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TMI Blog2025 (4) TMI 1545X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by Edelweiss Asset Reconstruction Company Ltd.-Financial Creditor to intervene in the main CP No. 05/2023 and which impugned order also dismissed the CP No. 05/2023. Aggrieved by the impugned order, the present appeal has been preferred by the Appellant who is Director of the Corporate Debtor- Infra Dredge Services Pvt. Ltd. 2. Coming to the factual matrix of the present matter, the Corporate Debtor had obtained loan facility from Bank of India amounting to Rs 52.32 Cr. The Appellant was a personal guarantor towards the aforementioned loan. The Appellant had mortgaged his residential property as security towards the loan availed by the Corporate Debtor and entered into a Deed of Guarantee as a personal guarantor towards the said loan. The Corporate Debtor and the Appellant faced several difficulties in repaying the loan. The default in making repayments occurred on 31.03.2011 which eventually led to declaration of the Corporate Debtor's account as NPA on 30.06.2011. The Bank of India initiated SARFAESI proceedings and issued a Demand Notice under Section 13(2) of the SARFAESI Act and took symbolic possession of the secured assets on 18.12.2012. The said loan together with un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority as the Appellant was not allowed opportunity to respond to the Intervention Application before passing the impugned order dismissing the Section 94 petition. It was strenuously contended that the dismissal of Section 94 petition was premature since the report of the RP did not contain any adverse findings. The impugned order could not have been passed in the absence of taking note of the finding in the report filed by the RP under Section 99 of the IBC. Holding that the summary rejection of the Section 94 petition by allowing an Intervention Application at pre-admission stage was procedurally irregular, it is the contention of the Appellant that the impugned order was therefore both procedurally and legally unsustainable. 5. It was also asserted that the Adjudicating Authority had failed to provide any reasoned order under Section 100(4) of the IBC which alone empowers dismissal of a Section 94 petition for fraudulent intent. Assailing the impugned order, it is the contention of the Appellant that mere initiation of proceedings under SARFAESI Act cannot be the basis for arriving at a finding that the Section 94 petition was filed with an intention to defraud the creditors. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possession from the subject residential premises. 8. Refuting the allegations and contentions raised by the Appellant, Shri Rohit Gupta, Ld. Counsel for Respondent No.1. submitted that the Appellant had initiated multiple legal proceedings during last ten years primarily to delay the attempts made by the Respondent No.1 to recover the outstanding loan amounts due to them by initiating SARFAESI proceedings. It was also asserted that the Appellant had made several false promises to repay the outstanding amount and also given undertaking to sell the immovable property to clear their outstanding dues. However, they had persistently failed to honour their commitment. It was further argued that the Appellant has sought to invoke the provisions of Section 94 of IBC not for purpose of genuine insolvency resolution but with the intent of invoking moratorium so as to frustrate enforcement action of recovery proceedings against them. The present Section 94 petition has been filed with the intent of wriggling out of their obligations to repay the debt. This appeal was a clear instance of the abuse of process of law and hence the Adjudicating Authority rightly dismissed the CP No. 05/2023 afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 30.08.2018 directing the Appellant to vacate the suit flats on 07.09.2018 and hand over the possession to the secured creditor. The Appellant had given an undertaking on 30.08.2018 to the DRT to handover possession of the subject residential premise within seven days but did not ensure compliance. Instead of handing over possession, the Appellant filed a Writ Petition before the Hon'ble High Court of Bombay and a plea was taken that they had found a buyer for the secured asset. The Hon'ble High Court of Bombay on 04.12.2019 allowed the Appellant to make payment to the Respondent No.1 either by themselves or through the buyer of the secured asset within twelve weeks and that in the event of default, the Respondent No.1 would be entitled to take possession of the subject residential premise and sell the same to release their dues. However, there was again a breach of commitment made before the Hon'ble High Court of Bombay by the Appellant. When the fourth S.A. filed by the Appellant was heard, the DRT in its Order of 07.12.2022, captured the conduct of the Appellant over the last 10 years seeking to frustrate the action on the part of the Creditor under the SARFAESI Act and observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the intent of genuine insolvency resolution but as a tool to obstruct lawful recovery of enforcement with the manifest intent of the Appellant being to seek refuge under the moratorium provision under Section 96 of the IBC in an effort to prevent enforcement of possession of the secured residential premises. 15. At this stage we advert our attention to the Getz Cable judgment supra on which the Appellant has placed their reliance. We have no quarrel with the proposition of law laid down in Getz Cable judgment supra that the right under Section 94 given to a personal guarantor/individual cannot be taken away only on the ground that SARFAESI proceedings have been initiated prior to filing of Section 94 application. Be that as it may, it is pertinent to notice that the said judgement has also observed that the Adjudicating Authority has to decide each case depending on the specific and individual facts of each case. 16. This is a case clearly where the Appellant on one excuse the other has all along tried to delay the handing over of the security to the Respondent No.1. We find that steps under SARFAESI Act have been pending since 2012. The Appellant has consistently misused the ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to subvert the recovery proceedings initiated against them and not for the purpose of the insolvency resolution. In the given fact situation, we are inclined to agree with the findings returned by the Adjudicating Authority that the Appellant had approached the Adjudicating Authority by filing the Section 94 application with an intent other than insolvency resolution. 17. The questioning of the jurisdiction of the Adjudicating Authority by the Appellant to examine the maintainability and bonafide of an application under Section 94 at the stage of Section 100 lacks substance. Since the report under Section 99 of the IBC had already been filed by the RP, nothing prevented the Adjudicating Authority to hear the matter and pass orders under Section 100 of the IBC while also entertaining the Intervention Application of Respondent No.1. This brings us to the contention of the Appellant of violation of the principle of natural justice by the Adjudicating Authority as the Appellant did not get an opportunity to file their response to the Intervention Application of the Respondent No.1. When we look at the material on record, we find that the Adjudicating Authority by its order dated 27.03 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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