Court rules for State Bank of India in Insolvency case against Coastal Energy Pvt Ltd's Guarantors

The court ruled in favor of the State Bank of India in an application under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 against the Personal Guarantors of Coastal Energy Private Limited, a Corporate Debtor. The Respondent's challenge to the application's maintainability was dismissed, with the court appointing an Interim Resolution Professional to further examine the case and provide recommendations for acceptance or rejection under Section 99 of the IBC, 2016. The matter was scheduled for additional proceedings following the Interim Resolution Professional's report.

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Issues:
1. Application under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 against Personal Guarantors of a Corporate Debtor under CIRP.
2. Maintainability of the application against the Personal Guarantors.
3. Defences raised by the Corporate Debtor and the response to these defences.
4. Appointment of Interim Resolution Professional and further proceedings.

Analysis:
1. The judgment pertains to an application filed under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 against the Personal Guarantors of a Corporate Debtor undergoing Corporate Insolvency Resolution Process (CIRP). The application was filed by the State Bank of India against the Personal Guarantors of Coastal Energy Private Limited, the Corporate Debtor.

2. The Respondent, a Personal Guarantor, challenged the maintainability of the application, arguing that it was premature as it arose from an order dated 08.03.2019 from DRT-I. The Respondent contended that the application should be dismissed as the sale proceeds of the Schedule Properties were deemed insufficient to cover the amount due to the Applicant, making the Respondent personally liable. However, the Applicant refuted these claims, stating that the Personal Guarantor was projecting the case of the borrower company and that the borrower's liability had been adjudicated.

3. The defences raised by the Corporate Debtor will be considered at a later stage when the Resolution Professional files their report under Section 99 of the IBC, 2016. The Applicant argued that the Personal Guarantor had not appealed against the decree passed by DRT, which had become final. The CIRP proceedings against the Corporate Debtor were also pending before the Tribunal.

4. The Tribunal, citing a judgment by NCLAT, appointed an Interim Resolution Professional and directed the Financial Creditor to serve a copy of the application to the Interim Resolution Professional for preparing a report under Section 99 of the IBC, 2016. The Resolution Professional was tasked with examining the application and providing a recommendation for its acceptance or rejection within a specified period. The matter was scheduled for further proceedings on a specific date for the filing of the Interim Resolution Professional's report.

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