AI Structured Summary
Not yet generated for this judgment
Judgment
ORDER
Per: Shri Raghu Nayyar, Technical Member
The Applicant, namely State Bank of India, has filed an Application bearing CP No.(IB)-70/95/JPR/2021, which is under consideration before this Authority under Section 95 r/w Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority for IRP for Personal Guarantors to Corporate Debtor) Rules, 2019 (‘Rules’), seeking initiation of Interim Resolution Process against the Respondent/Personal Guarantor of the Corporate Debtor, namely M/s Maximum Synthetics Private Limited for an amount of Rs. 34,78,76,322/- (Rupees Thirty-Four Crores Seventy-Eight Lakhs Seventy-Six Thousand Three Hundred and Twenty-Two Only) in relation to the credit facility extended by the Applicant. The Applicant/Creditor had filed the Company Petition through the Resolution Professional Ms. Reshma Mittal.
On presentation of the application by the Applicant/Creditor, this Authority vide order dated 23.12.2021 had appointed Ms. Reshma Mittal, bearing Registration No. IBBI/IPA-001/IP00297/2017-18/10541 as the Resolution Professional, to file a report under Section 99 of IBC, 2016 which has been filed by her through IA(IBC)No.106/JPR/2022.
The Present Application bearing IA(IBC)No.106/JPR/2022 has been filed by the Resolution Professional (‘RP’) under Section 99(1) read with Section 99(7) of the Insolvency and Bankruptcy Code, 2016 (‘The Code’/ ‘IBC’) recommending the admission of the application filed by the Creditor under Section 95 of the Code seeking commencement of Insolvency Resolution Process against the Respondent/Personal Guarantor, namely, Shri Kailash Chandak. The grounds for admission of the application in the Report are as follows: -
a. The Personal Guarantor has committed default in repayment of his debts; therefore, first requirement as set out under Section 95(1) is satisfied.
b. That the Application has been duly filed in the prescribed “Form A” Along with requisite fee of Rs. 2000/- and satisfies the requirement under Section 95(1).
c. The Corporate Debtor was issued a demand notice under Section 95(4)(b) of the Code seeking repayment of the dues which was duly served upon the personal guarantors. Even after 14 days of the Demand Notice, no payment was received from the Guarantor/Respondent.
d. The Insolvency Application does not relate to “excluded debts” as defined under Section 79 (15) of the Code.
e. That the Debtor is not eligible for a fresh start process provided under chapter II of IBC.
The compliance of the relevant sections of the Code is as follows:
| Sr. No. | Requirements under Relevant provisions of Section 99 of the Code | Compliance by RP |
|---|---|---|
| i. | Section 99 (1): The RP shall examine the application referred u/s 94 or 95 within 10 days of appointment and submit a report to Adjudicating Authority for approval/rejection of the application | YES The RP submitted that the present report is prepared in compliance with the requirements of Section 99(1) of the Code |
Section 99 (2): YES Where the application has The RP had issued intimation vide been filed under Section letter dated 08.01.2022 under Section 95, the resolution 99(2) to the Personal Guarantor professional may require requiring the Personal Guarantor to the debtor to prove prove repayment of the debt claimed repayment of the debt as unpaid by the Creditor in claimed as unpaid by the compliance with provisions of Section creditor by furnishing – 99(2) of the Code. Copy of the said a) evidence of electronic intimation letter dated 08.01.2022 is transfer of the unpaid annexed hereto as “Annexure 2”. But amount from the bank the said letter is retuned back with account of the debtor; reason “INSUFFICIENT ADDRESS” b) evidence of A short summary of the details of encashment of a delivery and copy of the speed post cheque issued by the tracking documents evidencing the debtor; or attempts for delivery made by the RP a signed acknowledgment to the Personal Guarantor is annexed by the creditor accepting hereto as “Annexure 3”. receipt of dues. For abundant caution, the RP made one more attempt and sent another letter to personal guarantor on 17.01.2022. RP also sent letter dated 08.01.2022 and 17.01.2022 through E-mail (counsel to Guarantor) on 17.01.2022. In respect of the above-mentioned letter and E-mails, RP did not receive any reply from the Personal Guarantor. The copies of the said Letter dated 17.01.2022 along with Indian Postal receipt and Copy of E-mail dated 17.01.2022 are annexed hereto as “Annexure 4 (Colly)”. For abundant caution, the RP made one more attempt and again sent letters dated 08.01.2022 and 17.01.2022 through E-mail (counsel to Guarantor) on 22.01.2022. In respect of the above-mentioned E-mail, RP did not receive any reply from the Personal Guarantor. The copy of said E-mail dated 22.01.2022 is annexed hereto as “Annexure 5”. In view of above, Personal Guarantor failed to submit any evidence of electronic transfer of the unpaid amount from his bank account; evidence of encashment of a cheque issued by personal Guarantor to State Bank of India; or a signed acknowledgment by State Bank of India accepting receipt of dues. Hence, the RP has concluded that the Personal Guarantor has not repaid the debt claimed by the Creditor.
Section 99(3): YES Where the debt for which an application has been filed by a creditor is Debt for which an application has been registered with the filed by a creditor is not registered information utility, the with the Information Utility. debtor shall not be entitled to dispute the validity of such debt.
Section 99(4): YES For the purposes of Since the application is filed by the examining an application, Creditor through the RP, no further the resolution professional information or explanation in may seek such further connection with the application is information or explanation sought from the Creditor. in connection with the application as may be The RP had issued intimation vide required from the debtor or letter dated 08.01.2022 under Section the creditor or any other 99(2) to the Personal Guarantor person who, in the opinion requiring the Personal Guarantor to of the resolution prove repayment of the debt claimed professional, may provide as unpaid by the Creditor in such information. compliance with provisions of Section 99(2) of the Code. Copy of the said intimation letter dated 08.01.2022 is hereto annexed as “Annexure 2” Supra. But the said letter was retuned back with reason “ADDRESSEE MOVED” A short summary of the details of delivery and copy of the speed post tracking documents evidencing the attempts for delivery made by the RP to the Personal Guarantor is hereto annexed as “Annexure 3” Supra. For abundant caution, the RP made one more attempt and sent another letter to personal guarantor on 17.01.2022. RP also sent letter dated 08.01.2022 and 17.01.2022 through E-mail (counsel to Guarantor) on 17.01.2022. In respect of the above-mentioned letter and E-mails, RP did not receive any reply from the Personal Guarantor. The copies of the said Letter dated 17.01.2022 along with Indian Postal receipt and Copy of E-mail dated 17.01.2022 are hereto annexed as “Annexure 4 (Colly)” Supra. For abundant caution, the RP made one more attempt and again sent letter dated 08.01.2022 and 17.01.2022 through E-mail (counsel to Guarantor) on 22.01.2022. In respect of the above-mentioned E-mail, RP did not receive any reply from the Personal Guarantor. The copy of said E-mail dated 22.01.2022 is hereto annexed as “Annexure 5 ” Supra.
Section 99(5): NO The person from whom In respect of the information sought, information or explanation RP has not received reply from the is sought under sub- Personal Guarantor within seven days. section (4) shall furnish Personal Guarantor failed to submit such information or any evidence of electronic transfer of explanation within seven the unpaid amount from bank account days of receipt of the of personal Guarantor; evidence of request. encashment of a cheque issued by personal Guarantor to State Bank of India ; or a signed acknowledgment by State Bank of India accepting receipt of dues.
| vi. | Section 99(6): The resolution professional shall examine the application and ascertain that -(a) the application satisfies the requirements set out in Section 94 or 95; (b) the applicant has provided information and given explanation sought by the resolution professional under sub-section (4). | YESRP submitted that the present application satisfies the requirements of provisions of Section 95 as has been provided in detail hereinabove in this report. RP submitted that the applicant (State Bank of India) has provided information and explanation sought by the RP. |
| vii. | Section 99(7): After examination of the application under sub-section (6), he may recommend acceptance or rejection of the application in his report. | YESRP submitted that the present application satisfies the requirements of provisions of Section 95 as is required to be examined under Section 99(6) of the Code. The RP submitted that based on her examination the present application deserves to be admitted under Section 100 of the Code and this Hon'ble Authority may pass appropriate orders in this regard. |
| viii. | Section 99(8): Where the resolution professional finds that the debtor is eligible for a fresh start under Chapter II, the resolution professional shall submit a report recommending that the application by the debtor under Section 94 be treated as an application under Section 81 by the Adjudicating Authority. | NOT APPLICABLE The RP submitted that the provisions of Section 99(8) of the Code does not apply to the present case on hand. Application is not filed by the debtor under Section 94 of the code. Application has been filed by the creditor under Section 95 of the code. |
| ix. | Section 99(9): The resolution professional shall record the reasons for recommending the acceptance or rejection of the application in the report under sub-section (7). | YESRP submitted that the present report is being presented under Section 99(7) of the Code to this Hon'ble NCLT with a recommendation of accepting the present application as the Personal Guarantor/debtor has not repaid the debt due to the Creditor. |
| x. | Section 99(10): The resolution professional shall give a copy of the report under sub-section (7) to the debtor or the creditor, as the case may be. | YESRP submitted that she has complied with the requirement of filing a copy of this report prepared under Section 99(7) of the Code to the Creditor. Copy of the said email dated 21.01.2022 serving copy of the Report on the creditor is attached herewith as “Annexure 4 ” Supra. |
As the Personal Guarantor was not traceable despite many attempts, the Applicant was directed vide order dated 05.04.2022 to carry out a common publication with respect to the Respondent and another Personal Guarantor of State Bank of India related to the same debt/Corporate Person in two daily newspapers (One English and one Hindi) having wide circulation in the area about opportunity to the concerned Guarantors to be present on the next date of hearing in the matter. Consequently, an Affidavit through Resolution Professional was filed by the Applicant dated 20.04.2022 stating compliance of the Order dated 05.04.2022. Therefore, it is deduced that the Respondent has received limited notice for his presence in terms of the order of the Hon’ble National Company Law Appellate Tribunal in Mr. Ravi Ajit Kulkarni vs. State Bank of India, Company Appeal (AT) (Insolvency) No. 316 of 2021. However, as there is no presence on behalf of the Personal Guarantor despite several attempts, it is presumed that the Personal Guarantor has chosen not to appear before this Authority and the proceedings ought to continue.
From the report there does not appear any request of the Resolution Professional for issuance of the instructions for the purpose of conducting negotiations between the debtor and creditors for arriving at a repayment plan. Therefore, based on the reasons recorded in the report submitted by the Resolution Professional, the application i.e., IA(IBC)No.106/JPR/2022 filed under the provisions of Section 95 of IBC is hereby admitted under Section 100 of the IBC.
Resultantly, Insolvency Resolution Process is initiated against Respondent/Personal Guarantor and moratorium is declared, which begins with the date of admission of the application and shall cease to have effect at the end of the period of 180 days, as provided under Section 101 of IBC. During the moratorium period inter-alia the following provisions shall be in effect;
a. Any pending legal action or proceeding in respect of any debt shall be deemed to have been stayed; and
b. The creditors of the debtor shall not initiate any legal action or 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;
d. 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., Ms. Reshma Mittal, who has been appointed under Section 97 vide order dated 23.12.2021, is directed to cause a public notice to be published on behalf of the Adjudicating Authority within 7 days of uploading of this order on the website of NCLT, inviting claims from all Creditors, who shall register their claims as provided under Section 103 within 21 days of such issuance. The notice shall contain the necessary information as provided under Section 102(2) of IBC. The publication of notice shall be made in newspapers, one in English and other in Vernacular 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 place by the Registry on our website and the other shall be affixed in the premises of this Authority.
The Resolution Professional in exercise of the powers conferred under Section 104 shall prepare a list of creditors within 30 days from the date of the notice. The debtor shall prepare a repayment plan in consultation with the Resolution Professional 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 her 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 summoned, she shall record the reasons therefor. If the resolution professional is of the opinion that the meeting of the creditors should be summoned, she shall specify the details as provided under Section 106(3). The date of 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, for which at least 14 days’ notice to the creditors (as per the list prepared) shall be issued by all relevant/feasible 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 sections 108, 109, 110 & 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 this Authority, copies of which shall be provided to the debtor and the creditors. It is made clear that the resolution professional shall perform her functions and duties in compliance with the Code of Conduct provided under Section 208 of the IBC, 2016.
In terms of the above, CP No.(IB)-70/95/JPR/2021 filed under Section 95 of the IBC, is admitted and the Insolvency Resolution Process stands initiated against the said Debtor/Personal Guarantor i.e. Shri Kailash Chandak. Accordingly, IA No. 106/JPR/2022 stands disposed of.