AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (11) TMI 705
X X X X Extracts X X X X
X X X X Extracts X X X X
....t on account of invocation of the corporate guarantee by the applicant. 2. Brief facts of the case necessary for disposal of the application are that the Financial Creditor, namely DBS Bank Limited filed C.P. No. (IB)-102(PB)/2017, which was admitted in the matter of 'Corporate Debtor' under Section 7 of the Code. While admitting the petition on 27.06.2017, we have also issued direction for the moratorium in terms of Section 14 of the Code as is evident from the perusal of para 11 of that order. The Interim Resolution Professional issued public notice inviting the claims, which was duly published on 30.06.2017 (Annexure-3). The applicant submitted its proof of claim in form 'C' on 11.7.2017 alongwith supporting documents to the IRP in respect of its claim aggregating to Rs. 396,76,07,676.68/-. The aforesaid amount was claimed being the amount guaranteed by the Corporate Debtor vide Corporate Guarantee furnished by it in favour of Educom Solutions Ltd. It is appropriate to mention that Educom Solutions Ltd. had entered into a Master Restructuring Agreement dated 25.03.2014, inter alia with the applicant-Axis Bank Ltd. for restructuring and reconstitution of the existing loans amo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....efore, it could not be verifiable. Another objection raised by the Resolution professional was that the applicant did not submit fresh claim form subsequent to the invocation of the Corporate Guarantee, therefore, the claim could not be accepted and verified (Annexure-7) (Colly). The RP also raised objections to the invocation of the corporate guarantee by the applicant in view of the Security Trustee Agreement. Axis Bank Ltd.-applicant has submitted that each of the grounds for objecting to the tenability of applicant's claim and its consequent rejection were untenable and contrary to the provisions of the Code. In that regard, reliance has been placed on Regulations 12,13 and 14 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016 (for brevity 'IBBI Regulations'). Axis Bank Ltd.-applicant has also placed reliance on the definition of 'Financial Creditor' as given in Section 5(7) to argue that it includes any person to whom financial debt is owed and also includes the person to whom the said debt has been legally assigned or transferred. Reliance has also been placed on the definition of 'financial debt' under Secti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d amount to unjust enrichment to such creditor and would lead to anomalous situation. It has thus been contended that once the Axis Bank Ltd.-applicant has exercised its right to file claim against the principal borrower, i.e. Educomp Solutions Ltd., it was incumbent upon it to wait for the CIRP of the principal borrower to get over before filing any claim against the guarantor. 10. It has further been stated by the Resolution professional that an un-matured claim at the time of commencement of the insolvency process cannot be accepted. According to the pleadings, the mature claim would be the one which are due on the date of admission of the petition, i.e. 27.06.2017. In that regard, reliance has been placed on Section 3(11) of the Code to argue that liability or obligation has to be due from any person in respect of a claim. The applicant had invoked the corporate guarantee on 21.07.2017, which is after the date of commencement of the insolvency process on 27.06.2017 and the claim has been rightly rejected. For the aforesaid submission, reliance has also been placed on Regulation 13 of the Regulations as the Resolution Professional has to verify only those claims which are exi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of concealment and has stated that it was not necessary to make disclosure with regard to the claim made against the principal borrower, i.e. Educomp Solutions Ltd. 15. The applicant has also claimed that there is no provision of raising the assets and liabilities of the Corporate Debtor on the date of commencement of the insolvency process as it is erroneously claimed by the Resolution professional. 16. We have heard learned Counsel for the parties at a considerable length and have perused the records with the able assistance. 17. The question which needs determination in the present proceedings is whether the Axis Bank Ltd.-applicant is entitled to make a claim by invoking the corporate guarantee after the date of commencement of the insolvency process. In order to appreciate the aforesaid issue, we may first refer to certain terms and conditions of the corporate guarantee executed between the parties on 03.06.2015 (Annexure-2). Under the caption '1.3 Terms of the Guarantee' clause-3 provides as under: "In the event of any default on the part of the Borrower in payment/repayment and in reimbursement of any of the monies referred to above, or in the event of any ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....shall be - (a) available for inspection by the persons who submitted proofs of claim; (b) available for inspection by members, partners, directors and guarantors of the corporate debtor; (c) displayed on the website, if any, of the corporate debtor; (d) filed with the Adjudicating Authority; and (e) presented at the first meeting of the committee." A co-joint reading of the aforesaid Regulations would show that a creditor has to submit proof of claim on or before the last date mentioned in the public announcement and if he has failed to submit proof of claim by the stipulated date, then he may still submit the proof to the Resolution professional till the approval of a Resolution Plan by the committee of creditors. As per Regulation 13(1) of IBB1 Regulations, the claims are to be verified by the Resolution Professional as on the date of commencement of insolvency process. The verification has to be completed within seven days from the last date of the receipt of the claims. Thereupon, the Resolution Professional is obliged to maintain a list of creditors containing the names of creditors alongwith the amounts claimed by them. The list....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not repaid by the debtor or the corporate debtor, as the case may be; A co-joint reading of the aforesaid provisions would show that a claim would mean a right to payment whether reduced to any judgment etc. It also includes right to remedy for breach of contract under any law for the time being in force. The 'Corporate Debtor' has been defined to mean a corporate person, who owes a debt to any person and 'creditor' has been defined to whom a debt is owed and includes all types of creditors, like a financial creditor, an operational creditor, a secured creditor, an unsecured creditor and a decree-holder. The emphasis appears to be on the expression 'payment and the debt, claim and the debt which is due from any person and includes financial debt and operational debt. Going by the aforesaid provisions, debt has not become due from the Corporate Debtor on the insolvency commencement date, i.e. 27.06.2017. It became due only when the corporate guarantee was invoked by the Axis Bank Ltd.-the Corporate Debtor-applicant on 21.07.2017. 20. Therefore, we are unable to pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eration as we are not proceeding to decide the application on the aforesaid issue. 23. Another submission made by learned Counsel for the applicant-Axis Bank Ltd. is that Section 22(3) of the Sick Industrial Companies (Special Provisions) Act, 1985 has been deliberately omitted from the Scheme of the Code and therefore, it should be taken to mean that no such bar would operate against the invocation of bank guarantee by virtue of moratorium imposed under Section 14 of the Code. An ancillary argument is that in any case there is no provision in the Code declaring the insolvency commencement date as the date to determine the claims of the parties. A perusal of Section 22(3) of the SIC Act would reveal that it is not different in sum and substance than the provision of Section 14 of the Code. In our view, Section 14 would clearly cover the invocation of guarantee after the insolvency commencement date. The moratorium prohibiting a number of things has been contemplated and for the present case clause (c) of sub-section (1) of Section 14 would be suffice and the same reads as under: 14. (1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, th....