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Judgment
This application is filed by the Petitioner Bank of Maharashtra, Financial Creditor (FC) against Respondents 1 & 2, who are the Personal Guarantor (PG) and Corporate Debtor (CD) respectively, seeking for initiation of Insolvency Resolution Process (IRP) against Respondent No. 2/Personal Guarantor (PG). Though Respondent No. 2 is shown as a party, the relief claimed is only against Respondent No. 1.
The facts, which are necessary for the purpose of adjudicating this application are, briefly, as follows:
The Financial Creditor i.e. Bank of Maharashtra vide its sanction letter dated 05/01/2012 sanctioned a working capital facility consisting of cash credit limit of Rs. 500 lakhs. The total amount, after deducting the repayments payable by the Corporate Debtor (CD) amounted to Rs. 12,69,34,767.65 (Rupees Twelve Crores Sixty Nine Lakhs Thirty Four Thousand Seven Hundred Sixty Seven and Sixty Five Paisa Only) including principal amount of Rs. 3,19,90,019.08 (Rupees Three Crores Nineteen Lakhs Ninety Thousand Nineteen and Eight Paisa Only). The CD failed to honour its obligations towards the FC. Accordingly, the loan account of Respondent No. 2 was declared as NPA as on 29/07/2014.
ii) The Personal Guarantor executed a Deed of Guarantee on 13/01/2012 to secure the financial assistance granted by the Financial Creditor to Respondent No. 2. The Personal Guarantor undertook to pay the Financial Creditor upon demand forthwith without any demur or protest all the amounts payable by the Corporate Debtor.
iii) Since Respondent No. 1 being the Personal Guarantor failed to pay the outstanding amount, this application is filed by the Petitioner.
Heard the ld. Counsel for the petitioner. None appeared on behalf of the Respondents, despite notice.
We have appointed Interim Resolution Professional by an order dated 21/02/2023. The Resolution Professional has given his report confirming the amount due from the Corporate Debtor and confirming that the Personal Guarantor failed to discharge the said amount, which he should have paid by virtue of the Contract of guarantee executed in favour of the Financial Creditor by the Personal Guarantor. The Counsel for the petitioner submits that the loan account of the Corporate Debtor was declared as NPA on 29/07/2014 and thereafter, they have approached the DRT and the DRT has issued a recovery certificate dated 10/01/2020. The Personal Guarantor was also a party to the said proceedings. It is a well settled that limitation gets extended from the date of the order passed by the DRT and the issue of recovery certificate.
The present application filed by the Petitioner on 5th December, 2022 is well within the limitation. Considering that there is default by the Personal Guarantor in paying the outstanding amount due by the Corporate Debtor, we do not find any reason to demur in allowing this application. Accordingly, the application filed by the Petitioner is allowed.
ORDER
The Company Petition is admitted. The initiation of Individual Insolvency Resolution Process shall commence from this date and shall be completed within 180 days hence.
Therefore, by exercising powers under Section 100 of the Code, we pass the following orders:
The petition i.e. CP (IB) No. 382/95/HDB/2022 filed under the provisions of Section 95 of IBC, 2016 is hereby admitted.
Consequently, the Insolvency Resolution Process is hereby initiated against the Personal Guarantor, Shri K. Srinivasa Rao and the moratorium is declared, which begins with effect from the date of admission of the petition and shall cease to have effect at the end of the period of 180 days, as provided under Section 101 of IBC, 2016. During the moratorium period;
Any pending legal action or proceeding in respect of any debt shall be deemed to have been stayed;
The creditors shall not initiate any legal action or legal proceedings in respect of any debt; and
The debtor shall not transfer, alienate, encumber or dispose of any of her assets or her legal rights or beneficial interest therein;
The provisions of this Section shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.
The Resolution Professional i.e. Mr. Murali Mohan Chevuturi, having Registration No. IBBI/IPA-003/00307/2020-2021/13464, having email.id: [email protected], Mobile No. 8978844288 who was appointed vide order dated 21/02/2023 is directed to cause public notice published on behalf of the Adjudicating Authority within 7 days of uploading of this Order on the website of NCLT, Hyderabad, inviting claims from all creditors, who shall register their claims as provided under Section 103 of the Code within 21 days of such issuance. The notice shall contain the necessary information as provided under Section 102 (2) of IBC, 2016. The publication of notice shall be made in newspapers, one in English and other in vernacular (Telugu) which have wide circulation in the State where the Debtor resides. The Resolution Professional shall furnish two spare copies of the notice to the Registry. One shall be placed on our website by the Registry and the other shall be affixed in the premises of this Adjudicating Authority.
The Resolution Professional, in exercise of the powers conferred under Section 104 shall prepare a list of creditors within 30 days from the date of the notice. The debtor shall prepare, in consultation with the resolution professional, a repayment plan containing a proposal to the creditors for restructuring of his debts or affairs as provided under Section 105 which shall include the provisions for payment of fee to the Resolution Professional. The Resolution Professional shall submit the repayment plan along with his report on the plan to this Adjudicating Authority within a period of 21 days from the last date of submission of claims as provided under Section 106.
In case the Resolution Professional recommends that a meeting of the creditors is not required to be summoned, he shall record the reasons thereof. If the Resolution Professional is of the opinion that the meeting of creditors should be summoned, he shall specify the details as provided under Section 106 (3). The date of meeting shall not be less than fourteen days or more than 28 days from the date of submission of the Report under Sub-Section (1) of Section 106, for which at least 14 days’ notice to the creditors (as per the list prepared) shall be issued by all modes. Such notice must contain the details as provided under the provisions of Section 107.
The meeting of the creditors shall be conducted in accordance with the provisions of sections 109, 110 and 111. The Resolution Professional shall prepare a report of the meeting of the creditors on repayment plan with all details as provided under Section 112 and submit the same to the Authority, copies of which shall be provided to the guarantor and the creditors. It is made clear that the Resolution Professional shall perform his functions and duties in compliance with the Code of Conduct provided under Section 208 of IBC, 2016.