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Judgment
AS PER MR. ABNI RANJAN KUMAR SINHA, MEMBER (JUDICIAL)
The present application is filed under Section 95 of the Insolvency & Bankruptcy Code, 2016, (hereinafter referred to as the "Code"), by State Bank of India ("Applicant/Creditor") praying for initiation of Insolvency Resolution Process against Mr. Vivek Sachdev, who is the Guarantor of M/s Auto Decor Private Limited ("Corporate Debtor").
The facts mentioned in the application in brief are as follows:
That the Applicant/Creditor had sanctioned facilities to the extent of Rs. 19.65 crores in favour of the Corporate Debtor vide sanction letter dated 09.07.2007 and the facilities were renewed from time to time as per the details reproduced below:
| Date of Sanction Letter | Facilities (Crores) sanctioned and granted |
|---|---|
| 17.12.2008 | Rs. 23.85 Crores |
| 29.09.2009 | Rs. 31.41 Crores |
| 06.10.2010 | Rs. 38.95 Crores |
| 18.05.2011 | Rs. 47.77 Crores |
| 03.10.2011 | Rs. 51.27 Crores |
| 24.03.2012 | Rs. 54.27 Crores |
That the Applicant/Creditor sanctioned SLC of Rs. 2 crores vide arrangement letter dated 10.01.2013. That the SLC was converted into WCTL of Rs. 2 Crores vide arrangement letter dated 15.03.2014 to the extent of Rs. 49.67 Crores.
That the account of the Corporate Debtor was declared NPA on 31.03.2014. Further, the Creditor enhanced the overall limit from Rs. 49.67 Crores to Rs. 51.17 Crores vide sanction letter dated 06.04.2015.
That the facilities sanctioned was secured by way of Personal Guarantee of the Debtor/Shri Vivek Sachdev by virtue of the execution of the Deed of Guarantee dated 09.07.2007, 17.12.2008, 29.09.2009, 06.10.2010, 18.05.2011, 03.10.2011, 24.03.2012, 10.01.2013, and 06.04.2015. The Personal Guarantor is thus jointly and severally liable for the dues of the Corporate Debtor.
That the facilities were last enhanced vide sanction letter dated 06.04.2015 and documents were last executed on 06.04.2015 in pursuance to Board resolution dated 06.04.2015. That the Notice under section 13(2) of Securitization Act dated 04.10.2016 was duly served.
That the Compromise Proposal vide letter reference no SAMB/17-18/CL1/1447 dated 07.03.2018 was sanctioned for Rs. 16.5 crores wherein the payment was to be made by 31.03.2018. The said sanction lapsed and the deposit amount was forfeited. The corporate debtor requested for revival of compromise proposal vide letter dated 17.05.2018.
The suit for recovery before the Debts Recovery Tribunal-II, Delhi, bearing OA No. 159 of 2017 titled as The State Bank of India vs M/s Auto Decor Pvt. Ltd. & Ors., is pending for adjudication.
That, vide order dated 02.08.2016, CIRP was commenced against the Corporate Debtor. Further, the Corporate Debtor was ordered for liquidation vide order dated 04.06.2019.
That the Creditor served a Demand Notice dated 08.07.2021 for the payment of outstanding dues.
That the total amount of debt is Rs. 72,90,64,845.33/-.
Limited notice was served upon the Personal Guarantor vide order dated 17.12.2021.
That the Applicant/Creditor has filed written submissions and the scanned copy is reproduced below:
1.That instant application has been filed by the State Bank of India (hereinafter referred to as the “Applicant/Creditor”) under Section 95 (1) of the Insolvency and Bankruptcy Code, 2016 (“IBC”) thereby praying for initiation of the Insolvency Resolution Process against Shri Vivek Sachdev (hereinafter referred to as the “Debtor”/ “Guarantor”). The said guarantor by virtue of execution of Deed of guarantee has secured the debt/facilities sanctioned and granted to the account of M/S Auto Decor Private Ltd. (hereinafter referred to as “Corporate Debtor”).
2.That the applicant herein states that the application has been filed through Resolution Professional in accordance with section 95(1) which categorically states that (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. Letter of authority by way of email is appended and marked as Annexure A 20, page 318. The resolution Professional has also given its consent in Form A Annexure A 21 page 319. Authorization for assignment and his certificate is appended on Page 320 & 321.
3.That further FORM C Part IV (Page 34) specifically calls for the Particulars of & Declaration by Insolvency Professional (If Application is filed through Insolvency Professional).
4.That the applicants herein states that the Corporate Debtor is under Liquidation vide order dated 04.06.2019 Annexure A 15, page 209.
5.That the guarantees duly executed were invoked by the Bank vide issuance of Demand Notice dated 08.07.2021 under Clause B of Sub Section 4 of Section 95 issued in Form B which was duly served upon the guarantor. Demand Notice along with tracking receipt is appended as Annexure A 16, Page 210.
6.The status in CIBIL reflects that suit has been filed and the status of the Debtor/Guarantor is that of a willful defaulter. Annexure A 17 Page 217-235.
7.Notice under section 13(2) of SARFESI Act (Annexure A 11 page 183) has been duly served and Original Application being OA no 159/2017 has also been filed for Recovery of Dues. The Debtor has made no attempts to repay the amount due and outstanding. That the total amount due and outstanding is Rs. 72,90,64,845.33/- (Rupees Seventy two crores Ninety lakhs sixty four thousand and eight hundred and forty five only) (Annexure A 18 Page 236)
8.That the application to initiate Insolvency Resolution Process has been made in accordance with FORM C under Rule 7 (2) of Insolvency and Bankruptcy Rules, 2019 and the copy of the same has been supplied to the creditor.
9.That the creditor bank submits that the application is in order and the terms and conditions as provided under has been duly complied with.
10.That the applicant seeks liberty to file additional written submission if any ground/grounds are raised by the Debtor and the same has not been addressed in the instant written submissions.
That the Personal Guarantor has filed written submissions and the scanned copy is reproduced below:-
PRELIMINARY SUBMISSIONS ON BEHALF OF THE GUARANTOR/ DEBTOR
1.This Hon'ble Tribunal was pleased to hear opening submissions on behalf of the parties on 23.03.2022. The Hon'ble Tribunal after hearing preliminary submissions for and on behalf of the parties was pleased to reserve orders and has granted leave to the parties to file their respective submissions.
2.Pursuant to the leave granted, the Guarantor/ Debtor is placing the following Preliminary Submission for the consideration of this Hon'ble Tribunal:
A. THE DEMAND NOTICE DATED 08.07.2021 [Pgs 210-216] IS NOT IN ACCORDANCE WITH FORM 'B' UNDER RULE 7 (1) IB (APPLICATION TO ADJUDICATING AUTHORITY FOR IRP FOR PERSONAL GUARANTORS TO CORPORATE DEBTORS) RULES, 2019 ['RULES'] IN AS MUCH AS NO AUTHORISATION DOCUMENT HAS BEEN ANNEXED AUTHORISING THE SIGNATORY THEREIN AND ADMITTEDLY THE DEMAND NOTICE HAS BEEN ISSUED BY 'ON BEHALF OF THE CREDITOR'.
3.The Guarantor/ Respondent submits that no authorisation document has been annexed with the Demand Notice dated 08.07.2021 [Pgs 210-216] authorising the signatory thereto [Pg 213] to act on behalf of the Creditor as required in Form B' of the Rules.
4.Even otherwise, the only authorisation on record authorising Mr Navjit Singh to act on behalf of the Creditor is an email dated 02.09.2021 [Pg 318]. The authorisation succeeds the issuance of the Demand Notice, therefore, there was no authorisation to issue the Demand Notice.
5.It is submitted that, therefore, the Demand Notice was defective, improper, incomplete and on this ground alone the present Company Petition ought to be dismissed.
B. THE AFFIDAVIT IN SUPPORT OF THE PRESENT PETITION FILED UNDER SECTION 95 (1) OF THE INSOLVENCY AND THE BANKRUPTCY CODE, 2016 ['CODE'] HAS BEEN FILED BY THE VERY SAME PERSON WHO IS THE PROPOSED INSOLVENCY RESOLUTION PROFESSIONAL WHO HAS FILED THE PRESENT APPLICATION.
6.The Guarantor/ Respondent submits that the Affidavit [Pg 37A] in support of the present Application has been filed by the Proposed IRP who has also apparently filed the present Petition under Section 95 of the Code [Pg 34-36].
7.The Deponent in the Affidavit further states that he is the authorised representative of the Applicant Bank and the accompanying Petition has been drafted under his instructions [Pg37A], however, in derogation to the Affidavit, admittedly, the present Application has been filed by the Creditor through the IRP.
8.Therefore, even otherwise, the present Petition is defective and deserves to be dismissed. The Petition cannot be filed by the same person on who's instruction the same is drafted.
9.Without prejudice and even otherwise this position would be contrary to the well settled maxim viz. Nemo Judex in Causa Sua inasmuch as the IRP would be submitting the very same report under Section 99 of the Code which has been 'drafted under my [his] instructions'.
C. EVEN OTHERWISE, THE MANDATORY REQUIREMENT OF SECTION 97 (1) OF THE CODE HAS TO BE FOLLOWED WHERE THE APPLICATION HAS BEEN FILED UNDER SECTION 95 THROUGH A RESOLUTION PROFESSIONAL.
10.It is submitted that the mandatory requirement of Section 97 of the Code has to be followed considering the fact that the Guarantor/ Respondent are completely unaware of the fact as to whether any disciplinary proceedings are pending against the Proposed IRP.
D. WITHOUT PREJUDICE TO ALL OTHER SUBMISSIONS THE EMAIL DATED 02.09.2021 BY ONE RAKESH VERMA [PAGE 318] CANNOT BE CONSTRUED TO AUTHORISE THE PROPOSED IRP TO INITIATE THE PRESENT INSOLVENCY PETITION UNDER SECTION 95 OF THE CODE
We have heard the Ld. Counsel for the Applicant/Creditor and the Personal Guarantor and perused the averments made in the application and the written submissions on behalf of the Applicant/Creditor and the Personal Guarantor.
That as per the different provisions contained under chapter III of the Code, whenever an application under Section 94 or 95 is filed, the first stage is to appoint a Resolution Professional, who after enquiry is required to submit a report under Section 99 of the Code. We further observe that the question of admission or rejection of the application under Section 100 of the Code can only be decided after the submission of the report by the Resolution Professional under Section 99 of the Code and when the matter will be taken up under Section 100 of the Code. At present, the question is only for the appointment of Resolution Professional under Section 97 of the Code.
For the purpose of appointment of Resolution Professional, the Adjudicating Authority is required to examine the details and the documents accompanied with the application as required under Section 95(4) of the Code. In terms of the provisions contained in Section 95(4) of the Code, we perused the averments made in the application and we observe the CIRP against Corporate Debtor has already been initiated vide order dated 02.08.2018 in an application filed by the Operational Creditor vide C.P. No. (IB)- 530(ND)/2018 under Section 9 of the Code and further, liquidation order is also passed on 04.06.2019.
We have noticed that the present application has been filed through a Resolution Professional in accordance with the provisions of Section 95(1) of the Code.
We have further noticed that the Applicant/Creditor has proposed the name of Mr. Navjit Singh, Insolvency Professional having registration number IBBI/IPA-001/IPP00314/2017-18/10578 for appointment as Resolution Professional, who has given his consent and declared that he is eligible to be appointed as there are no disciplinary proceedings pending against him at Page 34-36 Part-IV of the application. In addition to this, the Applicant/Creditor has annexed the Form 'A' i.e., the consent form to act as RP. The IBBI vide letter dt. 3rd June 2022 informed that online data base may also be used for the purpose of Section 97(2) and 98(6) of the IBC, therefore, there is no need to refer the matter for confirmation regarding the disciplinary proceeding pending against Mr. Navjit Singh
The Resolution Professional Mr. Navjit Singh shall exercise all the powers as enumerated under Section 99 of the IBC, 2016 read with the Rules made thereunder. He is directed to make the recommendations with the reasons in writing for acceptance or rejection of this Application within stipulated time as envisaged under the provisions of Section 99 of the IBC, 2016. The RP shall give a copy of the report under Section 99(7) to the Applicant/Creditor, as soon as the same is filed before this Adjudicating Authority.
It is made known to everyone that on filing of this Application by the Applicant/Creditor, the interim-moratorium commences as stipulated under Section 96 (1) (a) in relation to all the debts of the personal guarantor and shall cease to have effect on the date of admission of this Application. During the interim- moratorium period, the following are prohibited:
a. Any pending legal action or proceedings in respect of any debt of the personal guarantor shall be deemed to have been stayed; and
b. The Creditors of the personal guarantor shall not initiate any legal action or proceedings in respect of any debt.
This shall, however, not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.
The Registry as well as the Applicant are directed to send a copy of this Order to the IBBI for needful action.
List the matter on 14.07.2022