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Judgment
ORDER
Per: Ashok Kumar Borah, Member (Judicial)
Since common issues and laws are involved in both 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. Nasco Trading India Ltd., for initiating Insolvency Resolution Process, through the Insolvency Professional Mr. Padmakumar KC. The Creditors (State Bank of India) have duly authorized Mr. Padmakumar KC 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 23.03.2021 in IBA / 22 / KOB / 2020 and IBA / 23 / KOB / 2020.
The erstwhile State Bank of Travancore (SBT) on 02.09.2011 granted credit facilities of Rs.2,00,00,000/- 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. At the request of the Borrower, the credit facility was enhanced from time to time and finally on 18.02.2016 cash credit facility was enhanced to Rs.9.5 Crore along with a term loan of Rs.1 Crore. The Corporate Debtor had executed Term Agreement, Hypothecation Agreement and also created Equitable Mortgage by deposit of Title Deeds of properties of Personal Guarantors, Shri Nazar and Ms. Raheena (Respondents herein) as security. Mrs. Raheena, the Respondent/Personal Guarantor in CP(IB)/04/KOB/2022, and Mr. Nazar S, the Respondent/Personal Guarantor in CP(IB)/05/KOB/2022, have executed deed of guarantee and supplementary deed of guarantees for the increase in overall limit of credit facilities in favour of creditor/applicant herein dated 21.11.2011, 23.07.2012, 25.10.2013, 12.06.2014, 26.02.2015, 18.02.2016 guaranteeing repayment of all money payable by the corporate debtor in respect of credit facilities granted together with interest thereon and all costs and expenses in terms of loan documents.
It is stated that the State Bank of Travancore had been 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. It is further stated that due to the default committed by the Corporate Debtor, the Loan Accounts became NPA on 28.08.2017.
It is stated that the Creditors have issued a demand notice under Section 13(2) of the SARFAESI Act on 03.04.2018 to the Corporate Debtor and Guarantors, by invoking the personal guarantee, directing them to discharge the then liability of Rs. 11,38,48,232.61/- 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.49 of 2018 before the Debts Recovery Tribunal on 20.12.2017 for the recovery of Rs.11,38,48,232.61/- as on 11.12.2017 with future interest, costs and charges. It is stated that despite several opportunities having been granted to respondents/personal guarantors, the corporate debtor and personal guarantor failed to repay the outstanding dues and as on 23.03.2021, the total outstanding under the Loan Account No. 57060108229 was Rs. 12,80,02,003/- (Rupees Twelve Crores Eighty Lakhs Two Thousand and Three Only).
On presentation of the application by the Applicant/Financial Creditor, this Tribunal vide order dated 11.03.2022 appointed Mr. Padmakumar K.C, as Resolution Professional directing him to file a report under Section 99 of Insolvency and Bankruptcy Code, 2016. The Resolution Professional has filed a report recommending the admission of the application filed under Section 95 of IBC, 2016. The grounds for admission of the application as per the Report are as follows: -
I. Debt owed by M/s Nasco Trading India Pvt. Ltd to the applicant, State Bank. of lndia, is Rs.18,55,96,207/— as evidenced by the certified copy of the account statement. Smt. Raheena and Mr.S. Nazar has executed personal guarantee as evidenced by the deeds of guarantee submitted along with the application. The applicant has invoked the personal guarantee against Smt.Raheena and Mr.S. Nazar by issuing notice under Section 13(2) of the SARFAESI Act, 2002 on 03/04/2018 directing her to pay the amount in default within 60 days from the notice. However, the personal guarantors failed to repay the amount in default within 60 days from the issue of the demand notice. Hence the debt owed by Smt. Raheena and Mr.S. Nazar to the applicant is Rs.18,55,96,207/- . This amount is not disputed by the corporate debtor, M/s Nasco Trading India Pvt. Ltd. or by the guarantor, Smt. Raheena and Mr.S. Nazar, and hence the requirement under S.95(4)(a) is satisfied.
II. Demand Notice dated 20/ 11/2021 issued under Rule 7(1) of the lnsolvency and Bankruptcy(Application to Adjudicating Authority for Insolvency Resolution Process of Personal Guarantors to Corporate Debtors) Rules 2019 was returned undelivered by the Postal Department with the remarks, “addressee left”. Thereafter, notices were issued to the personal guarantors in the last known address as per the loan documents and there is a deemed service of notice under S.27 of the General Clauses Act. No repayment has been made within fourteen days of such service of notice satisfying the requirements of S.95(4)(b).
III. The applicant, State Bank of India has produced a copy of the account statement of the corporate debtor M/s Nasco Trading India Pvt. Ltd. with a certificate under the Banker’s Book of Evidence Act as Annexure A 5 of the application. It is also seen that no further payment has been made either by M/s Nasco Trading India Pvt. Ltd. or by Smt.Raheena and Mr.S. Nazar. Thus the requirement set out in S.95(4)(c) is met.
IV. The applicant, State Bank of India has served a copy of the application to Smt. Raheena and Mr. S. Nazar and M/s Nasco Trading India Pvt. Ltd. in their last known address resulting in a deemed service under S.27 of the General Clauses Act.
V. The application is submitted in Form C along with a fee of Two Thousand Rupees as prescribed under Rule 7(2) of the Insolvency and Bankruptcy(Application to Adjudicating Authority for Insolvency Resolution Process of Personal Guarantors to Corporate Debtors) Rules 2019. Receipt from Bharatkosh.gov.in is submitted as proof of payment of fees meeting the requirement under S. 95(6).
VI. The RP satisfied that the debts for which the present application for insolvency resolution process filed do not include:
a)Liability to pay fine imposed by a court or tribunal,
b)Liability to pay damages for negligence, nuisance or breach of a statutory, contractual or other legal obligation,
c)Liability to pay maintenance to any person under any law for the time being in force,
d)Liability in relation to a student loan or,
e)Any other debt prescribed under S. 79(5) of the Code.
In view of the above findings, the RP recommend the acceptance of the application filed u/s 95(1) of the Insolvency and Bankruptcy Code 2016 by the applicant, State Bank of India, against the debtor, Smt. Raheena and Mr.S. Nazar
After the report of the RP, this Tribunal issued notice to the respondents/personal guarantors to file their reply, if any, to the applications. Since the notice issued by the Registry returned with postal remarks”Absent”,the FC was directed to make necessary paper publications. Accordingly, publication has been effected in two newspapers, and proof of publication submitted by the FC.
FINDINGS
We have heard the learned counsel for the applicant Creditor, Shri Vinod PV through video conferencing and have perused the whole case records including the documents appended thereto. Even though a vakalath has been filed on behalf of the respondents by Adv. CS Ullas, neither the counsel appeared when the matter was taken up on 15.06.2022 nor the respondents filed any reply to the petitions.
On going through the averments in the IBA and the report of the RP, we are of the considered opinion that this is a fit case for admission and proceed against the Personal Guarantors/ Respondents to initiating Corporate Insolvency Resolution Process against them. Therefore, we admit CP(IBC)/4/KOB/2022 and CP(IBC)/5/KOB/2022, filed under the provisions of Section 95 of IBC, 2016 and Section 100 of the IBC, 2016 and initiate Insolvency Resolution Process against the Respondents/ Personal Guarantors and moratorium in relation to all the debts is declared, from today i.e. date of admission of the application and shall cease to have effect at the end of the period of 180 days, or this Tribunal passes order on the repayment plan under Section 114 whichever is earlier as provided under Sec 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 of the debtor shall not initiate any legal action or 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 viz., Mr. Padmakumar KC, an Insolvency Resolution Professional having Registration No: IBBI/IPA-001/IP-P01021/2017-2018/11671, residing at T.C.15/1997(3) Fair Dreams Womens College North Gate,Thiruvananthapuram,Kerala ,695014, who was appointed when these applications were allowed vide Order dated 11.03.2022, is directed to cause a public notice published on behalf of the Adjudicating Authority within 7 days of passing of this Order on the website of the NCLT Kochi Bench, inviting claims from all Creditors, within 21 days of such issue. The notice under Sub-Section (1) of Section 102(2) shall include: -
details of the order admitting the application;
particulars of the resolution professional with whom the claims are to be registered; and
the last date for submission of claims.
The publication of notice shall be made in two newspapers, one in English and other in Vernacular which have wide circulation in the State where the Corporate Debtor and Personal Guarantor resides. The Resolution Professional shall furnish two spare copies of the notice to the Registry for the record.
The Resolution Professional in exercise of the powers conferred under Section 104 shall prepare a list of creditors on the basis of :-
the information disclosed in the application filed by the debtor under Sections 94 or 95, as the case may be; and
claims received by the Resolution Professional under Section 102 within 30 days from the date of the notice.
The debtor shall prepare a repayment plan under Section 105, in consultation with the Resolution Professional, containing a proposal to the Creditors for restructuring of his debts or affairs. The repayment plan may authorize or require the Resolution Professional to: -
carry on the debtor’s business or trade on his behalf or in his name; or
realise the assets of the debtor; or
administer or dispose of any funds of the debtor. The repayment plan shall include the following, namely; -
justification for preparation of such repayment plan and reasons on the basis of which the creditors may agree upon the plan;
provision for payment of fee to the Resolution Professional;
such other matters as may be specified.
The Resolution Professional shall submit the repayment plan along with his report on the plan to this 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 called, he shall record the reasons therefor. If the Resolution Professional is of the opinion that a meeting of the creditors should be summoned, he shall specify the details as provided under Section 106(3) of IBC, 2016. The date of the meeting should not be less than 14 days or more than 28 days from the date of submission of the Report under Sub- Section (1) of Section 106 of IBC, 2016, 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 of IBC, 2016.
The meeting of the creditors shall be conducted in accordance with Sections 108, 109, 110 & 111 of IBC, 2016. The Resolution Professional shall prepare a report of the meeting of the creditors on a repayment plan with all details as provided under Section 112 of IBC, 2016 and submit the same to this Tribunal, copies of which shall be provided to the Debtor 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.
The Resolution Professional shall submit his periodic reports before this Tribunal, as per rules.