Tribunal Upholds Decision in Favor of Respondent No.1

The Tribunal upheld the Adjudicating Authority's decision, ruling in favor of Respondent No.1 on all issues. It found proper service of notice on the Corporate Debtor, deemed the Assignment Deed enforceable under the SARFAESI Act, established privity of contract between the Corporate Debtor and Respondent No.1, permitted simultaneous CIRP against the principal borrower and corporate guarantor, and allowed both Section 7 applications to proceed. The Tribunal dismissed the appeal, affirming the admission of the Section 7 application and allowing the Insolvency Resolution Process to continue.

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Issues Involved:
1. Proper service of notice on the Corporate Debtor.
2. Legal enforceability of the Assignment Deed.
3. Privity of contract between the Corporate Debtor and Respondent No.1.
4. Allegation of duplicate claims for the same debt.
5. Simultaneous CIRP against the principal borrower and the corporate guarantor.

Summary:

1. Proper Service of Notice:
The Appellant contended that Respondent No.1 did not properly serve notice on the Corporate Debtor as directed by the Adjudicating Authority, violating principles of natural justice. The Tribunal found that Respondent No.1 had complied with the service requirements by sending the notice to the registered email address of the Corporate Debtor, fulfilling the Adjudicating Authority's directions. The Tribunal concluded that the Appellant could not claim deprivation of a reasonable opportunity for a hearing due to non-service of notice.

2. Legal Enforceability of the Assignment Deed:
The Appellant argued that the Assignment Deed dated 18.01.2021 was not legally enforceable as it was unregistered. The Tribunal referred to a connected matter (Naresh Kumar Aggarwal v. CFM Asset Reconstruction Pvt. Ltd.) and held that the Assignment Agreement was in accordance with Section 5 of the SARFAESI Act, making Respondent No.1 a deemed lender entitled to initiate Section 7 proceedings. The Tribunal dismissed the Appellant's contention, stating that the Registration Act, 1908, does not apply to the Assignment Agreement in this context.

3. Privity of Contract:
The Appellant contended that there was no privity of contract between the Corporate Debtor and Respondent No.1, as the Deed of Guarantee was executed in favor of SBICAP. The Tribunal found that SBI had assigned all its rights, including the Deed of Guarantee, to Respondent No.1, making Respondent No.1 the deemed lender. The Tribunal concluded that Respondent No.1 was entitled to initiate Section 7 proceedings.

4. Allegation of Duplicate Claims:
The Appellant alleged that Respondent No.1 made a malafide attempt to file duplicate claims for the same debt, as the Adjudicating Authority had already admitted the principal borrower into CIRP. The Tribunal held that the liability of the guarantor is co-extensive with that of the principal borrower, allowing the financial creditor to initiate Section 7 proceedings against both simultaneously.

5. Simultaneous CIRP:
The Appellant argued that two applications under Section 7 could not be admitted simultaneously for the same claim and default against both the principal borrower and the corporate guarantor. The Tribunal referred to the Supreme Court judgment in Laxmi Pat Surana v. Union of India, which allows simultaneous proceedings against both, and dismissed the Appellant's contention.

Conclusion:
The Tribunal found no error in the Adjudicating Authority's order admitting the Section 7 application and dismissed the appeal, allowing the IRP to continue with the CIRP proceedings.

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