Tribunal initiates Insolvency Resolution Process under IBC: Moratorium declared, creditor claims invited, Repayment Plan prepared.

The Tribunal admitted the petition under Section 95 of the IBC, 2016, and initiated the Insolvency Resolution Process against the Personal Guarantor. A moratorium was declared for 180 days, during which pending legal actions or proceedings are stayed, and creditors cannot initiate new actions. The Personal Guarantor is prohibited from transferring assets. The Resolution Professional must publish a notice inviting creditor claims, prepare a list of creditors, and a Repayment Plan in consultation with the debtor.

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Issues Involved:
1. Whether the amounts recoverable from the Personal Guarantor can be crystallized before the culmination of CIRP.
2. Whether the Personal Guarantor was coerced into signing the Personal Guarantee agreement.
3. Whether the Applicant failed to provide supporting documents for the alleged debit entries in the statements of accounts.

Issue-wise Detailed Analysis:

1. Crystallization of Amounts Recoverable:
The Tribunal addressed the contention that the amounts recoverable from the Personal Guarantor cannot be crystallized until the culmination of the Corporate Insolvency Resolution Process (CIRP). It was clarified that the initiation of Insolvency Resolution Process against the Personal Guarantor is permissible even before the debt amount recoverable from the Corporate Debtor is finalized. The Tribunal emphasized that the liability of the surety in a Contract of Guarantee is co-extensive with that of the Principal Borrower. Therefore, the initiation of the Insolvency Resolution Process against the Personal Guarantor is not barred by the Code.

2. Coercion in Signing the Personal Guarantee Agreement:
The Personal Guarantor contended that he was coerced into signing the Personal Guarantee agreement. The Tribunal found this contention implausible and unconvincing, noting that it is unlikely the Respondent would not have realized he was signing important documents for a loan taken by another party. Additionally, no legal action was taken by the Personal Guarantor to void the contract on grounds of coercion. The Tribunal highlighted that under the Law of Contract, an agreement caused by coercion is voidable at the option of the coerced party, but since no action was taken to void the contract, it remains valid and enforceable.

3. Lack of Supporting Documents for Debit Entries:
The Respondent argued that the Applicant did not provide vouchers and other supporting documents for the alleged debit entries. The Tribunal noted that the debt was registered with the Information Utility (NESL), and under Section 99(3) of the IBC, 2016, the debtor cannot dispute the validity of such debt. Therefore, this contention was found to be unsustainable.

Final Order:
Based on the above analysis and the reasons recorded in the Resolution Professional's report, the Tribunal admitted the petition under Section 95 of the IBC, 2016, and initiated the Insolvency Resolution Process against the Personal Guarantor. The moratorium was declared, effective from the date of the order, and will last for 180 days. During the moratorium, any pending legal actions or proceedings in respect of any debt are stayed, and creditors cannot initiate new legal actions or proceedings. The Personal Guarantor is also prohibited from transferring or disposing of any assets.

The Resolution Professional was directed to publish a public notice inviting claims from all creditors within seven days of the order's publication. The notice must be published in widely circulated newspapers in English and Vernacular languages. The Resolution Professional is also required to prepare a list of creditors and a Repayment Plan in consultation with the debtor, and submit it to the Tribunal within specified timelines.

In conclusion, the Tribunal admitted the petition and initiated the Insolvency Resolution Process against the Personal Guarantor, directing the necessary procedural steps to be taken by the Resolution Professional.

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