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Judgment
ORAL ORDER
As can be seen from Part-IV of the application preferred by M/s Cosmic Infrasolutions Pvt. Ltd, the corporate guarantor could commit default in repaying the amount of Rs. 4,65,16,985/-. Part-IV of the application reads thus:-
It is seen from the guarantee deed dated 05.10.2017 enclosed as Annexure-8 to the application that the respondent/corporate guarantor had extended irrevocable and unconditional guarantee to discharge the liability of principal borrower. The relevant excerpt of deed of guarantee reads thus:-
The Ld. Counsel appearing for the corporate guarantor has not disputed the liability of the corporate guarantor as also the default occurred in making the payment of the guaranteed amount. It is seen from order dated 13.09.2024, the corporate guarantor/respondent had taken adjournment to arrive at some settlement qua the defaulted amount. The order reads thus:-
“Ld. Counsel appearing for the Corporate Debtor submitted that the management of Corporate Debtor has approached the Financial Creditor and is in the process of making the payment of defaulted amount. The Counsel for the Petitioner submitted that he is not aware about any development regarding settlement of defaulted amount and if payment of the amount of debt is made, he will withdraw the proceedings. The Creditor, either Operational or Financial, could be conscious of the fact that the present proceedings are not meant to recover the debt, but are instituted with the purpose and objective of ensuring that the Corporate Debtor is rescued and put back on its feet. Nevertheless, as prayed by the Ld. Counsel for the Corporate Debtor, the hearing is deferred to 26.09.2024 to place a report on the aforementioned settlement.”
Today the only plea raised by the Ld. Counsel for the corporate guarantor is that when the principal borrower is already in CIRP, the amount of debt may be recovered from it. The proposition espoused by the Ld. Counsel for the CD has already been dealt with by Hon'ble Supreme Court in Laxmi Pat Surana vs. Union of India (Civil Appeal No. 2734 of 2020), wherein it could be ruled that the CIRP can continue simultaneously both qua corporate guarantor and principal borrower. The relevant excerpt of the Judgment reads thus:-
“22.…..That action can still proceed against the guarantor being a corporate debtor, consequent to the default committed by the principal borrower. There is no reason to limit the width of Section 7 of the Code despite law permitting initiation of CIRP against the corporate debtor, if and when default is committed by the principal borrower. For, the liability and obligation of the guarantor to pay the outstanding dues would get triggered coextensively.”
Also in Lalit Kumar Jain vs. Union of India [(2021) 9 SCC 321], Hon'ble Supreme Court ruled that except in such cases where settlement is entered into between the creditor and the principal borrower, the discharge of part of liability of the principal borrower by operation of law, such as approval of resolution plan etc. would not absolve the guarantor from his liability. The relevant excerpt of the Judgment reads thus:-
“125.In view of the above discussion, it is held that approval of a resolution plan does not ipso facto discharge a personal guarantor (of a corporate debtor) of her or his liabilities under the contract of guarantee. As held by this Court, the release or discharge of a principal borrower from the debt owed by it to its creditor, by an involuntary process i.e. by operation of law, or due to liquidation or insolvency proceeding, does not absolve the surety/guarantor of his or her liability, which arises out of an independent contract.”
In view of the aforementioned, we are left with no option but to admit the captioned application in terms of Section 7(5) of the IBC. Ordered accordingly. As a corollary, moratorium in terms of Section 14(1) (a), (b), (c) & (d), the following prohibitions are imposed, which must be followed by all and sundry:-
The institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;
Transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;
Any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
The recovery of any property by an owner or lessor, where such property is occupied by or in the possession of the corporate debtor.
As proposed by the Applicant, this Bench appoints Mr. Mahesh Agarwal (Email ID: [email protected]) as IRP having Registration No. IBBI/IPA-001/IP-P01995/2020-21/13087, subject to the condition that no disciplinary proceedings are pending against the IRP so named and disclosures as required under IBBI Regulations, 2016 are made by him within a period of one week from this Order. This Adjudicating Authority orders that Mr. Mahesh Aggarwal, is directed to take charge of the CIRP of the Corporate Debtor with immediate effect. The Court Officer will inform the IRP so appointed by all modes. The IRP is directed to take the steps as mandated under the IBC specifically under Section 15, 17, 18, 20 and 21 of IBC, 2016.
The Applicant is directed to deposit Rs. 2,00,000/- (Two Lakh) only with the IRP to meet the immediate expenses. The amount, however, will be subject to adjustment by the Committee of Creditors as accounted for by Interim Resolution Professional and shall be paid back to the Financial Creditor.
A copy of this Order shall be communicated to the Financial Creditor, the Corporate Debtor and the IRP mentioned above by the Court Officer/Registry of this Tribunal. In addition, a copy of the Order shall also be forwarded by the Court Officer/Registry to the IBBI for their records.