NCLT Chennai Bench: Application under Section 95 IBC Complete. Confirmation of RP Appointment Directed. IBBI Information Sharing

The NCLT Chennai Bench found the application under Section 95 of the IBC, 2016, to be procedurally complete. It directed the confirmation of the Resolution Professional appointment and information sharing from the IBBI. The matter was listed for further hearing to await IBBI confirmation.

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Issues Involved:
1. Jurisdiction of the NCLT to adjudicate applications for insolvency resolution of personal guarantors.
2. Compliance with procedural requirements under Section 95 of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016).
3. Appointment and confirmation of the Resolution Professional.
4. Evaluation of the application’s completeness and supporting evidence.
5. Directions for further proceedings based on the application’s status.

Issue-wise Detailed Analysis:

1. Jurisdiction of the NCLT:
The judgment begins by establishing the jurisdiction of the National Company Law Tribunal (NCLT) to adjudicate applications for the insolvency resolution process of personal guarantors to corporate debtors. This is based on the Supreme Court's decision in Lalit Kumar Jain vs. Union of India & Ors., which upheld the validity of the notification by the Central Government concerning the insolvency process for personal guarantors. As per Section 60(2) of IBC, 2016, when a Corporate Insolvency Resolution Process (CIRP) is pending before the NCLT, it is the competent forum to file an application for the personal guarantor related to such a corporate debtor.

2. Compliance with Procedural Requirements under Section 95 of IBC, 2016:
The application under Section 95 of IBC, 2016, was filed by M/s. Tata Capital Financial Services Private Limited (Creditor) to initiate the insolvency resolution process against Mr. G. Ramakrishna Reddy (Personal Guarantor). The judgment details the necessary procedural steps and requirements under Section 95, including the submission of details and documents related to the debts, evidence of default, and the failure of the debtor to pay within 14 days of the notice of demand.

3. Appointment and Confirmation of the Resolution Professional:
The judgment discusses the procedure for appointing a Resolution Professional as stipulated under Sections 97 and 98 of IBC, 2016. Since the application was filed through a Resolution Professional, the NCLT directed the Insolvency and Bankruptcy Board of India (IBBI) to confirm within seven days that there are no disciplinary proceedings pending against the proposed Resolution Professional, Sripriya Kumar.

4. Evaluation of the Application’s Completeness and Supporting Evidence:
The judgment meticulously evaluates the application against the criteria set out in Section 95(4) of IBC, 2016:
- Section 95(4)(a): The application provided details of the debt owed by the Principal Borrower, M/s. Arohi Infrastructure Private Limited, and the role of the Personal Guarantor.
- Section 95(4)(b): It was confirmed that the Personal Guarantor failed to repay the debt within 14 days of receiving the demand notice.
- Section 95(4)(c): The creditor submitted the final arbitral award as evidence of the default, which was not contested by the Personal Guarantor.

5. Directions for Further Proceedings:
The judgment concludes that the application under Section 95 of IBC, 2016, is complete. The NCLT directed the IBBI to confirm the appointment of the Resolution Professional and to share a database of insolvency professionals, including details of any disciplinary proceedings, with the NCLT for effective adjudication. The matter was listed for further hearing on 15.06.2021 to await confirmation from the IBBI.

In summary, the NCLT Chennai Bench found the application to be procedurally complete and directed the necessary steps for the appointment of a Resolution Professional, while also addressing the need for better information sharing from the IBBI.

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