State Bank Of India vs Janjanam Vidyanath & Anr.

a. The CD is engaged in the business of processing and export of tobacco. It has availed various credit facilities from the FC from time to time. Personal Guarantor herein stood as guarantor, in order to secure the payment of the financial assistance availed by the CD. The outstanding debt and default as on 31.03.2021 Rs.137,68,37,255.53/- (Including un-applied interest).

b. The CD executed various loan documents and the guarantors of the CD executed Guarantee Agreements and secured the repayment of the CD. The CD committed defaults and has been declared as NPA on 30.04.2019. The FC issued notice under Section 13(2) of SARFAESI Act dated 09.05.2019 both to the CD and the Personal Guarantor. Inspite of the notice, he did not come forward to pay the outstanding amounts. As such, the date of default against the Personal Guarantor occurred on 08.07.2019.

c. A Company Petition is filed against the CD seeking to initiate the Corporate Insolvency Resolution Process (CIRP) and the same was admitted by this Tribunal on 23.12.2021. A demand notice dated 08.04.2021 was issued to the Personal Guarantors as it was noticed that an error occurred in the said notice. The FC again sent a demand notice on 30.11.2021. As the Personal Guarantor did not come forward to discharge the debt, this application is filed seeking to initiate CIRP. A notice was issued to the Respondents. But however, at the stage of appointing the RP since, there is no right of audience to the Respondent, no opportunity for filing counter was given. RP was appointed by virtue of the order dated 25.07.2022 and the IRP submitted his report, stating that the Guarantor has committed default in payment of his dues in respect of the guarantees extended to the CD.

The petition i.e. CP (IB) No. 71/95 /AMR/2022 filed under the provisions of Section 95 of IBC, 2016 is hereby admitted.

Consequently, the Insolvency Resolution Process is hereby initiated against the Personal Guarantor Mr. Janjanam Vidyanath and the moratorium is declared, which begins with effect from the date of admission of the petition and shall cease to have effect at the end of the period of 180 days, as provided under Section 101 of IBC, 2016. During the moratorium period;

Any pending legal action or proceeding in respect of any debt shall be deemed to have been stayed;

The creditors shall not initiate any legal action or legal proceedings in respect of any debt; and

the debtor shall not transfer, alienate, encumber or dispose of any of his assets or his legal rights or beneficial interest therein;

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.

The Resolution Professional i.e. Kurpati Sigarayya Chowdary, having Registration No. IBBI/IPA-003/IP-N00149/2017-2018/11728, having office at Flat No.101, Sheshadri Towers G16A, Madhura Nagar, Yousufguda, Hyderabad, West Maredpally, Telangana -500038, who was appointed vide order dated 25.07.2022 is directed to cause public notice published on behalf of the Adjudicating Authority within 7 days of uploading of this order on the website of NCLT, Amaravati, inviting claims from all creditors, who shall register their claims as provided under Section 103 of the Code within 21 days of such issuance. The notice shall contain the necessary information as provided under Section 102 (2) of IBC, 2016. The publication of notice shall be made in newspapers, one in English and other in vernacular (Telugu) which have wide circulation in the State where the Debtor resides. The Resolution Professional shall furnish two spare copies of the notice to the Registry. One shall be placed on our website by the Registry and the other shall be affixed in the premises of this Adjudicating Authority.

The Resolution Professional in exercise of the powers conferred under 104 shall prepare a list of creditors within 30 days from the date of the notice. The debtor shall prepare, in consultation with the resolution professional, a repayment plan containing a proposal to the creditors for restructuring of his debts or affairs as provided under Section 105 which shall include the provisions for payment of fee to the Resolution Professional. The Resolution Professional shall submit the repayment plan along with his report on the plan to this Adjudicating Authority within a period of 21 days from the last date of submission of claims as provided under Section 106.

In case the Resolution Professional recommends that a meeting of the creditors is not required to be summoned, he shall record the reasons thereof. If the Resolution Professional is of the opinion that the meeting of creditors should be summoned, he shall specify the details as provided under Section 106 (3). The date of meeting shall not be less than fourteen days or more than 28 days from the date of submission of the Report under Sub-Section (1) of Section 106, for which at least 14 days’ notice to the creditors (as per the list prepared) shall be issued by all modes. Such notice must contain the details as provided under the provisions of Section 107.

The meeting of the creditors shall be conducted in accordance with the provisions sections 109, 110 and 111. The Resolution Professional shall prepare a report of the meeting of the creditors on repayment plan with all details as provided under Section 112 and submit the same to the Authority, copies of which shall be provided to the guarantor and the creditors. It is made clear that the Resolution Professional shall perform his functions and duties in compliance with the Code of Conduct provided under Section 208 of IBC, 2016.