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Judgment
Per: Ashok Kumar Borah, Member (Judicial) Since common issues and laws are involved in all the petitions, they have been taken up together and a common order is passed in these cases. These petitions have been filed by the Petitioners /Creditors State Bank of India 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 the Personal Guarantors of the Corporate Debtor M/s. Orma Marble Palace Private Limited, for initiating Insolvency Resolution Process, through the Insolvency Professional Mr. Easwara Pillai Kesavan Nair. In part IV of these petitions the Creditors (State Bank of India) have duly authorized Mr. Easwara Pillai Kesavan Nair to file these petitions before this Tribunal.
The brief facts leading to the present petitions are as under: -
The Corporate Debtor is undergoing Corporate Insolvency Resolution Process pursuant to the order of this Tribunal dated 09.04.2021 in IBA/41/KOB/2020.
The erstwhile State Bank of Travancore (SBT) on 29.03.2006 granted credit facilities of Rs.1,00,00,000/- to the Corporate Debtor by way of a sanction letter and Agreement of Loan for overall working capital limit executed between the Corporate Debtor and SBT and the Guarantors have also executed a Deed of Guarantee for the overall working capital limit on 29.3.2006. At the request of the Borrower, the credit facility was enhanced to Rs.2,00,00,000/- on 04.05.2009. The credit facility was further enhanced to Rs.3,00,00,000/- by way of sanction letter dated on 23.03.2010 and to Rs.8,00,00,000/- by way of sanction letter dated 15.07.2011. At the request of the Corporate Debtor, the Creditor has further enhanced the aggregate limit of the existing credit facility from Rs.8,00,00,000/- to Rs.13,00,00,000/- vide sanction letter and supplementary agreement of loan for increase in overall Working Capital Limit along with other loan documents.
It is stated that the State Bank of Travancore merged with State Bank of India (SBI) with effect from 01.04.2017, since then, the account of the Corporate Debtor is maintained at SBI. The Respondent/Personal Guarantor in CP(IB)/07/KOB/2022, Mr. Aljo Joseph has executed Deed of Guarantees/supplemental deed of Guarantee on 29.03.2006, 23.03.2010, 16.07.2011 and 02.01.2015. The Respondent/Personal Guarantor in CP(IB)/08/KOB/2022, Smt. Alphonsa Joseph has executed Deed of Guarantees/supplemental deed of Guarantee on 29.03.2006, 23.03.2010, 16.07.2011 and 02.01.2015. The Respondent/Personal Guarantor in CP(IB)/09/KOB/2022, Mr. Laji Joseph has executed Deed of Guarantees/supplemental deed of Guarantee on 29.03.2006, 23.03.2010 and 16.07.2011. The Respondent/Personal Guarantor in CP(IB)/10/KOB/2022, Smt. Jerly Lijo has executed Deed of Guarantees/supplemental deed of Guarantee on 29.03.2006, 23.03.2010 and 16.07.2011. The Respondent/Personal Guarantor in CP(IB)/11/KOB/2022, Smt. Preethy Aljo has executed Deed of Guarantees/supplemental deed of Guarantee on 29.03.2006, 23.03.2010, 16.07.2011 and 02.01.2015. The Respondent/Personal Guarantor in CP(IB)/12/KOB/2022, Mr. Lijo Joseph has executed Deed of Guarantees/supplemental deed of Guarantee on 29.03.2006, 23.03.2010, 16.07.2011 and 02.01.2015. The Respondent/Personal Guarantor in CP(IB)/13/KOB/2022, Mr. Sijo Joseph has executed Deed of Guarantees/supplemental deed of Guarantee on 29.03.2006, 23.03.2010, 16.07.2011 and 02.01.2015 and the Respondent/Personal Guarantor in CP(IB)/14/KOB/2022, Smt. Joicy Laji has executed Deed of Guarantees/supplemental deed of Guarantee on 29.03.2006, 23.03.2010 and 16.07.2011. The Personal Guarantors guaranteed the repayment of all money payable by the Corporate Debtor to the Creditor in respect of the above credit facilities together with interest thereon, and all cost and expenses in terms of the Loan Documents. It is further stated that due to the default committed by the Corporate Debtor, the Loan Accounts became NPA on 28.05.2018.
It is stated that the Creditors have issued a demand notice under Section 13(2) of the SARFAESI Act on 07.01.2019 to the Corporate Debtor and Guarantors, by invoking the personal guarantee, directing them to discharge the then liability of Rs. 12,19,17,748/- within 60 days from the date of the said notice, However, the Corporate Debtor and Personal Guarantors failed to repay the outstanding liabilities. The Creditors have also filed Original Application No.222 of 2020 before the Debts Recovery Tribunal on 13.05.2020 for the recovery of Rs.11,96,24,730/- as on 29.11.2019 with future interest, costs and charges. Subsequently from 29,03.2018 to 31.03.2020 the Corporate Debtor has remitted to the Bank an amount of Rs.2,89,34,033/-towards the loan account.
It is stated that the Petitioners/Creditors have offered an OTS proposal on 23.10.2020, however, the Corporate Debtor did not accept the proposal. Despite granting sufficient opportunity, the Corporate Debtor and the Personal Guarantors failed to repay the outstanding dues. Hence, the total outstanding as on 09.04.2021 under the Laon Account No. 57060108229 is Rs. 12,80,02,003/- (Rupees Twelve Crores Eighty Lakhs Two Thousand and Three Only).
FINDINGS
We have heard learned counsel for the Petitioners/Creditors and have perused the whole case records including the documents appended thereto.
For considering these petitions it is recapitulate to quote Section 95 of I&B Code,2016, which reads: -
“(1)A creditor may apply either by himself, or jointly with other creditors, or through a resolution professional to the Adjudicating Authority for initiating an insolvency resolution process under this section by submitting an application.
(2)A creditor may apply under sub-section (1) in relation to any partnership debt owed to him for initiating an insolvency resolution process against— (a) any one or more partners of the firm; or (b) the firm.
(3)Where an application has been made against one partner in a firm, any other application against another partner in the same firm shall be presented in or transferred to the Adjudicating Authority in which the first mentioned application is pending for adjudication and such Adjudicating Authority may give such directions for consolidating the proceedings under the applications as it thinks just.
(4)An application under sub-section (1) shall be accompanied with details and documents relating to— (a) the debts owed by the debtor to the creditor or creditors submitting the application for insolvency resolution process as on the date of application; (b) the failure by the debtor to pay the debt within a period of fourteen days of the service of the notice of demand; and (c) relevant evidence of such default or non-repayment of debt.
(5)The creditor shall also provide a copy of the application made under sub-section (1) to the debtor.
(6)The application referred to in sub-section (1) shall be in such form and manner and accompanied by such fee as may be prescribed.
(7)The details and documents required to be submitted under sub-section (4) shall be such as may be specified.”
In view of the above provision and that the Petitioners have complied with Section 95(4) quoted above, that the demand notices dated 08.11.2021 have been served 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 Creditor Bank 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: -
ORDER
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 the State Bank of India against Personal Guarantors of the Corporate Debtor M/s. Orma Marble Palace Private 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-
any legal action or proceeding pending in respect of any debt shall be deemed to have been stayed; and
the creditors of the debtor shall not initiate any legal action or proceedings in respect of any debt.
IV. Since the petitions have been filed through Mr. Easwara Pillai Kesavan Nair, Insolvency Resolution Professional having Registration No: IBBI/IPA-001/IP-P00448/2017-2018/10791, office at Vijayakumar & Easwaran Chartered Accountants 6th Floor, Amrita Trade Towers S.A Road Pallimukku, Kochi, Kerala ,682016 he is appointed as the Resolution Professional, to carry out 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. This amount cannot be treated as the fee of the Resolution Professional. The fee of the Resolution Professional shall be as per the guidelines of IBBI.
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 04.04.2022.