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Judgment
This application is filed by the Financial Creditor (FC) against Respondents 2 & 1, who are the Corporate Debtor (CD) and Personal Guarantor (PG) respectively, seeking for initiation of Personal Insolvency Resolution Process (PIRP) against Respondent No. 1/Personal Guarantor (PG).
The facts, on the basis of which, the above relief is sought for are as follows:
The Financial Creditor i.e. Bank of Maharashtra had sanctioned working capital facility to the Corporate Debtor by virtue of sanction letter dated 12/02/2014. The Corporate Debtor became due for an amount of Rs. 17,10,79,788.43.43 (Rupees Seventeen Crores Ten Lakhs Seventy Nine Thousand Seven Hundred Eighty Eight and Forty Three Paise only) which includes the principal amount of Rs. 5,43,29,623/- (Five Crore Forty Three Lakh Twenty Nine thousand and Six Hundred Twenty Three only). The Corporate Debtor failed to make the payment and Respondent No. 1/ Personal Guarantor executed a Deed of Guarantee on 19/03/2014 to secure the financial assistance. The Personal Guarantor undertook to pay the amount payable by the Corporate Debtor and undertook to indemnify against all the losses, which the Financial Creditor suffers. The Guarantee Deed executed by Respondent No. 1 is irrevocable, independent, coextensive and continuing Guarantee. When the Personal Guarantor failed to pay the outstanding amount, a demand notice was issued to the Personal Guarantor by the Financial Creditor, which was received by the Personal Guarantor. The Financial Creditor approached the DRT, Hyderabad for recovery of the loan and the DRT vide its recovery certificate dated 06/02/2019 certified that the Financial Creditor is entitled for the amount due. Hence, the application is within the limitation, construed from the date of the certificate issued by the DRT and after exclusion of time during the time of Covid-19 as exempted by the Hon’ble Supreme Court in the Miscellaneous Application No. 665 of 2021 In SMW(C) No. 3 of 2020, dated 23/03/2020 by virtue of which the period from15-03-2020 to14-03-2021 is excluded from the limitation period, owing to the pandemic of Covid-19. Hence, in view of the above, this application is allowed.
None appeared for the Personal Guarantor. We have heard the Learned Counsel for the Financial Creditor and perused the record.
There is a personal guarantee executed by the Personal Guarantor undertaking to indemnify the Corporate Debtor. The Corporate Debtor has failed to discharge the loan. The Financial Creditor approached the DRT and obtained the award of the Certificate for recovery of the loan, issued by the DRT in Form No. 9 on 06/02/2019. This application is filed on 28/10/2022, which is beyond three years. However, the Hon’ble Supreme Court has suo-moto exempted the time limit by its judgment dated 23/03/2020 in the Miscellaneous Application No. 665 of 2021 In SMW(C) No. 3 of 2020 by virtue of which the period from15-03-2020 to14-03-2021 is excluded from the limitation period, owing to the pandemic of Covid-19. Hence, this application is considered to be within limitation.
Considering that the 1st Respondent failed in discharging the Debt due to the petitioner and considering the report of the RP, who was appointed by virtue of the order of this Tribunal dated 25/01/2023, wherein he recommended for initiation of CIRP against Respondent No. 2, we allow this application.
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. 356/95/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 Sunku Ramesh 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-003/0307/2020-2021/13464, having office at Flat No. 602, Dream Home Vasista, Plot No. 9, Barafbagh Colony, Lower Tankbund, Hyderabad – 500 029, who was appointed vide order dated 25.01.2023 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.