respond to the query made by RP. From the record placed before NCLT, it was clear that EARC had not invoked the corporate guarantee. NCLT therefore posed a question to itself, as to whether an uninvoked corporate guarantee could be considered as matured claim of the applicant. NCLT found that once the moratorium was applied under Section 14 of the I&B Code, EARC was prevented from invoking the corporate guarantee. NCLT further found that the OMML's guarantee had not been invoked by EARC till the date of completion of CIRP process and once the moratorium was imposed, it could not invoke the corporate guarantee. NCLT therefore found that there is no illegality or irregularity in not admitting the claim of EARC." 20. In paragraph 110, it was noticed by the Hon'ble Supreme Court that NCLT has found that the OMML's guarantee had not been invoked by EARC till th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd non-filing of the claim within time. *** 51. In the present case, as no ground has been made out in terms of sub-section (3) of Section 61 of the "I&B Code" and the decision of the "resolution professional" was not challenged by the appellant, no relief can be granted. However, this order will not come in the way of the appellant to move before appropriate forum for appropriate relief if the claim is not barred by limitation. 52. Insofar dues of the State of Jharkhand are concerned, we hold that the statutory dues shall be payable to the State of Jharkhand in terms of existing law which comes within the meaning of "operational debt" as defined in Section 5(20) read with Section 5(21) and held in CIT v. Spartek Ceramics (India) Ltd. [CIT v. Spartek Ceramics (India) Ltd., 2018 SCC OnLine NCLAT 289] Except the aforesaid observations, in absence of any appeal filed by the State of Jharkhand, no order is passed." 21. The above observations of this Tribunal was not approved. The Hon'ble Supreme Court held that the NCLAT ought to have dismissed the Appeal. The Hon'ble Supreme Court also noticed the submissions made on behalf of the EARC relying on the judgment of this Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Following was held in paragraph 133:- "133. We are therefore of the considered view that the appeal deserves to be allowed by expunging SCC OnLine NCLAT paras 28, 42, 43, 51 and 52 from the judgment of NCLAT dated 23-4-2019 [Edelweiss Asset Reconstruction Co. Ltd. v. Orissa Manganese & Minerals Ltd., 2019 SCC OnLine NCLAT 764] . It is ordered accordingly. The judgment and order passed by NCLT dated 22-6-2018 [SBI v. Orissa Manganese & Minerals Ltd., 2018 SCC OnLine NCLT 20888] is upheld. No costs." 23. From the above judgment indicated that the view taken by the NCLT in the above case that the guarantee could not have been invoked after initiation of the CIRP was upheld by the Hon'ble Supreme Court after noticing the submission of Counsel for EARC relying on the judgment of this Tribunal in "Export Import Bank of India v. JEKPL (P) Ltd." (supra). 24. Counsel for the Respondent has relied on the judgment of this Tribunal in "Export Import Bank of India v. JEKPL (P) Ltd." (supra). It is relevant to notice that the said judgment of this Tribunal was not approved by the Hon'ble Supreme Court in Ghanshyam Mishra's case in subsequent judgment. In "Edelweiss Asset Reconstruction Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejecting the liquidation application. The Learned Counsel for the Appellant referred to one of the Guarantee Deed which was executed by Company in favour of the Punjab National Bank which is at page 20 of the Additional Affidavit and referred to para 16 and 23 of the Deed. He has also placed reliance on the judgment passed in Company Appeal (AT) (Insolvency) No. 329 of 2023 "Pooja Ramesh Singh v. State Bank of India" decided on 28.04.2023 and in support of his submission submitted that liability against the Corporate Guarantor shall arise only when guarantee is invoked. 9. The fact that guarantee has not been invoked, does not absolve the Corporate Guarantor from debt. The debt which is Corporate Guarantor, the Company has been given corporate guarantee and undertaken to pay the debt and in para 10 of the Deed, following has been undertaken: "10. The rights of Lenders against the Guarantor shall remain in full force and effect notwithstanding any arrangement which may be reached between Lenders and the other Guarantor/s, if any, or notwithstanding the release of that other or others from liability and notwithstanding that at any time hereafter the other Guarantor/s may cease ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a list of creditors containing names of creditors along with the amount claimed by them, the amount of their claims admitted and the security interest, if any, in respect of such claims, and update it " 31. It is, thus, clear that no claim existed of the Respondent on the date of commencement of the CIRP process, hence, the said claim could not have been admitted in the process. Counsel for the Respondent submitted that prior to submitting the claim in Form C on 13.10.2021, it has sent letter dated 23.10.2020 which can be treated as claim which was required to be placed by the IRP before the CoC. We have found that the Respondent could not have been invoked the guarantee given by the corporate debtor on 18.09.2020. The said invocation cannot be base for any claim to be admitted in the CIRP it having not matured. It is not necessary for us to examine the contention that the claim of the Respondent has to be treated to have been filed on 23.10.2020 and not on 13.10.2021. 32. Coming to the order of the Adjudicating Authority impugned in the Appeal, it is to be noticed that the Adjudicating Authority has not even adverted to the ground raised in the reply by the IRP that the claim a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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