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TMI Blog2025 (2) TMI 1021X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding existence of the debt before appointing the resolution professional. This is because Section 99 requires the resolution professional to, at the first instance, gather information and evidence regarding repayment of the debt, and ascertain whether the application satisfies the requirements of Section 94 or Section 95 of the IBC. The existence of the debt will first be examined by the resolution professional in his report, and will then be judicially examined by the Adjudicating Authority when it decides whether to admit or reject the application under Section 100. It is well-settled that when statutory tribunals are constituted to adjudicate and determine certain questions of law and fact, the High Courts do not substitute themselves as the decision-making authority while exercising judicial review - In the present case, the proceedings had not even reached the stage where the Adjudicatory Authority was required to make such determination. Rather, the High Court exercised jurisdiction even prior to the submission of the resolution professional's report, thereby precluding the Adjudicating Authority from performing its adjudicatory function under the IBC. While there is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiation of CIRP against it, the appellant issued a demand notice dated 11.08.2020 and invoked the deed of personal guarantee calling upon respondent no. 1 and other guarantors to pay an amount of Rs. 244 crores. However, by letter dated 14.12.2020, respondent no. 1 and other guarantors offered Rs. 25 crores as full and final settlement. 4. After issuing a Demand Notice in Form B under Rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 Hereinafter 'Rules' on 22.02.2021, the appellant filed an application under Section 95(1) of the IBC read with Rule 7(2) of the Rules to initiate personal insolvency proceedings against respondent no. 1. 5. The Adjudicating Authority, by order dated 16.02.2024, appointed a resolution professional and directed him to examine the application and submit his report as provided in Section 99 of the IBC for approval or rejection of the application. On objections raised by respondent no. 1 on limitation and the validity and existence of the personal guarantee, the Adjudicating Authority, relying on the judgment of this Court in Dilip B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilitative role of collating information, as provided under Section 99 of the IBC, in which the resolution professional examines the application, determines whether the debt has been repaid, and submits a report to the Adjudicating Authority recommending the admission or rejection of the application. Ibid, paras 54 and 55. It is only after the submission of this report that the Adjudicating Authority's adjudicatory functions commence under Section 100. At this stage, the Adjudicating Authority determines whether to admit or reject the application for initiating insolvency. ibid, paras 60 and 74. These principles have been summarized as follows: "86.1. No judicial adjudication is involved at the stages envisaged in Section 95 to Section 99 IBC; [...] 86.3. The submission that a hearing should be conducted by the adjudicatory authority for the purpose of determining "jurisdictional facts" at the stage when it appoints a resolution professional under Section 97(5) IBC is rejected. No such adjudicatory function is contemplated at that stage. To read in such a requirement at that stage would be to rewrite the statute which is impermissible in the exercise of judicial review; [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y while exercising judicial review. Thansingh Nathmal v. Superintendent of Taxes, Dhubri, AIR 1964 SC 1419, para 7; United Bank of India v. Satyawati Tondon, (2010) 8 SCC 110, paras 43, 45; Commissioner of Income Tax v. Chhabil Dass Agarwal, (2014) 1 SCC 603, para 15; South Indian Bank Ltd v. Naveen Mathew Philip, 2023 SCC OnLine SC 435, para 14. In the present case, the proceedings had not even reached the stage where the Adjudicatory Authority was required to make such determination. Rather, the High Court exercised jurisdiction even prior to the submission of the resolution professional's report, thereby precluding the Adjudicating Authority from performing its adjudicatory function under the IBC. 12. While there is no exclusion of power of judicial review of High Courts, and the limits and restraint that the constitutional court exercises and must exercise are well articulated Whirlpool Corporation v. Registrar of Trade Marks, Mumbai, (1998) 8 SCC 1, para 15; Harbanslal Sahnia v. Indian Oil Corporation Ltd, (2003) 2 SCC 107, para 7., the primary issues involved in the present case, including the factual determination of whether the debt exists, is part of the statutory a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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