Bank Of Maharastra vs Smt. Manda Venkata Mahalakshmi & Anr.

Orders Passed recorded vide separate sheet in the result the instant Company Petition filed under the provisions of Section 95 of Code, 2016 is hereby admitted under the provisions of Section 100 of the Code, 2016 and Insolvency Resolution Process is initiated against the Personal Guarantor, and moratorium is declared in relation to all debts, which begins from the date of admission of the instant petition and shall cease to have effect at the end of the period of 180 days, as provided under Section 101 of the Code, 2016.

PER: BENCH

This instant petition is filed by Bank of Maharashtra under Section 95 of Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “the Code”) read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Rules, 2019 (hereinafter referred to as “Personal Guarantors Insolvency Rules, 2019), seeking an order for initiation of the Insolvency Resolution Process (“IR Process”) against Smt. Manda Venkata Mahalakshmi Gupta, who is the Personal Guarantor of SV SVS Projects Private Limited (hereinafter referred to as “Corporate Debtor”).

It is averred that corporate debtor had availed working capital facilities consisting of Cash Credit facility with a limit of Rs. 2.50 Crores and Bank Guarantee Facilities aggregating to Rs.48 Crores, the total facilities aggregating to an amount of Rs.50.50 Crores to the Corporate Debtor. Copies of the sanction letter dated 24.03.2014 and 09.04.2016 has been annexed along with this Application.

It is averred that excluding the total repayments of the Corporate Debtor herein, the total principal amount of default payable is Rs.32,30,71,217.76/- (Rupees Thirty Two Crores Thirty lakhs Seventy One Thousand Two Hundred Seventeen and Seventy Six Paise Only) along with a total interest amount of Rs.15,72,26,350.93/- (Rupees Fifteen Crores Seventy Two Lakhs Twenty Six Thousand Three Hundred Fifty and Ninety Three Paise only) calculated until 17.05.2022.

It is averred that the Corporate Debtor had failed to honor its obligations under Composite Deed of Hypothecation for all Facilities dated 25.03.2014 executed between the Financial Creditor and the Corporate Debtor. Accordingly, the Loan account of Corporate Debtor was declared as NPA as on 27.12.2018.

It is averred that Corporate Debtor, Personal Guarantor executed a Deed of Guarantee on 25.03.2014 to secure the financial assistance granted by the Financial Creditor to Corporate Debtor. Under the said Agreement, the Personal Guarantor undertook to pay to the Financial Creditor upon demand forthwith, without demur or protest all the amounts payable by the Corporate Debtor. The Personal Guarantor undertook to indemnify and keep the Financial Creditor indemnified against all losses, costs, claims and damages whatsoever which the Financial Creditor may suffer, pay or incur by reason of or in connection with any such default on the part of the Corporate Debtor.

It is averred that Personal Guarantor had failed to pay the outstanding amount, the Financial Creditor herein while invoking the provisions of the Insolvency and bankruptcy Code, 2016 had vide Form B Demand Notice dated 31.07.2021 issued a notice to the Personal Guarantor requesting him to honor the terms of the Agreement. Despite receipt of the demand notice, Personal Guarantor did not pay any amount. Thus the present application for initiation of insolvency resolution process with respect to personal guarantor.

It is averred that the Notice in Form-B was not at all served to the Respondent No.1/ Alleged Personal Guarantor and as such the Petition based on a statutory notice given to some other person and not to the Respondent No.1/alleged Personal Guarantor and as such this Petition is not at all maintainable and the question of filing counter to a different Form-B notice is not possible to be responded by this Respondent No.1/alleged Personal Guarantor.

It is averred that it is a classic instance of serious abuse of process of law having serious ramification on the Personal Guarantor’s liberty and encroaches upon the guarantee freedom under Article 19 (1)(g) and Article 21 of Constitution of India. Further it is submitted that the Respondent No.1/alleged Personal Guarantor has never signed balance and security confirmation letter by guarantors at material pages 60 and 61 and the signature alleged to be that of this Respondent No.1/alleged Personal Guarantor is forged signature and no liability can be fastened to this Respondent No.1 based on forged signature of this Respondent No.1 and as such the petition is not maintainable against this Respondent No.1.

It is further averred that the default in respect of the debt owned by the Corporate Debtor is on 27.12.2018 and the current petition is filed in May, 2022 and the same is clearly barred by provisions of the Limitation Act. Further it is averred that the subsequent Report filed by IRP is non-est in law because the very basis on which cause of action claimed is on a different Form-B Demand Notice sent to some other person and not to Respondent No.1. Thus prayed the Tribunal to dismiss the Application with exemplary costs for serious abuse of provisions of law contained in Section 95 of IBC.

Petitioner denied all the averments and allegations of the Respondent No.1 in his reply.

It is averred that due to clerical error during the filing of this instant Petition, the Demand Notice of annexed to the Captioned Application was incorrect. The Financial Creditor vide its Notice dated 31.07.2021 had issued Form B Demand Notice to the Personal Guarantor herein, and the same has been issued vide Indian Post bearing reference no. EN429237653IN. Further The Financial Creditor herein had complied with all the statutory requirements under the Insolvency and Bankruptcy Code prior to the filing of this Application.

It is averred that the Financial Creditor denied that the signature of Personal Guarantor herein in the Deed of Guarantee dated 25.03.2014 is forged and therefore has no liability. It is submitted that the Personal Guarantor herein, is making an attempt to mislead this Hon’ble Tribunal and to escape their obligation towards the Financial Creditor. While denying signature on deed of guarantee.

It is further averred that the Financial Creditor denied that the date Captioned Application is barred by limitation. It is submitted that the date of NPA of Corporate Debtor’s account is 27.12.2018., ie., in view of the Supreme Court’s Judgement in matter of IN RE: Cognizance for Extension of Limitation, the Captioned application filed before this Hon’ble Tribunal is well within the period of limitation.

It is averred that the Personal Guarantor by virtue of the Deed of Guarantee entered with the Financial Creditor herein is liable to repay the outstanding Financial Debt. Therefore the present Application filed by the petitioner is maintainable and the prayed the Tribunal to allow the Application.

Pursuant to framing of Personal Guarantors Insolvency Rules, 2019 which came into effect from 01.12.2019, permitting the Petitioner Bank to institute IR Process against the Personal Guarantors, the Petitioner Bank issued a demand notice dated 31.07.2021 to the Personal Guarantor, in Form B of the Code demanding payment of the amount in default.

On presentation of this instant petition, this Adjudicating Authority on 06.06.2022 granted interim-moratorium and has appointed Shri. Murali Mohan Chevuturi, as Resolution Professional, directing him to file his report within ten days from the date of his appointment, in terms of the Section 99 of the Code, 2016 and directed the Petitioner to issue notice to the Personal Guarantor and notice was send through registered post and the same was delivered. The Resolution Professional has filed his report, recommending the admission of the Petition under Section 95 of the Code, 2016. The Resolution Professional in his report stated that he has sent the demand notice dated 31.07.2021. Based on the facts the RP in his report has recommended for acceptance of the application for initiating insolvency resolution process against, Smt. Manda Venkata Mahalakshmi, Personal Guarantor to the Corporate Debtor for recovery of unpaid dues aggregating Rs.47,92,97,568.69 (Rupees Forty Seven Crore Ninety Two Lakh Ninety Seven Thousand Five Hundred and Sixty Eight and Paise Sixty Nine Only) with interest up to 17.05.2022.

In the light of the aforesaid factual matrix the point arises for our consideration is: Whether an Insolvency Resolution Process can be ordered against the Personal Guarantor under Section 100 of the Insolvency and Bankruptcy Code, 2016?

We have heard the Learned Counsel Ms.Aishwarya Chevuturi, for the Petitioner Bank and Learned Resolution Professional Shri. Murali Mohan Chevuturi and Learned Counsel for Respondent Ms.Mirza Moinulla Baig, and perused the record.

At the outset it may be stated that the IRP in his report has observed that creditor has sent demand notice in Form-B on 31.07.2021 to Respondent No.1. The total repayments of the Corporate Debtor herein, the total principal amount of default payable is Rs.32,30,71,217.76/-(Rupees Thirty Two Crores Thirty lakhs Seventy One Thousand Two Hundred Seventeen and Seventy Six Paise Only) along with a total interest amount of Rs.15,72,26,350.93/- (Rupees Fifteen Crores Seventy Two Lakhs Twenty Six Thousand Three Hundred Fifty and Ninety Three Paise only) from the date of receipt of demand notice is payable and IRP recommended initiation of Insolvency Resolution Process against Respondent No.1 in terms of Section 99 (7) of IBC, 2016.

Therefore, in the light of un-deniable factors this Tribunal carefully examined the report of RP. As per the report it is clear that the personal guarantor has not offered any repayment plan. Personal guarantor has not filed any objections to the report of the RP. We therefore, find no reason to reject the report of RP. Hence we admit the petition.

Hence, the instant Company Petition vide CP (IB) No. 173/95/HDB/2022 filed under the provisions of Section 95 of Code, 2016 is hereby admitted under the provisions of Section 100 of the Code, 2016 and Insolvency Resolution Process is initiated against Smt Manda Venkata Mahalakshmi, the Personal Guarantor, and moratorium is declared in relation to all debts, which begins from the date of admission of the instant petition and shall cease to have effect at the end of the period of 180 days, as provided under Section 101 of the Code, 2016. During the moratorium period-