Tribunal Upholds Order on Insolvency Application Appeal

The Tribunal dismissed the appeal against the order admitting the application under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Appellant's contentions regarding 'substituted service' and the inclusion of 'Corporate Guarantors' under the definition of 'Financial Creditor' were rejected. The Tribunal upheld that the guarantee invoked under the SARFAESI Act against the Corporate Debtor was valid. Despite issues with notice service, the Tribunal found no grounds for remitting the case, as the Corporate Debtor had defaulted on debt payment. The appeal was dismissed without costs awarded.

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Issues:
1. Appeal against the order admitting application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Validity of the admission order due to alleged lack of 'substituted service'.
3. Interpretation of the definition of 'Financial Creditor' under Section 5(7) and 5(8) of the I&B Code.
4. Inclusion of 'Corporate Guarantor' under the definition of 'Financial Creditor'.
5. Invocation of guarantee under the SARFAESI Act, 2002.
6. Consideration of notice service in the context of debt default by the Corporate Debtor.

Analysis:
1. The appeal was filed against the order admitting an application under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Appellant contended that the admission order was invalid due to alleged lack of 'substituted service' by the Financial Creditor, who sent the notice by Speed Post, not received by the Appellant. The Appellant claimed the order was passed ex parte, misleading the Adjudicating Authority.

2. The Appellant argued that only 'Personal Guarantors' could be subject to an application under Section 7, not 'Corporate Guarantors'. However, the Tribunal rejected this argument, citing the definition of 'Financial Creditor' under Section 5(7) and 5(8) of the I&B Code, which includes any person to whom a financial debt is owed, covering situations where a debt has been legally assigned or transferred.

3. The Tribunal emphasized that under Section 5(8)(i) of the I&B Code, any liability in respect of a 'guarantee' or 'indemnity' for financial debts falls within the definition of 'Financial Debt'. Therefore, a Corporate Debtor providing a guarantee for the principal borrower's debt also qualifies as a Corporate Debtor concerning the Financial Creditor to whom the guarantee was given.

4. The Appellant referenced a notice issued under the SARFAESI Act, 2002, indicating that the Financial Creditor had invoked the guarantee against the Corporate Debtor. The Tribunal noted this invocation and rejected the argument that the guarantor did not fall under the definition of the Corporate Debtor.

5. Regarding the service of the admission notice, the Tribunal acknowledged the possibility that it was not served but declined to remit the case on this ground. The Tribunal reasoned that even if the notice had been served before admission, the Corporate Debtor had defaulted on the debt payment, indicating that the outcome would likely remain the same.

6. Ultimately, the Tribunal dismissed the appeal, stating that no relief could be granted due to the lack of merit in the arguments presented. The decision was made considering the facts and findings presented, with no costs awarded in the case.

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