Tribunal admits petition under IBC, initiates CIRP against Corporate Debtor. Moratorium declared.

The tribunal admitted the petition under Section 7 of the IBC against the Corporate Debtor, initiating CIRP. A moratorium was declared, an IRP appointed, and the Financial Creditor directed to deposit Rs. 3,00,000 with the IRP. The tribunal found the application maintainable, held the Corporate Debtor liable as a guarantor, ruled the petition not barred by limitation, and allowed simultaneous proceedings against the Principal Borrower and Corporate Guarantor. The matter was scheduled for a progress report on 01/03/2022.

---

---

Issues Involved:
1. Maintainability of the petition under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016.
2. Liability of the Corporate Debtor as a guarantor.
3. Compliance with RBI circulars and press releases.
4. Limitation period for filing the petition.
5. Simultaneous proceedings against the Principal Borrower and the Corporate Guarantor.

Issue-wise Detailed Analysis:

1. Maintainability of the petition under Section 7 of the IBC, 2016:

The Financial Creditor, State Bank of India (SBI), filed a petition under Section 7 of the IBC, 2016, for initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, who stood as a guarantor for the Principal Borrower, GEE PEE Infotech Private Limited. The petition was supported by necessary documents, including the Deed of Guarantee and evidence of default. The Corporate Debtor contested the maintainability, arguing that there was no debt due or payable by them. However, the tribunal found that the application was maintainable as it complied with the provisions of the IBC and relevant rules.

2. Liability of the Corporate Debtor as a guarantor:

The Corporate Debtor had executed a Deed of Guarantee, making them liable for the debts of the Principal Borrower. The tribunal highlighted that the liability of the guarantor is co-extensive with that of the Principal Borrower. The Financial Creditor provided sufficient evidence, including the Deed of Guarantee and various supplemental agreements, to establish the Corporate Debtor's liability. The tribunal noted that the Corporate Debtor failed to discharge its liability as a guarantor, thereby committing default.

3. Compliance with RBI circulars and press releases:

The Corporate Debtor argued that the Financial Creditor did not comply with the RBI's circular dated 12th February 2018 and the press release dated 13th June 2017. The Financial Creditor countered that the application was filed under Section 7 of the IBC independently and did not rely on these documents. The tribunal agreed with the Financial Creditor, stating that the application was maintainable under the IBC, irrespective of the RBI circular and press release.

4. Limitation period for filing the petition:

The Corporate Debtor contended that the petition was barred by limitation, as the date of default was 10th January 2014, and the petition was filed in March 2018. The Financial Creditor argued that the limitation period was arrested by the filing of proceedings in the Debt Recovery Tribunal (DRT) on 24th September 2015. The tribunal referred to various judgments, including those of the Supreme Court, and concluded that the petition was not barred by limitation as the filing of the DRT proceedings had arrested the limitation period.

5. Simultaneous proceedings against the Principal Borrower and the Corporate Guarantor:

The Corporate Debtor argued that CIRP could not be initiated against them as the Principal Borrower was already in liquidation, and another guarantor was also under CIRP. The Financial Creditor relied on the judgment in Punjab National Bank vs. M/s. Krishna Alex Pvt. Ltd., which held that there is no bar to initiating CIRP against both the Principal Borrower and the Corporate Guarantor. The tribunal adopted this view, stating that simultaneous proceedings against the Principal Borrower and the Corporate Guarantor are permissible under the IBC.

Conclusion:

The tribunal admitted the petition under Section 7 of the IBC, 2016, against the Corporate Debtor and initiated the CIRP. A moratorium was declared, and an Interim Resolution Professional (IRP) was appointed. The tribunal directed the Financial Creditor to deposit Rs. 3,00,000 with the IRP and scheduled the matter for a progress report on 01/03/2022. The order emphasized that the application was maintainable, the Corporate Debtor was liable as a guarantor, the petition was not barred by limitation, and simultaneous proceedings against the Principal Borrower and the Corporate Guarantor were allowed.

---