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Judgment
Per: Bidisha Banerjee, Member (Judicial)
The Court Convened in a hybrid mode.
This I.A.(IB)No.1057/KB/2024 in C.P.(IB)/125(KB)2024 has been preferred by the Financial Creditor to seek initiation of Insolvency Regulation Process against the Respondent Personal Guarantor to Corporate Debtor Rule, 2019 (“Personal Guarantors Rules”) and Regulation 4(2) of IBBI (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019 (‘Personal Guarantors Regulations’) in terms of Section 99 (1) of the Insolvency and Bankruptcy Code, 2016 read with applicable Regulation of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors), 2016.
The amount in Debt & Default is Rs.62,96,52,778.51/-(Rupees Sixty-Two Crores Ninety-Six Lakhs Fifty-Two Thousand Seven Hundred Seventy-Eight and Fifty-One Paisa only) inclusive of interest applied upto 31.01.2024
Date of default occurred on 07.04.2023
The application is complete as required under Section 95 read with Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Rules, 2019.
It is to be noted that Hon’ble Supreme Court in the judgment of Dilip B. Jiwrajka vs. Union of Ind ia & Ors. In WP (Civil) No. 1281 of 2021 dated 09.11.2023 has upheld the Constitutional Validity of the Sections 94 to 100 and the propositions that can be culled out from the Judgments inter-alia are as follows:
“i.No judicial adjudication is involved at the stages envisaged in Sections 95 to Section 99 of the IBC;
ii.The Resolution Professional appointed under Section 97 serves a facilitative role of collating all the facts relevant to the examination of the application for the commencement of the insolvency resolution process which has been preferred under Section 94 or Section 95. The report to be submitted to the adjudicatory authority is recommendatory in nature on whether to accept or reject the application;
iii.No adjudicatory function of Adjudicating Authority is contemplated at the admission stage. To read in such a requirement at that stage would be to rewrite the statue which is impermissible in the exercise of judicial review;
iv.The resolution professional may exercise the powers vested under Section 99(4) of the IBC for the purpose of examining the application for insolvency resolution and CP/IB/337/AHM/2020 12 of 17 to seek information on matters relevant to the application in order to facilitate the submission of the report recommending the acceptance or rejection of the application;
v.There is no violation of natural justice under Section 95 to Section 100 of the IBC as the debtor is not deprived of an opportunity to participate in the process of the examination of the application by the resolution professional;
vi.No judicial determination takes place until the adjudicating authority decides under Section 100 whether to accept or reject the application. The report of the resolution professional is only recommendatory in nature and hence does not bind the adjudicatory authority when it exercises its jurisdiction under Section 100;
vii.The adjudicatory authority must observe the principles of natural justice when it exercises jurisdiction under Section 100 to determine whether to accept or reject the application; CP/IB/337/AHM/2020 13 of 17
viii.The purpose of the interim moratorium under Section 96 is to protect the debtor from further legal proceedings; and
ix.The provisions of Section 95 to Section 100 of the IBC are not unconstitutional as they do not violate Article 14 and A.”
The Applicant had not proposed the name of the Insolvency Professional for appointment as Resolution Professional. In view of the above, Ms. Brinda Bidasaria, IBBI Registration No. IBBI/IPA-001/IP-P-02818/2023-24/14329, email ID: [email protected]; was appointed as Resolution Professional, subject to his possessing a valid AFA, in exercise of the power conferred under Section 97 of the IBC, 2016 on this Authority.
The Resolution Professional was directed to file declaration within seven days to the effect that he fulfils all the requirements for being appointed as Resolution Professional in the matter which he has given, and to file his report in terms of Section 97 in two weeks.
The Resolution Professional Ms. Brinda Bidasaria has vide his report dated 22.04.2024 suggested/stated as extracted hereunder:
That considering the above, RP recommends for the acceptance of the application No. CP (IB) No.125/KB/2024 filed u/s. 95(1) of the IBC 2016 by the Applicant, Punjab National Bank to initiate Insolvency Resolution Process against Personal Guarantor Sri Anirudh Pasari, of the Corporate Debtor M/s. SKP Steel Industries Private Limited, the Hon’ble NCLT may pass appropriate order u/s 100 of IBC, 2016 for admission of the application.
We have noted that prior to issuance of Form B notice, guarantee invocation notice was issued on 01.06.2022, the Personal Guarantor neither entered appearance nor refuted the statements in the report of Resolution Professional.
We have considered the report and perused the details of claim indicated therein.
We are satisfied with the recommendation of the Resolution professional to admit the application.
In absence of any dispute or controversion by the Personal Guarantor, this application is admitted with the following directions:
Since the application is admitted under Section 100;
In terms of Section 101 :
When the application is admitted under section 100, a moratorium shall commence in relation to all the debts and shall cease to have effect at the end of the period of one hundred and eighty days beginning with the date of admission of the application or on the date the Adjudicating Authority passes an order on the repayment plan under section 114, whichever is earlier.
During the moratorium period—
(a)any pending legal action or proceeding in respect of any debt shall be deemed to have been stayed;
(b)the creditors shall not initiate any legal action or legal proceedings in respect of any debt; and
(c)the debtor shall not transfer, alienate, encumber or dispose of any of his assets or his legal rights or beneficial interest therein;
(4)Where an order admitting the application under section 96 has been made in relation to a firm, the moratorium under sub-section (1) shall operate against all the partners of the firm.
(5)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.
IRP is directed to cause a public notice on behalf of the Adjudicating Authority and Act in terms of Section 102, 103, 104 of the Code, to cause public notice, invite claims from creditors, list of creditors etc and hold regular meeting.
102. Public notice and claims from creditors:
(1)The Adjudicating Authority shall issue a public notice within seven days of passing the order under section 100 inviting claims from all creditors within twenty-one days of such issue.
(2)The notice under sub-section (1) shall include—
(a)details of the order admitting the application;
(b)particulars of the resolution professional with whom the claims are to be registered; and
(c)the last date for submission of claims.
(3)The notice shall be—
(a)published in at least one English and one vernacular newspaper which is in circulation in the state where the debtor resides
(b)affixed in the premises of the Adjudicating Authority; and
(c)placed on the website of the Adjudicating Authority.
103. Registering of claims by creditors:
(1)The creditors shall register claims with the resolution professional by sending details of the claims by way of electronic communications or through courier, speed post or registered letter.
(2)In addition to the claims referred to in sub-section (1), the creditor shall provide to the resolution professional, personal information and such particulars as may be prescribed.
104. Preparation of list of creditors:
(1)The resolution professional shall prepare a list of creditors on the basis of—
(a)the information disclosed in the application filed by the debtor under section 94 or 95, as the case may be;
(b)claims received by the resolution professional under section 102.
(2)The resolution professional shall prepare the list mentioned in sub-section (1) within thirty days from the date of the notice
(i) In terms of Section 105:
The Resolution Professional shall assist the debtor in preparing repayment plan containing a proposal to the creditors for restricting of his debts or affairs.
(ii) In terms of Section 106:
The Resolution Professional shall submit the repayment plan under Section 105 along with his report, within 21 days from the last date of submission of claims under Section 102 specifying.
(a)That the repayment plan is in compliance with the provisions of any law for the time being in force;
(b)That the repayment plan has a reasonable prospect of being approved and implemented; and
(c)Whether there is a necessity of summoning a meeting of the creditors, if required, to consider the repayment plan:
(iii)Meeting of creditors shall be held if necessary, specifying the
(a)Date, Time and Place of meeting after consulting the creditors;
(b)Within 14 to 28 days from submission of its report;
(c)After issuance notice for meeting at least 14 days in advance, to all the creditors mentioned in the list of creditors.
(iv)The Resolution Professional will act in accordance with Sections 107, 108, 109 and 110 to summon creditors, conduct meeting of creditors, allow them voting rights in accordance with voting share assigned to each, and seek approval of repayment plan if any.
(v)The Resolution Professional shall prepare a report of the meeting in accordance with Section 112 and furnish a report to this Adjudicating Authority.
Report under Section 99(1) is taken on record.
The RP appointed in the matter is directed to issue a public notice as envisaged in Section 102, on behalf of the Adjudicating Authority and invite claims from creditors, list of creditors etc and hold regular meeting and conduct the entire IR process as per Chapter-III of IBC 2016 read with the IBBI regulations cited above. Meanwhile he is directed to obtain Net worth certificate & last 5 years balancesheet and Income Tax returns of the Personal Guarantor, failing which Personal Guarantor is directed to be present on the next date of hearing.
The Financial creditor shall deposit Rs 1,00,000/- {Rupees One Lakh} with the RP for meeting all initial expenses. These expenses have to be adjusted in the final account to be rendered by the RP against remuneration and other expenses and is subject to final approval by the Financial Creditor /Creditors as the case may be.
As Company Petition No. 125 of 2024 stands admitted. I.A.(IB)No.1057/KB/2024 is disposed of.
Next date for consideration would be 25.08.2026
The Registry is directed to send e-mail copies of the order forthwith to all the parties and their Ld. Counsel in terms of Section 100(3) of the Code for information and for taking necessary steps.
Certified copy of the order may be issued, if applied for, upon compliance of all requisite formalities.