Just a moment...

Report
FeedbackReport
Bars
Logo TaxTMI
>
×

By creating an account you can:

Feedback/Report an Error
Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters0/2000
TMI Blog
Home / RSS

2024 (5) TMI 469

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ed in CP(IB) No.100/ NCLT/ AHM/2021 and in Company Appeal (AT) (Insolvency) No. 743 of 2024 has been filed against the order dated 27.02.2024 passed in CP(IB) No.92/ NCLT/ AHM/2021, by which orders Application filed by SBI in both the cases, under Section 95, sub-section (1) have been admitted. Both the Appellant(s) were Personal Guarantors of the Corporate Debtor - Sanghvi Forging & Engineering Limited and the SBI having filed Applications under Section 95 against both the Personal Guarantors, it shall be sufficient to refer to the pleading and facts in Company Appeal (AT) (Insolvency) No. 742 of 2024 for deciding these two Appeal(s). 3. Brief facts of the case are: (i) A working Capital Term Loan Consortium Agreement was executed between the Consortium bank consisting of the Respondent with Bank of Baroda and the Corporate Debtor. An Agreement was also entered into between the Personal Guarantor with Consortium Bank. Guarantee for repayment of various financial facilities extended to Sanghvi Forging & Engineering Limited was provided by the Appellant. (ii) The Corporate Debtor having defaulted in payment of debt, Section 7 Application was filed by the Financial Creditor, whi....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ity. 5. We have considered the submissions of learned Counsel for the Appellant and have perused the record. 6. The Company Petition filed under Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Rules, 2019 has been brought on record by the Appellant. In Part-III of the Application, particulars of debt has been given. In Column-1 of Part-III, it is clearly contemplated that in the event of successful implementation of the Resolution Plan approved by the Adjudicating Authority, the claim of Financial Creditor will be reduced by the amount received from the Resolution Applicant. Part-III, Column-1 and Column-2 are as follows: "PART-III PARTICULARS OF DEBT 1. Total debt (including any interest of penalties) Rs.137,64,76,599.15/- (Rupees one Hundred Thirty Seven Crore Sixty Four Lakhs Seventy Six Thousand Five Hundred Ninety Nine and Fifteen Paisa only) (As on 12.04.2021 along with accrued interest & penal interest and Legal/ other expenses) In the event of successful implementation of the Resolution Plan approved by the Hon'ble Adjudicating Authority vide order d....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....d enforce such Excluded Guarantees." 8. It is further submitted that as per the Resolution Plan, assignment agreement dated 28.06.2021 was executed in favour of SPV, i.e. M/s BF Industrial Solution Ltd. From the Clause 36 of the Resolution Plan, as extracted by the Appellant, it is clear that guarantees has been excluded from assignment and that guarantees shall continue to remain with the Financial Creditor, which can be invoked and enforced. The submission of the Appellant that since the entire debt has been assigned to SPV, personal guarantees against the Appellant could not have been invoked, has been considered and rejected by the Adjudicating Authority by the impugned order. The Adjudicating Authority in paragraph 13, 14, and 17 observed following: "13. On perusal of the application and documents annexed with it, it is found that the Resolution Plan of the CD was approved on 26.04.2021. As per the plan the entire debt of the CD was acquired by SRA but how much amount received by the applicant pursuant to approval of the resolution was not mentioned in the application. Therefore, this Tribunal has listed this matter for clarification on 24.01.2024. Pursuant to the order of....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....default. It was held by this Tribunal that even after approval of Resolution Plan, recourse against third party can be resorted to and the approval of Resolution Plan, does not extinguish the right of Financial Creditor to proceed against third party. This Tribunal while considering the issue, laid down following in paragraph 50, 51 and 56: "50. Law on extinguishment of claim against personal guarantor and third party on approval of Resolution Plan has been settled by Hon'ble Supreme Court in its judgment in Lalit Kumar Jain vs. Union of India and Ors. - (2021) 9 SCC 321, where the Hon'ble Supreme Court held that approval of resolution plan does not ipso facto discharge a personal guarantor (of a Corporate Debtor) of her or his liabilities under the contract of guarantee. In paragraph 126 the Hon'ble Supreme Court held following: "126. For the foregoing reasons, it is held that the impugned notification is legal and valid. It is also held that approval of a resolution plan relating to a corporate debtor does not operate so as to discharge the liabilities of personal guarantors (to corporate debtors). The writ petitions, transferred cases and transfer petitions are accordingly ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... Appellant(s) has placed reliance on the judgment of the Hon'ble Delhi High Court in Vineet Saraf vs. Rural Electrification Corporation Ltd. - (2023) SCC OnLine Del 4291. In the said case, a writ petition was filed for quashing the demand notice dated 09.12.2022 issued by Respondent under Rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Rules, 2019. In paragraph 1 and 2 of the judgment, facts have been noticed, which are to the following effect: "1. The petitioner has filed the instant writ petition seeking quashing of the impugned Demand Notice dated 09.12.2022 issued by the respondent i.e., Rural Electrification Corporation Limited(hereinafter 'REC Ltd.') under Rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (hereinafter 'Rules, 2019') invoking the personal guarantees of the petitioner for the purported total outstanding debt of Rs. 1211,91,94,259 (hereinafter 'impugned demand notice'). 2. As per the facts of the case, the petitioner stood a....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....prima facie opinion and left it to be dealt with by the concerned Tribunal on merits. We, thus, are of the view that judgment of the Delhi High Court in Vineet Saraf does not come to any aid in the present case. 14. The learned Counsel for the Appellant(s) has submitted that the Appellant(s) in their written submissions have also placed reliance on the judgment of Australian High Court in Hutchens v. Deauville Investments Pty Ltd. - 68 Australian Law Report 367, which judgment has not been dealt with by the Adjudicating Authority. The judgment of High Court of Australia in the above case arose out of action brought by Respondent for possession of certain land registered under the Transfer of Land Act 1958. The basis of the action was alleged default by Hutchens as under a registered mortgage of the land. The facts of the case has been noticed in paragraph-1 of the judgment, which is as follows: "1. This is an appeal by special leave from a judgment of the Full Court of the Supreme Court of Victoria affirming the decision of a single judge dismissing an appeal to him from an order made by a Master. The appellant is Kenneth Ruston Hutchens ("Hutchens") who was the defendant in the....