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Judgment
This Petition is filed under Section 95 of the Insolvency and Bankruptcy Code, 2016 Read with Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Process for Personal Guarantors to Corporate Debtors) Rules, 2019 seeking to initiate Insolvency Resolution Process against the Personal Guarantor of the Corporate Debtor (CD).
The facts as stated in the Petition are as follows:
a. On the request of Kinnera Steel Ltd. (former name of Torus India Ltd “CD”), erstwhile Industrial Development Bank of India (IDBI) had granted Term Loan facility of Rs.480 lakh to the Borrower Company vide the loan agreement dated 03.09.1997. Further, on request of the Company, IDBI also granted additional Term Loan facility of Rs.226 lakh to the Borrower Company vide loan agreement dated 19.10.2001.
b. Respondent/Personal Guarantor has executed two Personal Guarantees in favour of IDBI Bank for the above mentioned two term loans vide Guarantee Agreements dated 05.09.1997 & 10.04.2001 respectively.
c. The Central Government constituted Stressed Assets Stabilization Fund (SASF) by a Trust Deed dated 24.09.2004 with an object of acquiring the stressed assets of IDBI for the purpose of recovering the amounts due there under. On 30.09.2004, IDBI absolutely transferred to SASF, the facilities granted to Torus India Ltd., together with underlying security interest thereto and all of IDBI's right, title and interest in connection with the said facilities. Accordingly, SASF stepped into the shoes of IDBI and became a secured creditor, fully entitled to receive the debts in terms of the said transfer. The Corporate Debtor till now failed to pay the dues and committed default.
d. Further, FC issued a demand notice dated 03.03.2020 demanding Respondent/Personal Guarantor to clear the outstanding dues of Rs.242,30,76,960/-. However, Respondent/Personal Guarantor has failed to discharge its obligations. Hence, this Petition.
Heard the Counsel for the FC. The personal guarantor was set exparte, vide order dated 31.03.2023. By virtue of the orders dated 25.02.2022, this Tribunal appointed Mr.Raghu Babu Gunturu, as Resolution Professional (RP) and the RP submitted his report confirming that the debt is due to the FC by the Personal Guarantor and that he has committed default in discharging the debt.
The Counsel for the FC submits that the 1st Term Loan was sanctioned on 03.09.1997 and the 2nd Term Loan was sanctioned on 19.10.2001. The deeds of guarantee pertaining to the above mentioned two term loans are dated 05.09.1997 and 10.04.2001 respectively. The counsel further submits that, both the term loans have become due by 20.03.2017 and the default was committed on 03.04.2017. The demand notice was issued on 01.03.2020 and the company petition was filed on 19.03.2020, which, when reckoned from the date of the default, which is on 03.04.2017, is well within the limitation. Since, the personal guarantor did not appear and oppose the contentions made by the FC's counsel, I deem it fit to admit the petition and order initiation of Corporate Insolvency Resolution Process (CIRP) against the Personal Guarantor. Hence, ordered.
ORDER
The Company Petition is admitted. The Corporate Insolvency Resolution Process of the Corporate Debtor shall commence from this date and shall be completed within 180 days hence.
Therefore, by exercising powers under Section 100 of IBC, 2016, I pass the following orders:
The Company Petition i.e., CP (IB)/93/95/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. Rajendra P Tummala 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;
- (a) Any pending legal action or proceeding in respect of any debt shall be deemed to have been stayed; - (b) The creditors shall not initiate any legal action or legal 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 i.e. Mr.Raghu Babu Gunturu, (Registration No. IBBI/IPA-002/IP-N00025/2016-2017/10053), having office at EzResolve LLP, 402B, 4th Floor, Technopolis, Chikoti Gardens, Begumpet, Hyderabad, West Marredpally, Telangana-500016; e-mail: raghu@ezresolve.com; Mobile: +91 9848027782, who was appointed vide order dated 25.02.2022 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 Section 104 of IBC, 2016 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 of IBC, 2016.
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) of IBC, 2016. 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 of IBC, 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. vi. The meeting of the creditors shall be conducted in accordance with the provisions of Section 109, 110 and 111 of IBC, 2016. The Resolution Professional shall prepare a report of the meeting of the creditors on repayment plan with all details as provided under Section 112 of IBC, 2016 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.