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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 ..... held that the corporate guarantee could have been invoked prior to commencement of the CIRP. In paragraphs 27, 28, 29 and 30 of the judgment, following has been held that 'In the instant case, the CIRP commencement date of the 'Corporate Debtor' is 27/01/2020 and the Appellant had recalled the entire redemption amount with respect to debentures on 25/03/2020 subsequent to the initiation of CIRP. The Adjudicating Authority recorded that the Corporate Guarantee was invoked on 07/04/2020. The claims were filed by the Appellants on 10/02/2020. This Tribunal is of the earnest view that the Appellants cannot Claim the amounts in the CIRP of the 'Corporate Debtor' who is a 'Corporate Guarantor' on the basis of the Deed of Guarantee which was never invoked as on the date of filing of the Claims.' When the Respondent having invoked the guarantee on 18.09.2020 i.e. subsequent to initiation of the CIRP, on the basis of said invocation no claim could have been accepted in the CIRP. 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted to the IRP. After receipt of the letter dated 24.09.2020, the Commercial Financial Ltd. sent a letter dated 23.10.2020 sending the document which included the detailed chart of the names of borrowers, date of foreclosure of the amount which was 28.09.2020 and foreclosed amount. In the CIRP of the Corporate Debtor, the CoC approved the Resolution Plan on 13.09.2021. Commercial Financial Ltd. submitted a claim in Form C dated 13.10.2021 to the Resolution Professional claiming an amount of Rs.1,14,57,536/- for non-payment of agreed repayment of loan by the corporate debtor in pursuance of the corporate guarantee dated 13.11.2014. The said letter was replied by Appellant on 12.11.2021 informing that the claim is submitted under Regulation 17 of the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 which is not valid. Claim is not in accordance with the Insolvency and Bankruptcy Board of India (Insolvency Resolution process for Corporate Persons) Regulations, 2016. CoC has already approved the Resolution Plan on 09.09.2021 and application was filed for approval of the plan. The claim of Commercial Financial Ltd. having not been admitted, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appeal, notices were issued. Reply affidavit as well as Additional Affidavit has been filed by the Respondent to which rejoinder has also been filed by the Appellant. 3. We have heard Shri Shubhangda Singh, Learned Counsel for the Appellant and Shri Murtaza Najmi, Learned Counsel for the Respondent. 4. Counsel for the Appellant challenging the order passed by the Adjudicating Authority submits that the Respondent having invoked the guarantee only on 18.09.2020 i.e. subsequent to initiation of CIRP on 10.10.2019, the claim filed by the Respondent could not have been entertained in the CIRP. The provision of Section 14 of the IBC prohibited the Respondent to enforce its security by invoking the guarantee. Invocation itself being in breach of Section 14 of the IBC, claim could not have been accepted by the IRP. It is further submitted that no claim was submitted by the Respondent before approval of the Resolution Plan by the CoC. Letter dated 23.10.2020 which was sent by the Respondent cannot be treated to be any claim. Claim was submitted by Respondent only on 13.10.2021 that too in incorrect form. 5. Shri Murtaza Najmi, Learned Counsel appearing for the Respondent refuting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19. Publication in the newspaper inviting claims from creditors was issued on 16.10.2019. Last date of submission was 26.10.2019. (ii) No claim was submitted by the Respondent No.1 in response to the publication made by the IRP. (iii) The Corporate Debtor has executed a corporate guarantee in favour of the Respondent on 13.11.2014 guaranting the financial assistance extended by Respondent in favour of farmers. (iv) On 18.09.2020, the Respondent- Sustainable Agro-Commercial Financial Ltd. invoked the guarantee dated 13.11.2014 and asked the corporate debtor to make the payment. On 24.09.2020, the Corporate Debtor informed the Respondent of initiation of CIRP against the corporate debtor and asked the Respondent to file its claim before the Resolution Professional. (v) Letter dated 23.10.2020 was sent by the Respondent No.1 to Resolution Professional. (vi) On 13.07.2021, CoC approved the Resolution Plan. (vii) On 13.10.2021, Respondent sent claim in Form C. 8. In the application which was filed by the Respondent being IA No.886 of 2022, the Respondent claimed that they were not aware of the CIRP. The case of the Respondent in the application was that it has given loan to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reof, the same are detailed herein below: - a. Section 3 (11) of the Code states that a "debt" means a liability or obligation in respect of a claim which is due as on the insolvency commencement date; vis-à- vis in the instant case the Applicant had invoked the Corporate Guarantee on 18 September 2020 and the insolvency commencement date is 12 October 2019, therefore, the alleged claim of the Applicant is not maintainable. b. As per section 14 (1) (c) of the Code, any action to recover or enforce any security interest created by the Corporate Debtor is prohibited by the moratorium declared by the Adjudicating Authority from the insolvency commencement date, vis-à-vis in the instant case the Applicant had invoked the Corporate Guarantee on 18 September 2020 in contravention to the moratorium declared by the Hon'ble NCLT as on 10 October 2019. c. Further, reliance can be placed upon regulation 13 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("Regulations"), the resolution professional has to verify only those claims which are existing as on the insolvency commenceme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. [Explanation.-For the purposes of this sub-section, it is hereby clarified that notwithstanding anything contained in any other law for the time being in force, a licence, permit, registration, quota, concession, clearance or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license, permit, registration, quota, concession, clearances or a similar grant or right during the moratorium period;]" 14. The submission advanced by the Appellant is that after enforcement of Moratorium on 10.10.2019, the Respondent had no authority or jurisdiction to invoke the guarantee dated 03.11.2014. The purpose and object for enforcement of Moratorium has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal (AT) (Insolvency) No.356 of 2022". One of the issues which was framed in the above case for consideration was issue (c). Issue (c) is as follows:- "(c) Whether the Appellant can make a 'Claim' on the basis of the 'Guarantee Deed' which was never invoked pre-commencement of the CIRP, and remained uninvoked even as on the date of filing of the 'Claim', thereby meaning that 'Right to Payment' has not yet accrued." 17. This Tribunal while considering the aforesaid issue referred to and relied on judgment of the Hon'ble Supreme Court in "Ghanshyam Mishra and Sons Pvt. Ltd. vs. Edelweiss Asset Reconstruction Company Limited-(2021) 9 SCC 657" as well as judgment of this Tribunal in "Edelweiss Asset Reconstruction Company Ltd. vs. Orissa Manganese and Minerals Ltd.- 2019 SCC OnLine NCLAT 764". This Tribunal ultimately held that the corporate guarantee could have been invoked prior to commencement of the CIRP. In paragraphs 27, 28, 29 and 30 of the judgment, following has been held:- "27. It is seen from the aforenoted Judgement that an uninvoked Corporate Guarantee cannot be considered as a 'Matured Claim'. In para 133 of the aforenoted Judgement the Hon'ble Supreme Court has uph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. & Anr.' (Supra) that a 'Claim' gives rise to a debt only when it becomes due. A 'Claim' is wider in its scope then debt. A claim may be due or may not be due, but a debt must be a claim which is due. A complete mechanism has been provided in IBC, 2016 as to how and when claims become 'due and payable' and debt owed. In the instant case, the CIRP commencement date of the 'Corporate Debtor' is 27/01/2020 and the Appellant had recalled the entire redemption amount with respect to debentures on 25/03/2020 subsequent to the initiation of CIRP. The Adjudicating Authority recorded that the Corporate Guarantee was invoked on 07/04/2020. The claims were filed by the Appellants on 10/02/2020. This Tribunal is of the earnest view that the Appellants cannot Claim the amounts in the CIRP of the 'Corporate Debtor' who is a 'Corporate Guarantor' on the basis of the Deed of Guarantee which was never invoked as on the date of filing of the Claims. The record also does not show that any N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 Court was Civil Appeal No.8129 of 2019. In the above case, EARC has filed an application before the Adjudicating Authority complaining about non-admission of its claim submitted to the Resolution Professional. CA (IB) No. 470/KB/2018 was filed by EARC challenging the decision of the Resolution Professional for not admitting its claim which fact has been noticed in paragraph 107 of the judgment which is as follows:- "107. By common order dated 22-6-2018 [SBI v. Orissa Manganese & Minerals Ltd., 2018 SCC OnLine NCLT 20888], the application being CA (IB) No. 402/KB/2018 filed by RP, came to be allowed thereby, granting approval under the provisions of Section 31(1) of the I&B Code and declaring that the same will be binding on the corporate debtor, its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. Application being CA (IB) No. 398/KB/2018 filed by EARC challenging the approval granted by CoC to the resolution plan submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 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 the date of completion of CIRP process and once the moratorium was imposed, it could not invoke the corporate guarantee. The order passed by the NCLT was challenged before this Tribunal. In the judgment of this Tribunal in "Edelweiss Asset Reconstruction Company Ltd. vs. Orissa Manganese and Minerals Ltd." (supra), an observations were made by this Tribunal that rejection of the claim for the purpose of collating the claim and making it part of the Resolution Process will not affect the right of EARC who has invoked the bank guarantee against the corporate debtor which observation has been noticed in paragraph 118 of "Ghanshyam Mishra and Sons Pvt. Ltd." (supra) by the Hon'ble Supreme Court which is as follows:- "118. Vide the impugned judgment and order dated 23-4-2019 [Edelweiss Asset Reconstruction Co. Ltd. v. Orissa Manganese & Minerals Ltd., 2019 SCC OnLine NCLAT 764] , NCLAT found that as no ground was made out in terms of Section 61(3) of the I&B Code, no relief could be granted in the appeals. However, while doi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CLAT 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 in "Export Import Bank of India v. JEKPL (P) Ltd. Resolution Professional- 2018 SCC OnLine NCLAT 465". The said submission has been noticed in paragraphs 124 and 125 of the judgment. However, the Hon'ble Supreme Court took the view that the case relied by on behalf of the EARC is not being applicable even though SLP was dismissed by the Hon'ble Supreme Court dated 23.10.2019 against the judgment dated 14.08.2018. In paragraph 126 of the judgment, the Hon'ble Supreme Court has noted following:- "126. We find that the said case, on facts, would not be applicable to the case at hand. No doubt that the appeal filed against the judgment and order of NCLAT dated 14-8-2018 [Export Import Bank of India v. JEKPL (P) Ltd. Resolution Professional, 2018 SCC OnLine NCLAT 465] has been dismissed by this Court on 23-1-2019 [Atyant Capital (India) Fund I v. JEKPL (P) Ltd. Resolution Professional, 2019 SCC OnLine SC 2005] . However, it is a settled law that dismissal of a special leave petition/appeal does not amount to affirmation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id 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 Company Ltd. vs. Orissa Manganese and Minerals Ltd." (supra) has laid down following in paragraphs 24, 25 and 27:- "24. It is true that the 'Corporate Debtor' had taken guarantee but the said guarantee was not invoked in favour of the Appellant-'Edelweiss Asset Reconstruction Limited'. However, the said guarantee was not invoked by the Appellant- 'Edelweiss Asset Reconstruction Limited' as on the date of admission or filing of the claim. 25. On declaration of 'Moratorium', it was not open to the Appellant-'Edelweiss Asset Reconstruction Limited' to invoke the guarantee of initiation of 'Corporate Insolvency Resolution Process' (date of admission). (Corporate Guarantee). 27. For the said reasons, we hold that the 'Resolution Professional' has rightly not accepted the claim of the Appellant - 'Edelweiss Asset Reconstruction Limited' and the Adjudicating Authority has rightly rejected the application filed by the Appellant - 'Edelweiss Asset Reconstruction Limited' for accepting its claim." 25. It is to be noted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntor/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 for any reason whatsoever to be liable to LENDERS, Lenders shall be at liberty to require the performance by the Guarantor of its obligations hereunder to the same extent in all respects as if the Guarantor had at all times been solely liable to perform the said obligations." 12. The liability of Corporate Guarantor is coextensive with the Lenders and the Lenders are at liberty to require the performance by the Guarantor of its obligation. The Adjudicating Authority after noticing the fact which was brought by the RoC as well as Central Bank of India and has rightly taken the view that the present in the not case for liquidating the Company under the process of voluntary liquidation. The submission of the Appellant that since guarantee has not been invoked there is no debt cannot be accepted. Guarantee continues to bind the Corporate Guarantor to discharge its liability and the fact that as on date, guarantee has not been invoked, cannot be a ground for Appellant to be liquidated under Section 59 of the IBC. We thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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