TaxTMI 
TaxTMI 
2025 (4) TMI 1194
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....ench, Court-III) in CP (IB) No. IB-655(ND)/2022 and IA- 319/2024 by which initiation of Personal Insolvency Resolution Process (PIRP) it has been ordered against the Appellant. Similar PIRP2 has been ordered by the AA in CP (IB) No. IB-656(ND)/2022 and IA-521/2024 against which appeal CA (AT) (Ins.) 2054/2024 has been filed and for PIRP ordered by the AA in CP (IB) No. IB-652(ND)/2022 and IA-335/2024 appeal in CA (AT) (Ins.) 2117/2024 has been filed. Brief facts relevant for the Appeal 2. Facts necessary to be noticed for deciding this appeal are: Sanction Letter- issued in favour of Andes Town Planners Pvt. Ltd ("Corporate Debtor") and Rohtas Projects Ltd ("Co- Borrower") for a project loan of Rs. 90 crores by Omkara Assets Reconstruction Private Limited "Financial Creditor" or "Respondent No.1" - earlier Dewan Housing Finance Corporation Ltd.-DHFL and subsequently Piramal Capital & Housing Finance Limited. The Loan was secured by way of irrevocable personal guarantees. Sept. 10, 2014 Following documents exchanged between the Corporate Debtor, the Co-borrower and the Financial Creditor: a. Hypothecation Deed- charge created on all receivables from sale of unit....
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....ort filed by the RP u/s 99 of the Code. • The Appellant had not acknowledged the liability to pay the debt; • Corporate Debtor is already undergoing CIRP, wherein resolution plan is being considered by the members of the committee of creditors. Feb. 13, 2024 Adjudicating Authority passed the Impugned Order. Sept. 19, 2024 Submissions of the Appellant - Personal Guarantor: 3. DHFL issued a notice dated 02.01.2020 inter alia, to the Corporate Debtor, Co-Borrower and the Appellant to re-pay the alleged outstanding amount of Rs. 108,19,72,155/-, as on 30.12.2019, within 15 days. Pertinently, the said notice was not received by the Appellant. That the Loan Recall Notice, purportedly dated 02.01.2020, was never served upon the Appellant-PG. Respondent No. 1-FC has failed to provide any proof of service of this notice within the petition. The absence of a delivery receipt or any other credible evidence confirming its service indicates that the appellant was not notified of the Loan Recall Notice and, therefore, was deprived of the opportunity to respond or take any necessary action in relation to the same. 4. DHFL issued a purported notice dated....
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....hereafter on instruction she has appeared and the copy of petition was served on her email by the counsel of the RP on 8th February, 2024. That it is evident from the above this lack of service further compounds the appellant's inability to participate in the proceedings in a fair and informed manner, violating the principles of natural justice. 7. The Appellant filed its objections to the report filed by the Resolution Professional: (a) The Recall Notice, Invocation Notice and Demand Notice, was not delivered on the Appellant; (b) There were various discrepancies in the report filed by the RP u/s 99 of the Code.; (c) The Appellant had not acknowledged the liability to pay the debt; (d) Corporate Debtor is already undergoing CIRP, wherein resolution plan is being considered by the members of the committee of creditors. 8. It is contended that the Adjudicating Authority erroneously issued the Impugned Order on 19.09.2024 without considering settled legal principles and in contravention of the mandatory provisions of Section 95^7 of the Code. This includes improper service of the demand notice on the Appellant and an inaccurate report filed by the Resolution Professional (R....
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....Limited & Others (Company Appeal No. 437/2018), wherein it was held that ".. the admission of the principal debtor to CIRP does not mean that the debt stands proved as against the Guarantor in a Section 7 proceeding against the Corporate Guarantor automatically...". The Respondent has, therefore, failed in establishing compliance of subsection (4)(a) and (b) of section 95 I&B Code, 2016. As such the "debt" as claimed under the Guarantee Deed does not "exist" as on the date of filing of the Petition under Section 95 of IBC. 11. In light of the foregoing, it is evident that essential documents- including the alleged Loan Recall Notice, Invocation of Guarantee Notice, Demand Notice under Section 95(4)(b) of the IBC, 2016, and the petition itself-were either not served on the Appellant or their service has not been adequately proven. The lack of clear evidence of service for these crucial documents deprived the Appellant of a fair and reasonable opportunity to respond. This procedural lapse raises serious concerns regarding compliance with the mandatory requirements of the IBC, 2016, and undermines the Appellant's right to participate in the proceedings. 12. The presumption o....
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....Furthermore, a First Information Report (FIR No. RC0062022A0014) dated 11.04.2022 was registered by police station ACB, Lucknow, based on a complaint filed by Canara Bank, Lucknow, wherein the Appellant - Personal Guarantor's address was recorded as 803, Rohtas Road, Lucknow-the Given Address. 16. Thus, the issuance of the Recall Notice, Invocation Notice, and Demand Notice to the Given Address constitutes valid service in accordance with the Guarantee Deed. Consequently, the Appellant - Personal Guarantor's objections regarding non-service of the notices are baseless, contradict the terms of the Guarantee Deed, and should be rejected outright. 17. Respondent No. 1 - Omkara asserts that sending the Recall Notice, Invocation Notice, and Demand Notice to the last known address constitutes valid service. As previously stated, these notices were sent to the Given Address, as recorded in the Guarantee Deed. It is well settled in law that service of notice at a party's last known address is deemed valid. 18. Pursuant to the Adjudicating Authority's directions, a copy of the Petition was also sent to the Appellant - Personal Guarantor via email on 26.09.2022 and by speed post to ....
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....ed legal principles. This is settled by Hon'ble Supreme Court in Lalit Kumar Jain v. Union of India, [(2021) 9 SCC 321] wherein it was held that approval of a resolution plan does not ipso facto discharge a personal guarantor (of a corporate debtor) of her or his liabilities under the contract of guarantee. Further, the National Company Law Appellate Tribunal, New Delhi, in the matter of Mohan Kumar Garg vs. Omkara Assets Reconstruction Pvt. Ltd. & Anr. being Company Appeal (AT) (Insolvency) No.993 of 2023, had held that the simultaneous proceedings in respect of the guarantor as well as the borrower can be proceeded with. 24. Hence, it is a settled principle of law that simultaneous proceedings can be initiated against the borrower as well as the guarantor. Furthermore, it is submitted that the Respondent No 1- Omkara has not received the outstanding amount, either in part or in full. Hence, the contention of the that since borrower is already undergoing CIRP, wherein resolution plan is being considered by the members of the COC, the Petition ought not be proceeded with, is contrary to the settled principles of law. Submissions of Respondent No. 2-Resolution Professional....
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....he Company Petition was examined in accordance with the law under Sections 95 and 99(6)(a) of the Code. 30. Regarding the Appellant's claim that Section 95 requirements were not met, Respondent No. 2 reviewed all documents, including those submitted via email on January 3, 2024. Despite multiple attempts to engage the Appellant, they remained unresponsive and only raised objections later, causing unnecessary delays. The Appellant has not disputed the debt, the guarantee, or the last known address but only alleged non-delivery of the demand notice, which is unfounded. 31. Respondent No. 2- RP ensured to serve the copy of the order requesting the Appellant to put forward his case, objection and contentions to substantiate their case. However, there was no response. The contents of the objections filed by the Appellant has not denied the due debt amount. Therefore, the statement that the acknowledgement has not been given is untenable in the eyes of the law. The averment made by the Appellant regarding the same is unacceptable. 32. Respondent No. 2- RP has verified the documents pertaining to the NESL report wherein the default has been recorded in respect of the Corporate De....
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....rporate Debtor"), M/s. Rohtas Projects Ltd. ("Co-Borrower") and M/s. Dewan Housing Finance Corporation Limited. ["Financial Creditor" or "Respondent No.1" being Omkara Assets Reconstruction Private Limited which was earlier Dewan Housing Finance Corporation Ltd. and subsequently Piramal Capital & Housing Finance Limited]. Further to the sanction letter dated September 10, 2014 a loan of Rs. 90 crores which was approved and sanctioned to the Corporate Debtor. The Loan was secured by way of irrevocable personal guarantees. A deed of guarantee dated 29/09/2014 ("Deed of Guarantee") was issued by Mr. Paresh Rastogi, Mr. Piyush Rastogi, Mr. Pankaj Rastogi, Mr. Deepak Rastogi in favour of DHFL, giving an unconditional and irrevocable guarantee to jointly and severally repay on demand, all amounts that are due and payable under the facility, including interest, default/penal interest and all other charges, expenses and monies payable under the Loan Agreement. 37. Prayers sought in CA (AT) (Insol) 2053/2024 are: "a) Allow the present appeal; b) Set aside the Impugned Order dated 19.09.2024 passed by the Ld. Adjudicating Authority initiating Personal Insolvency Process ....
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....there was valid service of Loan Recall Notice, Invocation Notice, and Demand Notice b. whether statutory requirements under various sections of the Code particularly Sections 95 and 99 have been complied or not c. whether invocation of the Guarantee has happened or not in the instant case which would have made the proceedings against the Appellants non-maintainable. 41. We first delve into the issue of Validity of Service of Notices. From the materials on record we find that the Respondents had sent the Loan Recall Notice, Invocation Notice, and Demand Notice to the Given Address recorded in the Guarantee Deed. Appellant contends that the notices were either not served or not adequately proven to be served. Clause 22 of the Guarantee Deed explicitly states that all communications, including a Notice of Demand, sent to the address provided in the Guarantee Deed or the last known address shall be considered sufficient service. The relevant clause is reiterated below: "22. The Guarantors agree that all the communications including a Notice of Demand posted under the Certificate of Posting at the above stated or last known address of the Guarantors shall b....
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....thority and Ors. Vs. Manju Jain and Ors. (2010) 9 SCC 157 the Hon'ble Apex Court held as under: "... a. In C.C. Alavi Haji v. Palapetty Muhammed [(2007) 6 SCC 555: (2007) 3 SCC (Cri) 236] this Court reiterated a similar view that Section 27 of the General Clauses Act, 1897 and Section 114 Illustration (f) of the Evidence Act, give rise to a presumption that the service of a notice has been effected when it is sent to the correct address by registered post. This Court held as under: (SCC p. 564, para 14) "14. Section 27 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. ... Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business." b. This Court has reiterated a similar view in Gujarat Electricity Board v. Atmaram Sungomal Poshani [(1989) 2 SCC 602 : 1989 SCC (L&S) 393 : (1989) 10 ATC 396 : AIR 1989 SC 1433], CIT v. V.K. Gururaj [(1996) 7 SCC 275: 1996 SCC (L&S) 579: (1996) 33 ATC 269], Poonam Verma v. DDA [(2007) 13 SCC 154], Sar....
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....left without instructions" the requirement of Section 106 of the Transfer of Property Act, 1882 was met. The relevant paragraphs are: "14. The next question which comes up for consideration in this case is as to whether the notice, whereby the tenancy of the defendant was sought to be terminated by the plaintiffs, can be said to have been duly issued to/served on them. Admittedly, the notice was not actually received by the defendant-company either at its corporate of L; at the suit premises. The notice sent by courier was received back with the remarks "shifted", whereas the notice sent by registered post at the suit premises was received back with the remarks "on repeated visits premises found locked". As noted earlier, the notice sent at the registered office of defendant-company was also sent with the remarks 'left without instructions". 15. The contention of the learned counsel for the plaintiff is that the plaintiffs did whatever they could possibly have done to serve the notice upon the defendants and if the defendants chose to lock the suit premises and either shift its registered office or altogether stop its functioning and close down its operations ....
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....term 'post', as entailed in Section 27 of the General Clauses Act, has been enlarged to include `speed post' and 'courier' as well. The said position of law has been enunciated by the Hon'ble High Court of Jharkhand in Milan Poddar v. CIT, reported at (2013) 357 ITR 619. The relevant paragraphs are as follows: "19. In SIL Import, USA v. Exim Aides Silk Exporters (1999) 97 Comp Cas 575 (SC); AIR 1999 SC 1609, it was contended in the context of section 138 of the Negotiable Instruments Act that notice by fax was not valid. Rejecting the aforesaid contention, the hon'ble Supreme Court has held as under: 'Francis Bennion in Statutory Interpretation has stressed the need to interpret a statute by giving "allowances for any relevant changes that occurred, since the Act's passing, in law, social conditions, technology, the meaning of words, and other matters". For the need to update legislations, the courts have the duty to use interpretative process to the fullest extent permissible by the enactment. The following passage at page 167 of the above book has been quoted with approval by a three-judge Bench of this court in State....
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....nts of the Appellant-PG cannot be accepted that service of demand notice was not affected. 51. All above judgments support the case of the Respondents that support the proposition that notice served to the last known or registered address is deemed effective even if the recipient does not physically receive it. The Appellant's failure to update his address cannot now be used to invalidate such service. 52. We may also note the meaning of service in Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019, which is provided at Rule 3(g): "... 3(g). "serve" means sending any communication by any means, including registered post, speed post, courier or electronic form, which is capable of producing or generating an acknowledgement of receipt of such communication: Provided that where a document cannot be served in any of the modes, it shall be affixed at the outer door or some other conspicuous part of the house or building in which the addressee ordinarily resides or carries on business or personally works for gain;" 53. Further the Respondent No.1- ....
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.... 99 of the Code recommending acceptance of the petition and this report was prepared in compliance with Section 99. From the material on record we find that the Company Petition was examined in accordance with the law under Sections 95 and 99(6)(a) of the Code. The RP has listed the compliance of various provisions which are once again reproduced for clarity as follows: Provisions Compliances Section 95(4)(a) of the Code: Details and documents relating to the debts owed by the debtor to the creditor or creditors submitting the application Respondent No. 2 duly verified the following documents: 1. Demand Notice - dated May 10, 2022, issued by Respondent No.1 2. Loan Agreement- dated September 29, 2014. 3. Deed of Guarantee- signed by the Appellant. Section 95(4)(b) of the Code: Details and documents relating to the failure by the debtor to pay the debt within a period of fourteen days of the service of the notice of demand Respondent No.1 served the Demand Notice in Form B, upon the Appellant in terms of Rule 3(g) proviso of the Personal Insolvency Rules which was duly received by the Appellant. Neither any reply was received by Respondent No.1 to the said....
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....tions later which appear more to cause delays rather participating in resolution process. Respondent No. 2- RP ensured the Appellant- PG was given an opportunity to present their case, but no response was received. The Appellant has not disputed the debt, the guarantee, or the last known address but only alleged non-delivery of the demand notice, which is unfounded. Only claim of lack of acknowledgment of notices etc is legally untenable and unacceptable. As noted earlier it was the duty of the Appellant to notify any change in their address, if any. Regarding the Appellant's claim that Section 95 requirements were not met, Respondent No. 2 reviewed all documents, including those submitted via email on January 3, 2024. 58. We also note that the Respondent No.1 - Omkara had sent the Recall Notice, Invocation Notice, and Demand Notice to the Given Address, which remained the last known address of the Appellant-PG as per the Guarantee Deed. It is to be noted that the same address was used by the Appellant-PG for transactions with other banking and financial institutions as well. Even in the Objections, the Appellant-PG had not claimed that the same address does not belong to them o....
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....ppellant and even in the affidavit filed in this appeal at page 10 of APB the address is noted to be the same as on which all the correspondence has been happening. This address of 803, Rohtas Court, Lucknow - 226001 has also been noted in various places in the APB [ e.g. page 269 in CA (AT) (Ins.) No. 2053/2024]. 61. From the materials on record, we find that the Resolution Professional's report, prepared under Section 99 of the IBC, substantiates that the procedural requirements under Section 95-specifically the issuance and service of the Demand Notice in the prescribed manner-have been met. The evidence of service, including speed post receipts and email transmissions, supports the contention that the statutory process was duly followed. The Appellant's argument that the non-receipt of the notices undermines the proceedings is not borne out by the documentary record. 62. In the above background, the contentions of the Appellant-PG for non- compliance of statutory requirements are devoid of merits and are rejected. 63. Now we delve into the issue of Invocation of the Guarantee and Liability of the Appellant. It is claimed by the Appellant that the guarantee was not prop....
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....the borrower can be proceeded with. The relevant portion of the judgment is reiterated hereunder: "8. Insofar as submission of the Appellant that simultaneous proceeding cannot be initiated against the Principal Borrower and the Corporate Guarantee, the Adjudicating Authority has adequately answered the said issue and referred to relevant judgments. Learned counsel for the Respondent has relied on subsequent judgment of this Tribunal in "Edelweiss Asset Reconstruction Co. Ltd. vs. Gwalior Bypass Projects Ltd., Company Appeal (AT) (Ins.) No. 1186 of 2019", "State Bank of India vs. Mr. Animesh Mukhopadhyay, Company Appeal (AT) (Ins.) No. 186 of 2021" and "Kanwar Raj Bhagat vs. Gujarat Hydrocarbons and Power SEZ Ltd. & Anr., Company Appeal (AT) (Ins.) No. 1096 of 2020" taking the view that simultaneous proceedings against the Principal Borrower and the Corporate Guarantor can be Initiated. 9. We are of the view that law is well settled that proceeding under Section 7 can be initiated against both the Principal Borrower and Corporate Guarantor and there is no inhibition in proceeding against the Corporate Guarantor although proceeding against Principal Borrower under ....
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....Ajit Kulkarni Vs. State Bank of India (Company Appeal (AT) (Insolvency) No. 316 of 2021. The Applicant/Financial Creditor duly complied the order dated 07.09.2022 and filed the proof and Affidavit of service dated 03.10.2022 20. Further, the Resolution Professional took step to inform the Personal Guarantor to furnish necessary information/ documents with regard to repayment of debt. Thereafter, the Resolution Professional obtained the latest information of the Personal Guarantor through the applicant/Financial Creditor. The Resolution Professional sent a letter dated 23.12.2023 to Personal Guarantor on 26.12.2023. However, the letter sent on 26.12.2023 has been returned with the remarks 'Addressee left without instructions'. 21. Be that as it may the Personal Guarantor has not denied that pursuant to the Sanction of the credit facilities by the Applicant/Financial Creditor in favour of the Corporate Debtor, the Personal Guarantor executed the various documents which were duly accepted by the Corporate Debtor and the Personal Guarantor. 22. We have also noticed that the Personal Guarantor has not raised any objection with regard to non-compliance ....
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.... I.A No. 283 of 2025 under Section 114(1) ("Termination Application") read with Sections 115(2) and 106 of the Code, before the Adjudicating Authority, seeking the closure of the Insolvency Resolution Process of the Appellant, liberty for creditors to file a bankruptcy application under Chapter IV of the Code, and discharge from duties as there was absence of a viable repayment plan under Section 105 of the Code from the Appellant tantamount to rejection of repayment plan under Section 114(1) of the Code. In view of the non-presentation of the Repayment Plan or any relevant details by the Appellant, the Respondent No.2 was constrained from submitting its report under Section 106 of the Code. Termination Application is pending before the Adjudicating Authority. Conclusion 68. In view of the above, it we conclude that: • The notices in question were sent to the last known address as stipulated in the Guarantee Deed, and such service is deemed valid under established legal principles. • The Resolution Professional has satisfactorily demonstrated compliance with the requirements of Sections 95 and 99 of the IBC. • The Appellant's contentions....