TaxTMI 
TaxTMI 
2021 (6) TMI 533
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....tunity to the Applicant to file a reply in the above captioned petition being C.P. (IB) 116(ND) of 2021; AND c) During the pendency of the present application order dated 22.03.2021 be kept in abeyance; d) Pass such orders or further order(s) as this Hon'ble Adjudicating Authority may deem fit and proper in the facts and circumstances of the present case." 3. To put succinctly, facts of the case are that the Creditor, M/s. Siemens Financial Services Pvt. Ltd. (hereinafter referred to as Creditor/Respondent No. 1) had filed an application bearing no IB-116(ND)/2021 under Section 95 of IBC 2016 for initiation of IR Process against the Personal Guarantor Mr. Vinod Sehwag. That vide order dated 22.03.2021, this Adjudicating Authority had appointed Mr. Amit Ojha as the Resolution Professional (hereinafter referred to as "RP/Respondent No. 2"). The RP was directed to examine the application and make recommendation along with the reasons in writing for acceptance or rejection of the Application filed under Section 95 of IBC, 2016 within the time as stipulated under Section 99 of IBC, 2016. The matter was further posted to 22.04.2021. 4. It is the contention of ....
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....f the Code. It is pertinent to mention herein that this Hon'ble Adjudicating Authority heard the above captioned petition as ex-parte." 6. That both the Respondents have made their appearance and opposed the Application by stating that there is no illegality in the order dated 22.03.2021. As regards to the service of demand notice dated 22.10.2017, it was submitted that the Tracking Report annexed on Page 81 of the IB/116/ND/2021 clearly reflects that the delivery of the relevant consignment was successfully made to the Applicant himself. For the sake of convenience, the Tracking Report is reproduced below: 7. Further, in response to the allegation of the Applicant regarding non-service of the demand notice at the address where he is residing, it is stated by the Respondent No. 1 that the demand notice was served through email as well, the proof of which has been annexed on Page 85-86 of IB/116/ND/2021. The same is reproduced overleaf: 8. In response to the specific queries, raised by this Bench during hearing of the matter, pertaining to (a) receipt of the copy of the Petition in terms of Section 95(5) of IBC 2016 read with Rule 7(3) of Insolvency & Bankruptcy (Applic....
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....on or application is of such nature that it cannot be set aside as against one respondent only, it may be set aside as against all or any of the other respondents also." 12. That in this regard, the Applicant has placed emphasis on the provisions under Section 424(1) of the Companies Act, 2013 read with THE ELEVENTH SCHEDULE, Entry no. 32 under the IBC 2016, which states that it is mandatory for this Adjudicating Authority to follow the principles of natural justice. The contents of the Section 424(1) of the Companies Act 2013 are reproduced below- "424. Procedure before Tribunal and Appellate Tribunal- (1) The Tribunal and the Appellate Tribunal shall not, while disposing of any proceeding before it or, as the case may be, an appeal before it, be bound by the procedure laid down in the Code of Civil Procedure, 1908, but shall be guided by the principles of natural justice, and, subject to the other provisions of this Act 1["or of the Insolvency and Bankruptcy Code, 2016] and of any rules made thereunder, the Tribunal and the Appellate Tribunal shall have power to regulate their own procedure." 13. To support his contention regarding the necessity of issuanc....
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....CLT is, therefore, obliged to afford a reasonable opportunity to the financial debtor to contest such claim of default by filing a written objection or any other written document as the NCLT may direct and provide a reasonable opportunity of hearing to the corporate debtor prior to admitting the petition filed under Section 7 of the Code of 2016. Section 7(4) of the Code of 2016 requires the NCLT to ascertain the default of the corporate debtor. Such ascertainment of default must necessarily involve the consideration of the documentary claim of the financial creditor. This statutory requirement of ascertainment of default brings within its wake the extension of a reasonable opportunity to the corporate debtor to substantiate by document or otherwise, that there does not exist a default as claimed against it. The proceedings before the NCLT are adversarial in nature. Both the sides are, therefore, entitled to a reasonable opportunity of hearing." 16. That the Applicant has also relied upon the order dated 03.11.2020 passed by the Principal Bench in C.P. (IB) No. 947(PB) of 2020 titled as State Bank of India Vs. Shagufa Khan, wherein an opportunity was given to the Personal Guaran....
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.... admission of such application; and (b) during the interim-moratorium period- (i) any legal action or proceeding pending in respect of any debt shall be deemed to have been stayed; and ii) the creditors of the debtor shall not initiate any legal action or proceedings in respect of any debt." 23. From perusal of the contents of Section 96(1)(b) of IBC 2016, we observe that the interim-moratorium only restrains any ongoing or fresh legal action or proceeding in respect of any debt pertaining to the Personal Guarantor. However, unlike the provision of "final moratorium" as stipulated under Section 101 (2)(c) of IBC 2016, which is initiated after the admission of the Application, there is no provision under interim-moratorium, which restrains Personal Guarantor from transfer, alienation, encumbering or disposing of any of the assets or his legal right or beneficial interest therein. 24. Thus, it is clear and therefore, we are of the considered view that initiation of the interim-moratorium under Section 96 causes no prejudice to the Personal Guarantor. 25. That when an Application comes for the first time before this Adjudicating Authority, ....
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.... Personal Guarantor is entitled to dispute the validity of such a debt except when the debt is registered with the information utility. Thus all these provisions seek to protect the interest of Personal Guarantor, which are required to be considered by the RP before giving the report containing his recommendation for approval or rejection of the application. 28. Thus in nutshell, since (a) the application is neither admitted nor rejected at the initial stage, when RP is appointed, (b) the Scheme of Insolvency Resolution Process in Chapter III of the IBC, 2016 does not empower this Adjudicating Authority to waive imposition of the interim-moratorium or to adjudicate upon the application of Creditor on merits before the appointment of RP, (C) no prejudice is caused to the Personal Guarantor at the stage, when RP is appointed; and (d) the proceedings under IBC are summary proceedings, we are of the considered view that no notice is required to be issued to the Personal Guarantor at the initial stage when the RP is appointed. 29. That this Adjudicating Authority is empowered under Rule 51 of NCLT Rules, 2016 to regulate its own procedure and further decide what shall be the appro....
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....levant extracts of the order are reproduced overleaf: "3. If the provisions of Sections 95, 96, 97 and 99 of IBC, 2016 are taken into consideration, then it can be seen that the Scheme under Chapter III provides that on the application filed under Sections 94 and 95 as the case may be, the interim moratorium shall commence. If an application under any of these Sections is not filed through Resolution Professional, then the Resolution Professional is appointed by this Authority. The Resolution Professional after examination of the application shall ascertain that the application satisfies the requirements set out in Sections 94 or 95 as the case may be and shall file a REPORT under Section 99 within 10 days inter alia recommending the acceptance or rejection of the application. A copy of the report is to be provided to the debtor or creditor as the case may be. Under Section 99 (2) of IBC, 2016 the Resolution Professional may require the debtor to prove repayment of debt, so the debtor will have full opportunity of defending him/herself. 4. Therefore, before appointing Resolution Professional and seeking REPORT from the Resolution Professional under Section 99 of I....