State Bank Of India vs Rajesh K S & Ors.

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 Petitioner /Creditor 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 Mr. Rajesh K S, Mr. Satheesh Babu V. K, Mr. Saleesh K Satheesh, Mrs. Bindya Saleesh, and Mrs. Sindhu Rajesh, Personal Guarantors of the Corporate Debtor M/s. Propyl Packaging Limited, for initiating Insolvency Resolution Process against them.

The brief facts leading to the present Petitions are as under: -

The Corporate Insolvency Resolution Process has been initiated against the Corporate Debtor pursuant to the order of this Tribunal dated 14.02.2020 in IBA/52/KOB/2Ol9 and thereafter, an order of liquidation has been passed on 18.11.2021in IA (IBC)/106/KOB/2021 since no Resolution Plan was received from any prospective applicants.

The petitioner/ Creditor has initially sanctioned an overdraft facility of Rs 7.05 Crore as an International Letter of Credit Facility of Rs.4.70 Crore to the Corporate Debtor against mortgage of properties under SBI asset-backed loan by way of a letter of arrangement dated 28.11.2O14. As security towards the credit facilities, Corporate Debtor has executed loan cum hypothecation agreement dated 05.12.2014, demand promissory note dated 05.12.2014 and also created equitable mortgage of the properties owned by the Corporate Debtor and the Guarantors. Further at the request of the Corporate Debtor, petitioner/ Creditor has sanctioned an enhancement of the credit facilities to 16.80 Crore by way of a letter of arrangement dated O7.01.2017 as follows:

The Petitioners stated that on the basis of the above, the Corporate Debtor has executed Loan cum hypothecation agreement on 11.01.2017 and the Respondents also executed Guarantee Agreement on 11.01.2017 guaranteeing 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 costs and expenses in terms of the Loan Documents in the event of default, in case of failure of the Corporate Debtor to repay the amounts.

The learned counsel for the petitioners argued that the Corporate Debtor committed default in the loan account and loan accounts of the Corporate Debtor were declared as NPA on 09.09.2018. In view of non-payment of the dues, the petitioner has issued a notice under Sec 13 (2) of SARFEASI Act on 05.11.2018 against the Corporate Debtor and personal guarantors, by invoking the personal guarantee, directing them to repay the then outstanding amount of Rs. 13,57,11,189/-. Despite granting sufficient opportunities, Corporate Debtor and personal guarantors failed to repay the outstanding dues. Hence, the petitioners filed OA No.93 of 2020 before the DRT on 15.11.2019 for recovery of the dues of Rs.15,14,65,723.38 with future interest and charges, at contractual rate, which is pending before the DRT.

As of 14.02.2O20, the total amount due under loan account Number 36446428466, 36446651063 and 36449727553 is Rs.16,04,69,894/-. The petitioners have filed a claim before the Resolution Professional of Propyl Packaging Limited and RP has admitted the debt of Rs.15,98,69, 894/- claimed by the applicant.

The demand notice dated 08.11.2021 was sent to the Respondents/Personal Guarantors on 09.11.2021. The Respondents/Personal Guarantors did not make payment even after receiving the notice. Since the Respondents, i.e., Mr. Rajesh K S, Mr. Satheesh Babu V. K, Mr. Saleesh K Satheesh, Mrs. Bindya Saleesh and Mrs. Sindhu Rajesh in the capacity of personal guarantors failed and unable to repay the debt, the petitioners filed these applications to initiate Corporate Insolvency Resolution Process against them under Section 95 (1) of Insolvency and Bankruptcy Code, 2016.

The Petitioners have suggested the name of an Insolvency Professional, viz., Mr. Dileep K. P (Reg No./IBBI/IPA-001/IP-P-01310/2018-2019/12220) for appointment as Resolution Professional; in the event this Tribunal allows these petitions.

We have heard Shri. Vinod P V, learned counsel for the Petitioner and have perused the whole case records including the documents appended thereto.

In this connection it is profitable to quote Section 95 of I&B Code,2016: -

The Hon’ble NCLAT, Principal Bench, in the matter of Mr. Ravi Ajit Kulkarni –Vs-State Bank of India in Company Appeal (AT) (Insolvency) No. 316 of 2021 in para 42 has held that once an Application under Section 95 of IBC, 2016 is filed, the Adjudicating Authority has to act on it, and following principles of natural justice, give limited notice to Personal Guarantor to appear referring to the Interim Moratorium that has commenced as per terms of Section 96 and subsequently proceed to the next stage of appointing Resolution Professional as per Section 97 read with attendant Rules and Regulations.

In view of the above provision and the decision stated supra, as the Petitioners have complied with Section 95(4) quoted above, the demand notices dated 08.11.2021 have been sent to the Respondents/Personal Guarantors and 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 Corporate Debtor 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: -

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 State Bank of India against Personal Guarantors of the Corporate Debtor Propyl Packaging 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 petitions 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-

IV. As the name of the suggested Insolvency Professional is available in the panel of IPs approved by IBBI in respect of NCLT-Kochi Bench for the period from 01.01.2022 to 30.06.2022, this Tribunal appoints Mr. Dileep K. P, an Insolvency Resolution Professional having Registration No: IBBI/IPA-001/IP-P01310/2018-2019/12220, residing at Veluthedath House, Ponnurunni Vytilla P O Cochin, Ernakulam, Kerala ,682019 as the Resolution Professional, to carry out the 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 Lakh only) to be paid by the Petitioners/Creditors to the Resolution Professional (RP) immediately to initiate the process which shall be adjusted towards the fee and expenses payable to the Resolution Professional (RP). It is made clear that this amount cannot be construed as the fee paid to the Resolution Professional.

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 the Applications 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 Creditor 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 the report of the Resolution Professional on 05.04.2022.