TaxTMI 
TaxTMI 
2022 (8) TMI 69
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....lant as Personal Guarantor of the Corporate Debtor - M/s Ess Dee Aluminum Limited. 2. Company Appeal (AT) (Insolvency) No. 807 of 2021 has been filed against the order dated 03.08.2021 passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench, Kolkata in C.P. (IB) No. 54/KB/2020 by which order on an application filed under Section 95 Sub- section (1) of the I&B Code by the State Bank of India, the Adjudicating Authority appointed Mr. Prashant Jain as Resolution Professional and directed him to make recommendations in writing for acceptance or rejection of the application filed under Section 95(1). The Appellant aggrieved by the order dated 03.08.2021 has filed Company Appeal (AT) (Insolvency) No. 807 of 2021. In the appeal, notices were issued on 25.10.2021 but this Tribunal did not grant any kind of interim order. 3. Company Appeal (AT) (Insolvency) No. 740 of 2022 has been filed by the Appellant challenging the order dated 16.06.2022 passed in same company petition being C.P. (IB) No. 54/KB/2020 by which order the Adjudicating Authority admitted the application filed under Section 95(1) and insolvency resolution process was initiated against the Ap....
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....ising from the Deed of Guarantee does not extinguish but the said liability cannot be enforced by way of proceedings under I&B Code. 7. Shri Ashwini Kumar Singh, learned counsel appearing for State Bank of India submits that the Company Appeal (AT) (Insolvency) No. 807 of 2021 has become infructuous in view of the subsequent order passed by the Adjudicating Authority dated 16.06.2022. It is submitted that the Appellant was given due opportunity by the Adjudicating Authority and notice was issued to the Appellant by the Adjudicating Authority before passing the impugned order dated 03.08.2021. He submitted that Application under Section 7 has already been admitted by the Adjudicating Authority i.e. National Company Law Tribunal, Kolkata Bench against the Corporate Debtor - 'M/s Ess Dee Aluminum Limited' by order dated 14.02.2020. Refuting the submission of Shri Mukherjee, learned counsel for the Respondent submits that the Adjudicating Authority has rightly admitted the application under Section 95(1) filed by the State Bank of India. It is submitted that Appellant is fully bound by the Deed of Guarantee dated 19.10.2015 given by him. The fact that subsequently the Appellant has ....
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....ght it out in its application that personal guarantor has committed default in making the payment of the cash credit facility. The said para cannot be read as recording any finding by the Tribunal regarding default. When the Adjudicating Authority has appointed Resolution Professional who has to make recommendations, no finding can be recorded regarding default before appointing Resolution Professional since it is the Resolution Professional who after examining the relevant material shall make recommendations. Para 7 of the impugned judgment thus has to be read only to the effect that said para contains the averments of the applicant so as to proceed further in the matter in accordance with the provisions of the Code. 12. In Company Appeal (AT) (Insolvency) No. 807 of 2021 reply has been filed by the Bank, where it has been stated that application under Section 95(1) against the Appellant was filed on 01.12.2020. Copy of the application was also served on the Appellant by email dated 01.12.2020. Adjudicating Authority vide order dated 25.02.2021 has issued notice to the Appellant fixing 14.04.2021 as next date before the Adjudicating Authority. We, thus, are satisfied that proce....
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....claims to have acquired citizenship of Singapore on 18.06.2018. 15. From the submissions of learned counsel for the parties following issues arise in the present Appeal: (i) Whether a Personal Guarantee given by the Appellant by Guarantee Deed dated 19.10.2015 shall extinguish, on Appellant, the Personal Guarantor acquiring citizenship of Singapore w.e.f. 18.06.2018? (ii) Whether proceedings under Section 95(1) against the Appellant as a Personal Guarantor could not have been initiated by State Bank of India before the NCLT, Kolkata Bench by filing C.P. (IB) No. 54/KB/2021 due to the reason that Appellant has obtained citizenship of Singapore w.e.f. 18.06.2018 and has gone beyond jurisdiction of the Adjudicating Authority to proceed against him under Section 95(1)? (iii) Whether it was necessary for the Central Government to enter into an agreement as required under Section 234-235 of the Code to enable the Adjudicating Authority to proceed against the Appellant, a Singapore citizen' under Section 95(1) where the Appellant has executed Guarantee Deed dated 19.10.2015? 16. Issues No. 1, 2 and 3 are all interrelated, hence, are being taken together. ....
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....me to Section 60 which deals with Adjudicating Authority for Corporate Persons. Section 60(1), (2) and (3) are to the following effect:- "60(1) The Adjudicating Authority, in relation to insolvency resolution and liquidation for corporate persons including corporate debtors and personal guarantors thereof shall be the National Company Law Tribunal having territorial jurisdiction over the place where the registered office of the corporate persons located. (2) Without prejudice to sub-section (1) and notwithstanding anything to the contrary contained in this Code, where a corporate insolvency resolution process or liquidation proceeding of a corporate debtor is pending before a National Company Law Tribunal, an application relating to the insolvency resolution or 1[liquidation or bankruptcy of a corporate guarantor or personal guarantor, as the case may be, of such corporate debtor] shall be filed before such National Company Law Tribunal. (3) An insolvency resolution process or 2[liquidation or bankruptcy proceeding of a corporate guarantor or personal guarantor, as the case may be, of the corporate debtor] pending in any court or tribunal shall stand tran....
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....eed has obtained citizenship of a foreign country. In event, such Personal Guarantors are allowed to wash off from their obligation under the Guarantee Deed, the easiest way for a Personal Guarantor is to run away out of the country and say that now I am not liable to perform my obligation under the Deed of Guarantee since I am no more Indian citizen. The Adjudicating Authority in the impugned order has very rightly made following observations in above regard:- "ex-facie sans rationale, provisions and legislative intent of the Code. If this plea of respondent is accepted, it shall mean allowing a subterfuge to get away without discharge of financial obligations incurred in India. Give a Bank Guarantee for obtaining loan in India, renounce Indian citizen ship and upon being asked to discharge obligation of repayment/face CIRP, simply state 'Catch me if you can' after becoming Citizen of any other Country. No law or policy can be interpreted to give it such an absurd interpretation. In considering and taking a decision to the plea of respondent, reliance is also placed on judgment of Hon'ble Super Court, 1994 SCC (3) 440, where it has been held: "It is perm....
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....ply the Code, in such a manner as to achieve the objective of the amendment, i.e. to ensure that adjudicating body dealing with insolvency of corporate debtors also had before it the insolvency proceedings of personal guarantors to such corporate debtors. 96. The amendment of 2018 also altered Section 60 in that insolvency and bankruptcy processes relating to liquidation and bankruptcy in respect of three categories i.e. corporate debtors, corporate guarantors of corporate debtors and personal guarantors to corporate debtors were to be considered by the same forum i.e. NCLT." 26. At this juncture, we may also notice provisions of Section 234 and 235 of the I&B Code, which are to the following effect:- "234. Agreements with foreign countries. - (1) The Central Government may enter into an agreement with the Government of any country outside India for enforcing the provisions of this Code. (2) The Central Government may, by notification in the Official Gazette, direct that the application of provisions of this Code in relation to assets or property of corporate debtor or debtor, including a personal guarantor of a corporate debtor, as the case may be, si....
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....ry, hence, reliance on Section 234 and 235 are wholly misplaced. In the judgment of 'Lalit Kumar Jain' (Supra) after noticing Sections 234 and 235, Hon'ble Supreme Court stated following in Para 106:- "These two provisions also reveal that the scheme of the Code always contemplated that overseas assets of a corporate debtor or its personal guarantor could be dealt with in an identical manner during insolvency proceedings, including by issuing letters of request to courts or authorities in other countries for the purpose of dealing with such assets located within their jurisdiction" 28. The net result of above discussion is that the Deed of Guarantee of the Appellant executed on 19.10.2015 still continues and bind him and he cannot escape his obligation under the Personal Guarantee given by him on mere fact that he has obtained citizenship of Singapore w.e.f. 18.06.2018. 29. Shri Mukherjee, learned senior counsel for the Appellant has submitted that he does not dispute the liability arising from the Deed of Guarantee which does not extinguish but the said liability cannot be enforced by proceedings under I&B Code. He submits that for enforcing the said liability the B....