AI Structured Summary
Not yet generated for this judgment
Judgment
Per: Justice Rakesh Kumar Jain:
27.01.2025: This appeal is against the order dated 25.06.2024 by which the application filed under Section 95 of the Insolvency and Bankruptcy Code, 2016 (in short ‘Code’) has been admitted.
In brief, BBT Elevated Road Pvt. Ltd. (CD) entered into a concession agreement with Kolkata Metropolitan Development Authority (KMDA) on 28.05.2014 for development, design, financing, procurement, engineering, construction, operation and maintenance of the elevated road between Jinzira Bazar and Batanagar of the project highway on Budge Budge Trunk Road, Kolkata on DBFOT basis. The CD alongwith two directors, namely, Mr. Sumit Dabriwala and Mr. Nandu Kishinchand Belani (Appellants herein) approached the Respondent (Canara Bank) for grant of various financial facilities which were extended on 17.01.2015. As per the concession agreement dated 28.05.2014, the CD was to establish an escrow account and as such an escrow agreement dated 19.02.2015 was entered into between the Bank, CD and KMDA. The Bank was appointed as the trustee for KMDA.
The sanction letter was modified, the loan amount was reduced and the commercial operation date was changed consequently.
The Appellant being director of the CD executed the deed of guarantee on 24.02.2015 with the Bank as a personal guarantor of the loan.
The Financial Creditor, namely, State Bank of India filed CP (IB) No. 245/KB/2023 under Section 95 of the Code for initiation of Insolvency Resolution Process against the Personal guarantor r/w Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for personal guarantors to CD) Rules, 2019 (in short ‘Rules’) and Regulation 4(2) of IBBI (Insolvency Resolution Process for Personal Guarantors to CD) Regulations, 2019 (in short ‘Regulations’).
The amount of debt is Rs. 1,97,36,12,442.68 whereas the amount of default is Rs. 1,24,34,00,128.62.
The Applicant proposed the name of Manish Jain as the RP. The RP submitted its report under Section 99 of the Code on 05.02.2024 in which he recommended admission of the personal guarantor into insolvency resolution process. The relevant portion of the report of the RP is reproduced as under:-
“1.That the Application filed by Canara Bank satisfies the requirements as set out in section 94 of the Code.
2.That the corporate debtor has committed default in repayment of the Loan facility granted by Canara Bank. That M r. Nandu Kishinchand Belani, personal Guarantor to corporate debtor has committed default in repayment of Loan facility demanded by Canara Bank after invocation of personal guarantee.
3.That the Insolvency Application has been filed in the requisite form in terms of rule 6(1) of the Insolvency and Bankruptcy Board of India (Application to Adjudicating Authority for Insolvency Resolution process for personal Guarantors to Corporate debtors) Rule, 2019 and the applicant has paid the requisite fees.
4.The Insolvency Application does not relate to "excluded debts" as defined under section 79(15} of the IBC Code, 2016.
5.The Personal Guarantor to the Corporate Debtor, is not eligible for fresh start under Chapter II of the code.
6.That the Guarantor despite request from the Resolution Professional vide an email dated 01.02.2024 has not provided proof of payment of entire debt.
7.That the Financial creditors i.e. Canara Bank has provided the information and the application filed by them.
8.Hence, the RP after going through the contents of the main application and considering the requirements of the admission of personal guarantee as stipulated in the Code opines and confirms that insolvency resolution process for personal guarantor Mr. Nandu Kishinchand Belani, Personal Guarantor for BBT Elevated Road Pvt. Ltd. should be initiated and the Application filed by the Applicant i.e. Canara Bank who is the Creditor should be admitted.
The report filed by the RP with I.A No. 346 of 2024 was taken on record and the application was disposed of. The Tribunal thereafter passed the order on 06.03.2024 granting an opportunity to the personal guarantor /Appellant, on his asking, to file reply to the report of the RP. The said order dated 06.03.2024 is reproduced as under:-
“I. Ld. Counsel Authorized Representative for the parties present.
2.Ld. Counsel appearing for the Personal Guarantor seeks I 0 days' time to file its reply to the report of Resolution Professional. Time is allowed.
3.Post this matter thereafter for hearing on 08.04.2024.”
However, on 08.04.2024 (adjourned date), no one appeared on behalf of the personal guarantor though the case was passed over once and also no reply to the report was filed but still one week was given to file the reply as a last opportunity making it clear that if the reply is not filed then the right to file the reply shall stand closed. The order dated 08.04.2024 is reproduced as under:-
“1.Ld. Counsel for the Resolution Professional present. Ld. Counsel for the Financial Creditor present. None for the Personal Guarantor.
2.None appeared for personal ground in the first round. The matter was passed over however no one appears for personal guarantor again. Time to file reply to the report of resolution professional is extended by one week. It will be the final opportunity. If reply is not filed, right to same shall stand closed. 3. Post the matter on 21.05.2024.”
It is pertinent to mention that the order dated 08.04.2024 was not challenged in appeal though appealable and attained finality.
It is also pertinent to mention that despite opportunity given to the Appellant to file the reply, no reply was filed to the report of the RP.
In view of the aforesaid facts and circumstances, the Court, having been satisfied with the recommendation made by the RP, passed the order under Section 100 of the Code which has now been challenged in this appeal.
Counsel for the Appellant has argued only that the reply could not be filed to the report though opportunity was granted because of miscommunication between the Appellant and his counsel. However, during the course of hearing, Counsel for the Appellant could not explain as to what was the miscommunication because it is clearly found from the order dated 06.03.2024 that a period of 10 days sought by the Counsel for the Appellant was granted to file the reply to the report of the RP and on 08.04.2024 when neither appellant was present despite the fact that the case was passed over twice nor reply was filed yet the court thought it fit to grant some more time to file reply to the report of the RP but made it a last opportunity and a peremptory order was passed that if reply is not filed within a week then the right to file reply shall stand closed. Meaning thereby, the order of closing the right to file reply came in to effect with the expiry of period of one week and for that matter no further order was required to be passed by the Court in that regard.
Not only that the Appellant did not file reply to the report but also neither any application was filed for recalling of the order dated 08.04.2024 for getting some more time or even no effort was made to challenge the order dated 08.04.2024 in appeal as the said order was appealable in terms of Section 61 of the Code.
Thus, it appears that the Appellant was not only remiss in not filing the reply but also never wanted to file any reply much less objection to the recommendation of the RP for admission of the application filed under Section 95 of the Code.
The lame excuse which has been raised in the present appeal is of no avail to the Appellant for challenging the well-considered order passed by the Tribunal and hence, we do not find any merit in the present appeal and the same is hereby dismissed. No costs.