https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=457932 https://www.taxtmi.com/caselaws?id=457932 Initiation of Insolvency Resolution process against this Corporate Debtor - denial of execution of Corporate Guarantee - Corporate Guarantee not valid for want of RBI approval - mainatinability of application before this Bench as aerlier it was applied before Mauritius Court against the principal borrower - guarantee agreement is an unstamped instrument. Denial of execution of Corporate Guarantee - HELD THAT:- There is ample material to prove that this debtor company has given Corporate Guarantee on its subsidiary s behalf to the creditor, therefore the defence of the debtor company saying that corporate guarantee has not been given by it does not infuse any belief in the mind of this Bench to turn down the case of the applicant, therefore, this Bench hereby believes that the creditor placed enough material proving that this Corporate Debtor executed Corporate Guarantee to the loan of USD 30 million taken by RPML from the Creditor Bank. Usually, the loan procured by a subsidiary overseas is secured by a guarantee provided by the Indian parent entity, the same is the thing happened here. Corporate Guarantee is not valid for want of RBI approval - HELD THAT:- May be the debtor has not put its efforts to see it reached to the RBI because guarantee is more than its limits. Since this duty is cast upon the Corporate Debtor to intimate to RBI about giving guarantee, the person, done wrong by not ensuring intimation reached to the RBI, today cannot come out with a defence stating since intimation has not reached to the RBI, the liability arising under this agreement is not enforceable against the corporate debtor. Therefore, there are no merit saying that not sending intimation to RBI about execution of guarantee will make this transaction invalid. No law says a person made a gain out of a transaction can vilify the same saying by so and so glitch in the law he has become free from the obligation owed upon him. More so, even if any transaction is irregular in the teeth of any regulation, mere irregularity per se will not make an act illegal. Another objection raised by the Corporate Debtor is that since the applicant obtained decree against the principal borrower and filed a civil suit against this Corporate Debtor before Mauritius Supreme Court claiming recovery of the same debt for RPML failed to discharge its obligations, this Applicant should not now elect to proceed before this Bench after having already tried its luck before Mauritius Court against the principal borrower, thereafter against this Corporate Debtor - HELD THAT:- On looking into Section 5 sub-Section 8 of the Insolvency Bankruptcy Code, it is ascertainable that the clause (i) of Sub-Section 8 says that the amount of any liability in respect of the guarantee given for the credit facility availed by the principal borrower will fall within the definition of Financial Debt, therefore, this applicant is entitled to proceed against the guarantor because this Code mandated that the liability against the guarantee will also amount to financial debt. As to proceedings u/s. 7 of the Code, the dispute pending in relation to the claim amount before any other forum will not become impediment or bar to initiate Insolvency Resolution Process u/s. 7, therefore, obtaining a decree against RPML or pending of suit against this Corporate Debtor in relation to this claim cannot invalidate the proceeding u/s. 7. Moreover, it is not the case of the Corporate Debtor that the decree passed against RPML has been satisfied by making payment either by RPML or by this Corporate Debtor; thereby pendency of proceedings cannot become an objection for admission of this case. Unstamped Corporate Guarantee Agreement - HELD THAT:- Since this Bench has already held that this Court has not believed the defence of the Corporate Debtor saying that no Corporate Guarantee Agreement has been executed in favour of the applicant, once such instrument has been sent for impounding it will automatically get impounded provided requisite stamp has been paid, moreover nothing is left to decide once this administrative act of impounding is done. It is a curable defect; therefore it will not become an impediment to initiate Insolvency Resolution Process. This Bench has not gone into as to whether a foreign instrument not chargeable in that respective country needs to be stamped as envisaged under the Stamp Act, because both sides failed to assist this Bench on that perspective. If at all this Bench has not admitted this company petition, then there is every likelihood diminution of the value of the corporate debtor company if initiation of Insolvency Resolution process is prevaricated. Since it is a known fact that unless and until the moratorium is declared, the corporate debtor company is at free to alienate the assets of the company or to dilute the assets of the company, since it is not in doubt that the corporate debtor executed guarantee agreement the direction for impounding will not cause any impediment for admitting this petition. This Bench hereby directs the creditor for impounding guarantee agreement as per law - this Bench being satisfied that the principal borrower drew down the loan facility given by the petitioner thereafter defaulted in making repayment for the principal borrower having defaulted the contingent liability against the guarantor has become crystallised into a definite liability falling within a definition given for financial debt for this corporate debtor has also not paid, this Bench hereby admit this Company Petition - Petition admitted. Case-Laws IBC Fri, 30 Jun 2017 00:00:00 +0530