TaxTMI 
TaxTMI 
2019 (2) TMI 316
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....common judgment. 2. A 'Deed of Agreement' was entered into by 'All India Society for Advance Education and Research' (hereinafter referred to as "Principal Borrower") with 'M/s. Piramal Enterprises Ltd.' (hereinafter referred to as "Financial Creditor") for grant of Rs. 38,00,00,000/- (Rupees Thirty-Eight Crores Only) which was guaranteed by two 'Corporate Guarantors' namely- 'Sunrise Naturopathy and Resorts Pvt. Ltd.'- ("Corporate Guarantor No.1" for short) and 'Sunsystem Institute of Information Technology Pvt. Ltd.'- ("Corporate Guarantor No.2" for short). The loan amount was disbursed in two tranches by the 'Financial Creditor' to the 'Principal Borrower' which is as follows: DATE AMOUNT (IN RS.) 28th October, 2013 31,17,00,000 1st November, 2013 6,83,00,000 Total 38,00,00,000 3. Between the years January, 2014 to July, 2017, the 'Principal Borrower' has repaid more than Rs. 22 Crores of the loan. 4. The 'Financial Creditor' had filed a Civil Suit bearing No. 46/40/2017 before the Court of Additional District Judge-I, Alwar, Rajasthan against the 'Principal Borrower' and both the 'Corporate Guarantors' on 15th September, 2017, which is pending a....
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....Piramal Enterprises Ltd.') against both the 'Corporate Guarantors No. 1 & 2' (shown as 'Corporate Debtors') it is clear that same claim amount has been shown in both the Form-1, and reliance has been placed on same agreement. Debt amount and the amount of default, date of default etc. are also same which is in terms of the agreement dated 18th October, 2013. The Adjudicating Authority noticed the similarity in two separate impugned orders and used same language and reasoning though passed orders one on 24th May, 2018 and the other on 31st May, 2018. 11. In the aforesaid background, learned counsel for the Appellant raised question of maintainability of two 'Corporate Insolvency Resolution Processes' against two 'Corporate Guarantors' based on same sets of claim; debt, default and record. 12. Learned counsel for the Appellant submitted that no 'Corporate Insolvency Resolution Process' can be initiated against the 'Corporate Guarantors', without initiating 'Corporate Insolvency Resolution Process' against the 'Principal Borrower'. Further, according to him, the 'Principal Borrower' not being a Company, no application under Sections 7 or 9 can be filed against it. If no applicat....
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....Authorised Share Capital: Rs. 2,10,00,000 (Rupees Two Crores Ten Lakhs) Paid Up Share Capital: Rs. 2,09,04,000 (Rupees Two Crores Nine Lakhs Four Thousand) Copies of the Memorandum of Association, the Articles of Association Of the Corporate Debtor along with the extract of the master data for the Corporate Debtor as available on the website of the Ministry of Corporate Affairs 5. ADDRESS OF THE REGISTERED OFFICE OF THE CORPORATE DEBTOR P.O. Kalighati (SIR) Panchayat, Bilochi, Tehsil - Arner, Jaipur PART-III PARTICULARS OF THE PROPOSED INTERIM RESOLUTION PROFESSIONAL 1. NAME, ADDRESS, EMAIL ADDRESS AND REGISTRATION NUMBER OF THE PROPOSED INTERIM RESOLUTION PROFESSIONAL Name: Mr. Sethurathnam Ravi Registration No: IBBI/IPA-O0l/IP-POO372/20l7-18/10629 Address: 505-A, 5th Floor, Rectangle 1, District Centre, Saket .New Delhi,Delhi, 110017 Email Address: [email protected] Form 2 along with registration certificate issued by IBBI in favour of the proposed Interim Resolution Professional is annexed herewith as Annexure A-3 (Colly.) PART -IV PARTICULARS OF FINANCIAL DEBT 1. TOTAL AMOUNT OF DEBT GRANTED DATE(S) OF DISBURSEMENT Rs. 38,00,00,00....
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....ored by the Borrower is annexed hereto as Annexure A-4 PART-V PARTICULARS OF FINANCIAL DEBT (DOCUMENTS, RECORD AND . EVIDENCE OF DEFAULT) 1. PARTICULARS OF SECURITY HELD, IF ANY, THE DATE OF ITS CREATION, ITS ESTIMATED VALUE AS PER THE CREDITOR. [ATTACH A COPY OF A CERTIFICATE OF REGISTRATION OF CHARGE ISSUED BY THE REGISTRAR OF COMPANIES (IF CORPORATE DEBTOR IS A COMPANY)] N/A 2. PARTICULARS OF AN ORDER OF A COURT, TRIBUNAL OR ARBITRAL PANEL ADJUDICATING ON THE DEFAULT, IF ANY. As stated above, a civil suit is pending adjudication and the matter has been referred for mediation. Since no progress is made in the mediation, the Financial Creditor intends to withdraw from the mediation. 3. RECORD OF DEFAULT WITH THE INFORMATION UTILITY, IF ANY. N/A 4. DETAILS OF SUCCESSION CERTIFICATE, OR PROBATE OF A WILL, OR LETTER OF ADMINISTRATION, OR COURT DECREE (AS MAY BE APPLICABLE), UNDER THE INDIAN SUCCESSION ACT, 1925 (10 OF 1925). N/A 5. THE LATEST AND COMPLETE COPY OF THE FINANCIAL CONTRACT REFLECTING ALL AMENDMENTS AND WAIVERS TO DATE. i. Deed of Guarantee dated 18 October 2013 executed by the Corporate Debtor in favor of the Financial Cre....
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....Financial Creditor has paid the requisite fee of Rs. 25,000 for this application through a demand draft bearing no. 506410 dated 11 January, 2018 drawn on Deutsche Bank, 28, Kasturba Gandhi Marg, ECE House, Main Building, New Delhi payable at New Delhi The Financial Creditor submits that this Hon'ble Tribunal may be pleased to admit the present Application in terms of Section 7 of the Insolvency and Bankruptcy Code, 2016. Yours sincerely, Signature of person authorised to act on behalf of the financial creditor Name Shikha Varun Ginodia Position with or in relation to the financial creditor Manager, Legal Address of person signing Piramal Enterprises Limited, Piramal Tower, Peninsula Corporate Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400013 "Sunsystem Institute of Information Technology Pvt. Ltd.'-("Corporate Guarantor No.2")" Relevant Extract of Form-1 PART - II PARTICULARS OFTHE CORPORATE DEBTOR 1. NAME OF THE CORPORATE DEBTOR Sunsystem Institute of Information Technology Private Limited 2. IDENTIFICATION NUMBER OF THE CORPORATE DEBTOR CTN: U16911RJ2001PTC016911 3. DATE OF INCORPORATION OF....
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....res Twenty Eight Lakhs Seventy Six Thousand Four Hundred and Sixty One). The default occurred on 11 November, 2017 where despite receipt of notice prescribed under the Deed Guarantee dated 18 October, 2013 calling upon the Corporate Debtor to make payments as outstanding on 30 September 2017, the Corporate Debtor failed to pay the due amount. The breakup of the outstanding amount as on 30 September, 2017 is as follows: Particulars Amount (in Rs.) Interest Payable 5,80,01,098 Principal Outstanding 28,53,44,965 Penal Interest payable 5,95,30.399 Total Outstanding 40,28,76,461 The Applicant reserves its rights to file an updated claim before the RP inclusive Of the applicable interest post 30 September, 2017. * The Borrower originally defaulted in repayment of its obligations to the Financial Creditor on 30 April, 2014 and since then has persistently defaulted on its repayment obligations. The Financial Creditor has already commenced Civil Suit No. 46/40/2017 before the court of Additional District Judge-I, Alwar against the Borrower and the guarantors, including the Corporate Debtor herein on 15 September, 2017. * The F....
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....e Borrower; (ii) Legal notice dated 17 November, 2015 issued to the Borrower and inter alia the Corporate Debtor, on behalf of the Financial Creditor (iii) Letter dated 26 November, 2015 issued by the Borrower (iv) Letter dated 9 December, 2015 issued by the Borrower (v) Balance confirmation dated 18 January, 2016 signed by Mr. V.K. Agarwal on behalf of the Borrower (vi) Audit Report of the Borrower for the year 1 April, 2015 to 31 March, 2016 issued by Ravindra Shah & Co., Chartered Accountants (vii) Letter dated 12 July, 2016 issued by the Financial Creditor to inter alia the Corporate Debtor (viii) Notice of Demand/Invocation dated 24 October, 2017 issued by the Financial Creditor to the Corporate Debtor (ix) Legal Notice dated 24 October, 2017 issued by the counsel on behalf of the Financial Creditor, KNM & Partners, to the Corporate Debtor (x) Letter dated 26 October, 2017 issued on behalf of the Financial Creditor to the Corporate Debtor Copies of the above documents are annexed herewith as Annexure A-6 (COLLY) The Financial Cre....
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....; xxx xxx Sec. 3(10) "creditor" means any person to whom a debt is owed and includes a financial creditor, an operational creditor, a secured creditor, an unsecured creditor and a decree-holder; Sec. 3(11) "debt" means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt; Sec. 3(12) "default" means 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." 20. Certain definitions contained in Section 5 of the 'I&B Code', relevant of which are Section 5(7) & (8) and reads as follows:- "Sec. 5. Definitions.─ (7) "financial....
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....ement of the bond. That condition was fulfilled. Neither the principal debtor nor the surety discharged the admitted liability of the principal debtor in spite of demands. Under Section 128 of the Indian Contract Act, save as provided in the contract, the liability of the surety is coextensive with that of the principal debtor. The surety became thus liable to pay the entire amount. His liability was immediate. It was not deferred until the creditor exhausted his remedies against the principal debtor. 4. Before payment the surety has no right to dictate terms to the creditor and ask him to pursue his remedies against the principal in the first instance. As Lord Eldon observed in Wright v. Simpson "But the surety is a guarantee; and it is his business to see whether the principal pays, and not that of the creditor". In the absence of some special equity the surety has no right to restrain an action against him by the creditor on the ground that the principal is solvent or that the creditor may have relief against the principal in some other proceedings. 5. Likewise where the creditor has obtained a decree against the surety and the principal, the surety has no righ....
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....uted against the mortgage property first or can a money decree, which covers whole or part of decretal amount covering mortgage decree can be executed earlier. There is nothing in law which provides such a composite decree to be first executed only against the property." xx xx xx "13 In the present case before us the decree does not postpone the execution. The decree is simultaneous and it is jointly and severally against all the defendants including the guarantor. It is the right of the decree-holder to proceed with it in a way he like....
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....t the 'Principal Borrower', it is always open to the 'Financial Creditor' to initiate 'Corporate Insolvency Resolution Process' under Section 7 against the 'Corporate Guarantors', as the creditor is also the 'Financial Creditor' qua 'Corporate Guarantor'. The first question is thus answered against the Appellant. 26. We have noticed that with regard to the claim amount of debt and date of default etc. two separate applications under Section 7 has been preferred by same 'Financial Creditor' against two 'Corporate Guarantors' namely- 'Sunrise Naturopathy and Resorts Pvt. Ltd.'- ("Corporate Guarantor No.1") and 'Sunsystem Institute of Information Technology Pvt. Ltd.'- ("Corporate Guarantor No.2"). Both the applications under Section 7 are same in verbatim, as noticed and referred in the preceding paragraphs. 27. In "Innoventive Industries Ltd. v. ICICI Bank and Ors.─ (2018) 1 SCC 407", the Hon'ble Supreme Court observed and held as follows: "27. The scheme of the Code is to ensure that when a default takes place, in the sense that a debt becomes due and is not paid, the insolvency resolution process begins. Default is defined in Section 3(12) in very wide terms a....
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....s to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor, is important. This it must do within 14 days of the receipt of the application. It is at the stage of Section 7(5), where the adjudicating authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the "debt", which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under sub-section (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be." 28. A 'Financial Creditor' has been defined under sub-section (7) of Section 5 means any person to whom a financial debt i....
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....orporate Insolvency Resolution Processes'. If same claim cannot be claimed from 'Resolution Professionals' of separate 'Corporate Insolvency Resolution Processes', for same claim amount and default, two applications under Section 7 cannot be admitted simultaneously. Once for same claim the 'Corporate Insolvency Resolution Process' is initiated against one of the 'Corporate Debtor' after such initiation, the 'Financial Creditor' cannot trigger 'Corporate Insolvency Resolution Process' against the other 'Corporate Debtor(s)', for the same claim amount (debt). 32. There is no bar in the 'I&B Code' for filing simultaneously two applications under Section 7 against the 'Principal Borrower' as well as the 'Corporate Guarantor(s)' or against both the 'Guarantors'. However, once for same set of claim application under Section 7 filed by the 'Financial Creditor' is admitted against one of the 'Corporate Debtor' ('Principal Borrower' or 'Corporate Guarantor(s)'), second application by the same 'Financial Creditor' for same set of claim and default cannot be admitted against the other 'Corporate Debtor' (the 'Corporate Guarantor(s)' or the 'Principal Borrower'). Further, though there is a ....