M/s. JM Financial Asset Reconstruction Company Limited vs Mrs. Reena Paul & Ors.

Per: Ashok Kumar Borah, Member (Judicial)

Since common issues and laws are involved in all the applications, they have been taken up together and a common order is passed in these cases.

This Petition has been filed by the Petitioner /Creditor M/s. J M Financial Asset Reconstruction Company Limited under Section 95 (1) of the Insolvency and Bankruptcy Code, 2016 (I&B Code,2016) read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (Personal Guarantors Insolvency Rules) against Mrs.Reena Paul, Personal Guarantor of the Corporate Debtor M/s. Unitek Power Solutions India Limited, for initiating Insolvency Resolution Process.

The Corporate Debtor, M/s. Unitek Power Solutions India Limited availed credit facilities from the Federal Bank Limited, viz. Cash Credit, Bank Guarantee, Term Loan (IPS). The amount of default is Rs. 38,56,65,007,80/-(Rupees Thirty-Eight Crore Fifty-Six Lakhs and Sixty-Five Thousand and Seven and paisa Eighty Only) as on 31.05.2021. The Corporate Debtor failed to make good its debt obligations and the account was classified as a non-performing asset (NPA) in the books of accounts of the Bank as per the extant guidelines of Reserve Bank of India. The loans availed was secured by way of a charge over certain properties belonging to some of the Guarantors/ Co-obligators. The financial facilities were secured by one of the Guarantors i.e., Mrs. Reena Paul (Respondent) by executing several agreements of guarantee on various occasions.

The Respondent undertook to unconditionally and irrevocably pay the Bank on demand the amount without protest in the event of default by the Corporate Debtor, nevertheless her liability under the guarantee shall not exceed on the whole sum of Rs. 18,00,00,000/-(Rupees Eighteen Crores Only) apart from all other expenses.

Hence, Mrs. Reena Paul in the capacity of personal guarantor is liable to pay to the Petitioner herein for the default committed by the Corporate Debtor, in accordance with the guarantee agreement dated 20.11.2008, and 27.02.2010

This Petition has been filed by the Petitioner /Creditor M/s. J M Financial Asset Reconstruction Company Limited under Section 95 (1) of the Insolvency and Bankruptcy Code, 2016 (I&B Code,2016) read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (Personal Guarantors Insolvency Rules) against Mrs. Susan Zachariah, Personal Guarantor of the Corporate Debtor M/s. Unitek Power Solutions India Limited, for initiating Insolvency Resolution Process.

The Corporate Debtor, M/s. Unitek Power Solutions India Limited availed credit facilities from the Federal Bank Limited, viz. Cash Credit, Bank Guarantee, Term Loan (IPS). The amount of default is Rs. 38,56,65,007,80/-(Rupees Thirty-Eight Crore Fifty-Six Lakhs and Sixty-Five Thousand and Seven and paisa Eighty Only) as on 31.05.2021. The Corporate Debtor failed to make good its debt obligations and the account was classified as a non-performing asset (NPA) in the books of accounts of the Bank as per the extant guidelines of Reserve Bank of India. The loans availed was secured by way of a charge over certain properties belonging to some of the Guarantors/ Co-obligators. The financial facilities were secured by one of the Guarantors i.e., Mrs. Susan Zachariah (Respondent) by executing several agreements of guarantee on various occasions.

The Respondent undertook to unconditionally and irrevocably pay the Bank on demand the amount without protest in the event of default by the Corporate Debtor, nevertheless her liability under the guarantee shall not exceed on the whole sum of Rs. 18,00,00,000/-(Rupees Eighteen Crores Only) apart from all other expenses.

Hence, Mrs. Susan Zachariah, in the capacity of personal guarantor is liable to pay to the Petitioner herein for the default committed by the Corporate Debtor, in accordance with the guarantee agreement dated 20.11.2008, and 27.02.2010.

This petition has been filed by the Petitioner/Creditor M/s. J M Financial Asset Reconstruction Company Limited under Section 95 (1) of the Insolvency and Bankruptcy Code, 2016 (I&B Code,2016) read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (Personal Guarantors Insolvency Rules) against Mrs. John Zachariah, Personal Guarantor of the Corporate Debtor M/s. Unitek Power Solutions India Limited, for initiating Insolvency Resolution Process.

The Corporate Debtor, M/s. Unitek Power Solutions India Limited availed credit facilities from the Federal Bank Limited, viz. Cash Credit, Bank Guarantee, Term Loan (IPS). The amount of default is Rs. 38,56,65,007,80/-(Rupees Thirty-Eight Crore Fifty-Six Lakhs and Sixty-Five Thousand and Seven and paisa Eighty Only) as on 31.05.2021. The Corporate Debtor failed to make good its debt obligations and the account was classified as a non-performing asset (NPA) in the books of accounts of the Bank as per the extant guidelines of Reserve Bank of India. The loans availed was secured by way of a charge over certain properties belonging to some of the Guarantors/ Co-obligators. The financial facilities were secured by one of the Guarantors i.e., Mr. John Zachariah (Respondent) by executing several agreements of guarantee on various occasions.

The Respondent undertook to unconditionally and irrevocably pay the Bank on demand the amount without protest in the event of default by the Corporate Debtor, nevertheless her liability under the guarantee shall not exceed on the whole sum of Rs. 18,00,00,000/- (Rupees Eighteen Crores Only) apart from all other expenses.

Hence, Mr. John Zachariah, in the capacity of personal guarantor as well as co-obligator is liable to pay to the Petitioner herein for the default committed by the Corporate Debtor, in accordance with the guarantee agreement dated 15.03.2008, 28.06.2008, 20.11.2008 and 27.02.2010.

This Petition has been filed by the Petitioner/Creditor M/s. J M Financial Asset Reconstruction Company Limited under Section 95 (1) of the Insolvency and Bankruptcy Code, 2016 (I&B Code,2016) read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (Personal Guarantors Insolvency Rules) against Mrs. Annu Mathew Personal Guarantor of the Corporate Debtor M/s. Unitek Power Solutions India Limited, for initiating Insolvency Resolution Process.

The Corporate Debtor, M/s. Unitek Power Solutions India Limited availed credit facilities from the Federal Bank Limited, viz. Cash Credit, Bank Guarantee, Term Loan (IPS). The amount of default is Rs. 38,56,65,007,80/-(Rupees Thirty-Eight Crore Fifty-Six Lakhs and Sixty-Five Thousand and Seven and paisa Eighty Only) as on 31.05.2021. The Corporate Debtor failed to make good its debt obligations and was the amount classified as a non-performing asset (NPA) in the books of accounts of the Bank as per the extant guidelines of Reserve Bank of India. The loans availed was secured by way of a charge over certain properties belonging to some of the Guarantors/ Co-obligators. The financial facilities were secured by one of the Guarantors i.e., Mrs. Annu Mathew (Respondent) by executing several agreements of guarantee on various occasions.

The Respondent undertook to unconditionally and irrevocably pay the Bank on demand the amount without protest in the event of default by the Corporate Debtor, nevertheless her liability under the guarantee shall not exceed on the whole sum of Rs. 18,00,00,000/-(Rupees Eighteen Crores Only) apart from all other expenses.

Hence, Mrs. Annu Mathew, in the capacity of personal guarantor is liable to pay to the Petitioner herein for the default committed by the Corporate Debtor, in accordance with the guarantee agreement dated 20.11.2008 and 27.02.2010.

This petition has been filed by the Petitioner/Creditor M/s. J M Financial Asset Reconstruction Company Limited under Section 95 (1) of the Insolvency and Bankruptcy Code, 2016 (I&B Code,2016) read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (Personal Guarantors Insolvency Rules) against Mr. Mathew John Personal Guarantor of the Corporate Debtor M/s. Unitek Power Solutions India Limited, for initiating Insolvency Resolution Process.

The Corporate Debtor, M/s. Unitek Power Solutions India Limited availed credit facilities from the Federal Bank Limited, viz. Cash Credit, Bank Guarantee, Term Loan (IPS). The amount of default is Rs. 38,56,65,007,80/-(Rupees Thirty-Eight Crore Fifty-Six Lakhs and Sixty-Five Thousand and Seven and paisa Eighty Only) as on 31.05.2021. The Corporate Debtor failed to make good its debt obligations and the account was classified as a non-performing asset (NPA) in the books of accounts of the Bank as per the extant guidelines of Reserve Bank of India. The loans availed was secured by way of a charge over certain properties belonging to some of the Guarantors/ Co-obligators. The financial facilities were secured by one of the Guarantors i.e., Mr. Mathew John (Respondent) by executing several agreements of guarantee on various occasions.

The Respondent undertook to unconditionally and irrevocably pay the Bank on demand the amount without protest in the event of default by the Corporate Debtor, nevertheless her liability under the guarantee shall not exceed on the whole sum of Rs. 18,00,00,000/-(Rupees Eighteen Crores Only) apart from all other expenses.

Hence, Mr. Mathew John, in capacity of personal guarantor is liable to pay to the Petitioner herein for the default committed by the Corporate Debtor, in accordance with the guarantee agreement dated 15.03.2008, 28.06.2008, 20.11.2008 and 27.02.2010.

This Petition has been filed by the Petitioner/Creditor M/s. J M Financial Asset Reconstruction Company Limited under Section 95 (1) of the Insolvency and Bankruptcy Code, 2016 (I&B Code,2016) read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (Personal Guarantors Insolvency Rules) against Mr. Korah John Personal Guarantor of the Corporate Debtor M/s. Unitek Power Solutions India Limited, for initiating Insolvency Resolution Process.

The Corporate Debtor, M/s. Unitek Power Solutions India Limited availed credit facilities from the Federal Bank Limited, viz. Cash Credit, Bank Guarantee, Term Loan (IPS). The amount of default is Rs. 38,56,65,007,80/-(Rupees Thirty-Eight Crore Fifty-Six Lakhs and Sixty-Five Thousand and Seven and paisa Eighty Only) as on 31.05.2021. The Corporate Debtor failed to make good its debt obligations and the account was classified as a non-performing asset (NPA) in the books of accounts of the Bank as per the extant guidelines of Reserve Bank of India. The loans availed was secured by way of a charge over certain properties belonging to some of the Guarantors/ Co-obligators. The financial facilities were secured by one of the Guarantors i.e., Mr. Korah John (Respondent) by executing several agreements of guarantee on various occasions.

The Respondent undertook to unconditionally and irrevocably pay the Bank on demand the amount without protest in the event of default by the Corporate Debtor, nevertheless her liability under the guarantee shall not exceed on the whole sum of Rs. 3,35,00,000/-(Rupees Three Crores Thirty Five Lakhs Only) apart from all other expenses.

Hence, Mr. Korah John, in the capacity of personal guarantor is liable to pay to the Petitioner herein for the default committed by the Corporate Debtor, in accordance with the guarantee agreement dated 15.03.2008 and 28.06.2008.

This petition has been filed by the Petitioner/ Creditor M/s. J M Financial Asset Reconstruction Company Limited under Section 95 (1) of the Insolvency and Bankruptcy Code, 2016 (I&B Code,2016) read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (Personal Guarantors Insolvency Rules) against Mr. K.G. Paul Personal Guarantor of the Corporate Debtor M/s. Unitek Power Solutions India Limited, for initiating Insolvency Resolution Process.

The Corporate Debtor, M/s. Unitek Power Solutions India Limited availed credit facilities from the Federal Bank Limited, viz. Cash Credit, Bank Guarantee, Term Loan (IPS). The amount of default is Rs. 38,56,65,007,80/-(Rupees Thirty-Eight Crore Fifty-Six Lakhs and Sixty-Five Thousand and Seven and paisa Eighty Only) as on 31.05.2021. The Corporate Debtor failed to make good its debt obligations and the account was classified as a non-performing asset (NPA) in the books of accounts of the Bank as per the extant guidelines of Reserve Bank of India. The loans availed was secured by way of a charge over certain properties belonging to some of the Guarantors/ Co-obligators. The financial facilities were secured by one of the Guarantors i.e., Mr. K.G. Paul (Respondent) by executing several agreements of guarantee on various occasions.

The Respondent undertook to unconditionally and irrevocably pay the Bank on demand the amount without protest in the event of default by the Corporate Debtor, nevertheless her liability under the guarantee shall not exceed on the whole sum of Rs. 18,00,00,000/-(Rupees Eighteen Crores Only) apart from all other expenses.

Hence, Mr. K. G. Paul, in the capacity of personal guarantor is liable to pay to the Petitioner herein for the default committed by the Corporate Debtor, in accordance with the guarantee agreement dated 20.11.2008 and 27.02.2010.

The amount of default is Rs. 38,56,65,007,80/-(Rupees Thirty-Eight Crore Fifty-Six Lakhs and Sixty-Five Thousand and Seven and paisa Eighty Only) as on 31.05.2021. By way of registered assignment Agreement dated 26.03.2013, the financial assets of Corporate Debtor along with all the rights, title, interest and underlying security interests secured by the Corporate Debtor and Guarantors were assigned by the Federal Bank Ltd. to the Applicant under the provisions of Securitizations and Reconstruction of financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). It is stated that the Creditor has filed OA No. 376 of 2013, before the Debt Recovery Tribunal-1 Ernakulam against the Corporate Debtor and the Guarantors and the said OA is pending. The Creditor had also filed an application under Section 7 of the Code as CP/91/IB/2018 before the National Company Law Tribunal, Chennai. The Tribunal allowed the application by order dated 01.01.2019, admitting the CIRP against Unitek Power Solutions India Limited.

It is further stated that the order of the Hon'ble Tribunal was challenged by the Corporate Debtor before the High Court of Kerala in O P(Civil) No. 268 of 2019, which was dismissed by judgment dated 25.9.2019. Thereafter the Special Leave Petition filed by the Corporate Debtor as SLP No. 26294/2019 was also dismissed on 13.11.2019. Subsequently this Tribunal directed Liquidation of the Company vide order dated 06.12.2009 in MA/ 33/KOB/2019.

The demand notice dated 14.02.202 was sent to the Respondents/Personal Guarantors. Since Respondents/Personal Guarantors did not make payment even after receiving the notice, the applicant has filed the present applications to initiate Corporate Insolvency Resolution Process under Section 95(1) of the Code read with Rule 7(2) of the Rules.

On 30.07.2021 this Tribunal directed the Petitioner to file this petition through the Resolution Professional within 10 days. However, on 18.08.2021 the learned counsel for the Petitioner stated that he is not filing the petition through the Resolution Professional and that this Tribunal can appoint a Resolution Professional from the IBBI list, to which the learned counsel for Petitioners have not objected to. Later, the learned counsel for Petitioner has filed a memo on 27.09.2021 suggesting the name of a Bankruptcy Trustee, viz: Mrs. Sujata Chattopadhyay (Reg No./IBBI/IPA-003/IP-N00044/2017-18/10353). But on a scrutiny of the IBBI list for Kochi Bench, it is seen that the name of the aforesaid person is not available in the names of IRP’s approved by IBBI for NCLT-Kochi Bench for the period 01.07.2021 to 31.12.2021. Therefore, this Tribunal decided to appoint a Resolution Professional from the IBBI list, to which the learned counsel for Petitioners have not objected to. On 27.09.2021 the learned counsel for the Respondents filed counter in CP(IBC)/13/KOB/2021, CP(IBC)/15/KOB/2021 and CP(IBC)/19/KOB/2021

We have heard learned counsel for the Petitioners and the learned counsel for the Respondents/Personal Guarantors in which they are appearing and have perused the whole case records including the documents appended thereto.

In this connection it is profitable to quote Section 95 of I&B Code,2016: -

In view of the above provision and that the Petitioners have has complied with Section 95(4) quoted above, that the demand notices dated 14.02.2020 have been sent to the Respondents/Personal Guarantors and that the Respondents/Personal Guarantors failed to make the payment, we have come to the conclusion that there is a default on the part of the Respondents/Personal Guarantors by not fulfilling the debts owed to the Corporate Debtor as per the clauses contained in the Consent Terms in respect of the outstanding financial debt which is apparent from the documents placed on record. Hence, this Tribunal ordered as under: -

I. These petitions filed under Section 95 of the Insolvency and Bankruptcy Code, 2016 (IBC) read with Rule 7(2) of the Insolvency and Bankruptcy Rules, 2019 by JM Financial Asset Reconstruction Company Limited against Personal Guarantors of the Corporate Debtor Unitek Power Solutions India Limited are allowed with the following directions: -

II. The interim-moratorium under Section 96(1) (a) of the Insolvency and Bankruptcy Code, 2016 has commenced on the date of filing of these applications by the Creditor in relation to all the debts and will cease to have effect on the date of admission

III. During such interim-moratorium period-

IV. This Tribunal appoints Mr. Francis Mathew, an Insolvency Resolution Professional having Registration No: IBBI/IPA-001/IP-P00995/2017-2018/11642, residing at 38/1614, Kannanthodath Lane, Edappally, Kochi, Ernakulam, Kerala 682 024 as the Resolution Professional, to carry out the functions as mentioned under the Insolvency and Bankruptcy Code, 2016. The fee payable to the Resolution Professional (RP) shall be in accordance with the Insolvency and Bankruptcy Board of India (IBBI) Regulations/ Circulars/ Directions issued in this regard.

V. That this Bench also directs that an advance payment of Rs.2,00,000 (Rupees Two Lakhs only) to be paid by the Petitioners/Creditors to the Resolution Professional (RP) immediately to initiate the process which shall be adjusted towards the fee and expenses payable to the Resolution Professional (RP).

VI. The Resolution Professional, shall exercise all the powers as enumerated under Section 99 of the Code read with Rules made thereunder. He is directed to make the recommendations with reasons in writing for acceptance or rejection of this Application within ten days from the date of receipt of this order, as envisaged under the provisions of Section 99 of the Code. The Resolution Professional shall provide a copy of the report under Sub-Section 7 of Section 99 to the Creditors as soon as the same is filed before this Adjudicating Authority.

VII. The Registry is directed to immediately communicate this order to the Creditors, Personal Guarantors, Corporate Debtor and the Resolution Professional by way of email. The Registry shall place a compliance report of this direction in this file.

VIII. List the above IBAs for further proceedings on 26.10.202.