TaxTMI 
TaxTMI 
TaxTMI 
2026 (3) TMI 255
X X X X Extracts X X X X
X X X X Extracts X X X X
.... subsequently the admission order dated passed against the appellant/personal guarantor. Brief facts of the matter: 2. The present appeal arises from the Impugned Order dated 12.09.2024 passed by NCLT, Chandigarh Bench, whereby the application bearing CP(IB) No. 104/CHD/PB/2023 filed by Respondent No. 1-Stressed Assets Stabilisation Fund (SASF)-against the Appellant/Personal Guarantor of M/s Krishan Engineering Works Ltd. was admitted. The Respondent No. 1 contended that the borrower company had availed financial facilities from it, for which the Appellant had executed a guarantee agreement dated 28.10.1994. Upon default by the borrower, the account was declared NPA on 31.10.1998. Thereafter, Respondent No. 1 filed OA No. 2777 of 2017 before DRT-I, Chandigarh against both the borrower and the Personal Guarantor, which was allowed and a recovery certificate was issued on 23.01.2019. As the decretal amount remained unpaid, a demand notice dated 29.03.2022 was issued, followed by initiation of proceedings under Section 95 of the IBC by way of CP(IB) No. 104/CHD/PB/2023. The NCLT, vide order dated 06.02.2024, admitted the application and appointed Respondent No. 2 as the Resoluti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r AND an invoked guarantee) to be fulfilled. 6. Further, it would be worthwhile here to mention that the in OA 2777 of 2017, an ex-parte order was passed and respondent had no knowledge of the said matter. Moreover, as per the terms of guarantee agreement (Page no.86), the recovery certificate in itself is not sufficient for invocation of guarantee. In Syndicate Bank v. Channaveerappa Beleri (2006), the Hon'ble Supreme Court has held that a guarantor's liability arises only upon proper invocation as per the terms of the contract. No demand notice was ever served to the appellant- 7. As per the provisions of Section 95 (4) (b) of IBC, 2016 the service of the 14 days' demand notice is pre-requisite for filing the petition under Section 95 of IBC, 2016. Rule 7 (1) of the Insolvency and Bankruptcy (Application to The Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to The Corporate Debtors) Rules, 2016 laid down that the creditor shall serve on the guarantor a demand notice under Section 95 (4) (b) of IBC, 2016 demanding the payment of amount of default in form B. However, in the case in hand no such demand notice was ever served upon th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The copy of the application u/s. 95 was served on dormant e-mail address i.e. [email protected] • This is further substantiated from the letter dated 19.10.2024 (Annexure A- 5, Page no.345-346), sent by the respondent no.2/resolution professional stating that he tried to contact the appellant by the aforesaid email id but the email bounced back every time. 11. Shortcomings of Report u/s. 99 of IBC, 2016- Resolution Professional failed to consider the fact that: i) No invocation of guarantee had taken place, ii) The demand notice was never served upon the applicant iii) No notice of the application filed by the creditor under section 95 of IBC, 2016 12. Wrong affidavit of service was filed by the Respondent No.2 - Resolution Professional. In the service affidavit, the Respondent no. 2/ Resolution Professional had stated that the report under Section 99 has been served upon the applicant whereas no such service report was ever served upon the applicant as: • The applicant resigned from the directorship of the CD in the year 1998 and CD was not a going concern and as such e-mail id was dormant since long.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....meena Begum & Anr. (Civil Appeal No. 7903 of 2023), wherein it was held that a litigant may file both recall and appeal proceedings concurrently, though the pursuit of both is not mandatory. However, if the present appeal is dismissed, appellant won't be able to pursue the recall application. 15. Nobody should be condemned unheard and both the parties must be heard before passing the final order. This is the basic concept of rule of law and the most fundamental and foundational concept of fairness justice in human society. However, in the case in hand this basic concept was completely ignored by the respondents and on the basis of misrepresentation before the NCLT, Chandigarh Bench, the Respondents managed to get the impugned order. Submissions of R1-SASF 16. The Respondent No. 1 is competent to file the present reply as the debt involved in the present case has been assigned by SASF to the Omkara Assets Reconstruction Private Limited vide assignment dated 31.08.2024. The copy of the assignment forms part of the appeal. SASF was created by the Government of India and as per available information, it is in the process of being wound up. Therefore, the present reply is b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....• That there is a decree as well as a recovery certificate issued by DRT against the appellant as well as the Borrower. • That the debt and default is recorded with the information utility (National E-governance Services Limited); • The debt has not been repaid and the amount overdue is Rs. 780,21,90,384 (Seven Hundred Eighty Crores Twenty-One Lakh Ninety Thousand Three Hundred Eighty-Four Only) 22. The Appellant has approached this Hon'ble Tribunal by concealing and misrepresented critical facts about his knowledge about pendency of the proceedings before the NCLT. From the record of the present matter, it is abundantly clear the Appellant was aware of the proceedings under Section 95 and therefore, the present Appellant based on alleged non-delivery of demand notice or the report under Section 99 is not maintainable. The Appellant is estopped from raising any issue related to non-delivery of demand notice or the report under Section 99 submitted by the respondent no. 2 as during the pendency of the proceedings, despite knowledge, he chose to remain away from the proceedings and the present appeal is only an afterthought. The law bars him to turn....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gilant and for persons who come to Court with clean hands. The applicant has suppressed material facts about his interaction with the RP during the pendency of the proceedings and before reserving of the judgment by the NCLT. 26. The Appellant avers that the loan was assigned by SASF to Omkara Asset Reconstruction Private Limited and therefore SASF was not competent to pursue the proceedings against the Appellant before NCLT. The appellant is trying to mislead this Hon'ble Tribunal by twisting the facts in question. The matter was heard and reserved on 30.07.2024 and the assignment in question was done on 31.08.2024 when the matter was lying reserved and the appellant has failed to point out any provision of law which provides for supplying fresh information after the matter has been resolved by the concerned court. 27. The Appellant next contends that he was never served the copy of the petition filed by Respondent No. 1 before the NCLT. However, it is clear from the record of the NCLT that an email was sent at the address given by the borrower and the guarantor who served as a director of the borrower company. The Appellant has failed to demonstrate that the said email addr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iterating the appointment of the Resolution Professional by the Adjudicating Authority and providing details of the scheduled meeting dated 12.02.2024 at 5 PM. In response, the Appellant sent a message on 21.02.2024, simply confirming that the Appellant was active on the provided number and fully aware of the ongoing insolvency proceedings. Despite this, the Appellant failed to take any action to provide the necessary information or records, nor did the Appellant raise any objections at that time. • Thereafter, in compliance with the directions of the Adjudicating Authority and the provisions of Section 99 of the Code, the R2 submitted its Report under Section 99 through Application bearing I.A. No. 559/CH/2024 on 17.02.2024, recommending the commencement of Insolvency Proceedings against the Appellant. The said report was duly taken on record by the Adjudicating Authority vide its order dated 18.03.2024. Furthermore, through the same Order, the Adjudicating Authority directed the R2 to serve a copy of the report to the Appellant and Respondent No. 1 and to file an affidavit of service. • Pursuant to the above, the R2 served a copy of the Report under Sect....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Certificate demanding repayment of outstanding dues. 31. Furthermore, the Financial Creditor has annexed demand notice dated 29.03.2022 (Page 77 of Appeal) issued under Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process of Personal Guarantors to Corporate Debtor) Rules, 2019. Moreover, the debt has been registered with information utility namely NESL in Form C (Page 81 of the Appeal). 32. The entire Appeal has been filed on the basis that the Appellant was not aware about the proceedings under Section 95 of the Code being pending before the NCLT which is demolished from the fact that the Respondent No. 2 had discussed the appointment of Resolution Professional by the NCLT on call and sent a message on WhatsApp which has been duly acknowledged by the Appellant. The number on which the message has been sent by the Respondent No. 2 - "+91-9815022159" is the number of the Appellant as can be seen from Page 15 of the Appeal. 33. It is further submitted that the Respondent No. 2 sent emails for intimation about proceedings under Section 95 of the Code and appointment of RP under Section 97 of the Code at the register....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ould not have pursued the Application under Section 95 is wrong, misconceived and untenable. That in terms of Section 5(3) of SARFAESI Act, the assignee steps into the shoes of the assignor and acquires all rights/ interests qua the debt. Moreover, it is not the case of the Appellant that SASF has been pursuing the Application under Section 95 of the Code even after assignment, since the debt was assigned after reserving of orders by the NCLT in the Application. 36. It is further apposite to mention that the Appellant has also filed an Application bearing I.A. No. 2414/2024 before the NCLT seeking recall of Order dated 12.09.2024 on the same grounds as are being raised in the present Appeal. The matter is being heard by NCLT. This conduct of the Appellant constitutes forum shopping and involves misrepresentation of facts thereby rendering the present Appeal liable to be dismissed. 37. It is worthwhile to mention here that the R2 was eventually able to identify the Appellant's workplace, i.e., Nangli Auto Industries, Village Wariana, Kapurthala Road, Jalandhar-144001, Punjab, which was made available to the Resolution Professional by the Creditor. Thereafter, the Answering Res....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it of Service in compliance with the directions passed by the Adjudicating Authority. 39. The Appellant's address, i.e., EH-58, Ladowal Road, Jalandhar, and email ID: [email protected], which were used by the Answering Respondent for serving the letter intimating the initiation of proceedings against the Appellant and the Report under Section 99 of the Code, were provided by the Financial Creditor, as set forth in the Petition filed before the Adjudicating Authority and relied upon by the Answering Respondent. The address of the Appellant was further obtained from the following documents: • Copy of Recovery Certificate issued by the Presiding Officer of DRT-1, Chandigarh dated 23.01.2019 annexed as Annexure- 2T of the Report • Demand Notices u/s. 13(2) of the SARFAESI Act, 2002 dated 28.07.2021 and 29.02.2022 annexed as Annexure- 2U and 2V of the Report respectively. 40. Despite being specifically asked by the Resolution Professional, the Appellant never mentioned that the address provided by the Financial Creditor in the application was incorrect or that the email ID was inoperative. Instead, the Appellant has attempted to m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 23.01.2019 plus interest thereon. 06.02.2024 NCLT appointed R2 as the Resolution Professional in the matter of Personal Guarantor under Section 97 of the Code with direction to file report under Section 99 of the Code 08.02.2024 10.02.2024 12.02.2024 R2 intimated the Appellant vide email about the appointment and sought information for forming an opinion and filing a report under Section 99 of the Code in terms of the provisions and directions passed by the NCLT Email was provided by the Financial Creditor in the Petition and is also registered email as per MCA Records. 10.02.2024 Appellant failed to respond on email, hence R2 was constrained to send a message on WhatsApp to which was duly delivered. 17.02.2024 R2 filed report u/s. 99 of the Code vide Application bearing IA 559/2024 in compliance with provisions and directions passed by the NCLT 18.03.2024 NCLT took the report on record and directed RP to serve on Appellant and file affidavit of Service 19.04.2024 R2 served through email and speed post. Since the speed post was returned, R2 in accordance with Rule 38 of NCLT rules, served notice on Appellant through publication and filed ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ently the financial creditor issued demand notice dated 28.07.2021 (Page 307 of the Appeal) seeking repayment of the outstanding dues from the Appellant being the Personal Guarantor. However, the Respondent failed to pay the dues of Financial Creditor. Therefore, the ground taken by the Appellant with regard to no invocation of guarantee by the creditor is misconceived and wrong in view of demand notice and Recovery Certificate demanding repayment of outstanding dues. 47. The Financial Creditor has also annexed demand notice dated 29.03.2022 (Page 77 of Appeal) issued under Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process of Personal Guarantors to Corporate Debtor) Rules, 2019. Moreover, the debt has been registered with information utility namely NESL in Form C (Page 81 of the Appeal). 48. The entire Appeal has been filed on the basis that the Appellant was not aware about the proceedings under Section 95 of the Code being pending before the NCLT which is demolished from the fact that the Respondent No. 2 had discussed the appointment of Resolution Professional by the NCLT on call and sent a message on WhatsApp ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the R2 to serve a copy of the report to the Appellant and Respondent No. 1 and to file an affidavit of service. Pursuant to the above, the R2 served a copy of the Report under Section 99 of the Code to the Petitioner-Financial Creditor and the Personal Guarantor through email and Speed Post at their respective designated addresses. An affidavit of service was subsequently filed before the Adjudicating Authority. While service to Respondent No. 1 was duly completed, service to the Appellant could not be affected due to an insufficient address. Consequently, the Resolution Professional served notice to the Appellant through substituted means by publishing it in the Two (2) Newspapers Financial Express (English) and Punjab Jagran (Punjabi) on 12.04.2024, which is also reproduced as follows: 52. The affidavit of service was thereafter taken on record by the Adjudicating Authority vide its Order dated 30.07.2024. 53. From the materials placed on record we note that the Appellant has falsely claimed to be unaware of the pending proceedings and has incorrectly stated that they were only informed on 21.10.2024. Contrary to this assertion, the Appellant was duly notified but failed ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he conclusion that the Appellant has been deliberately and with malicious intent chose not to appear before the NCLT. The negligence on the part of the Appellant cannot be given any benefit/ relief. The Appellant is trying to evade payment of dues to the Financial Creditor to the tune of Rs. 780.22 Crores. 59. Further it is pertinent to mention that the Appellant has filed an Application bearing I.A. No. 2414 of 2024 before the Adjudicating Authority seeking recall of the same impugned Order date 12.09.2024. That the Appellant cannot be allowed to approach two forums seeking the same relief. 60. We find that the Respondents demonstrated that demand notices dated 28.07.2021 and 29.03.2022 were issued; that the Recovery Certificate dated 23.01.2019 itself constituted a valid demand; that the guarantee stood invoked; and that service was affected through multiple modes including email, speed post, publication, and even WhatsApp messages duly acknowledged by the Appellant. The contention that SASF lost locus after assignment is misplaced. Under Section 5(3) of the SARFAESI Act, the assignee steps into the shoes of the assignor and acquires all rights qua the debt. Moreover, the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., is liable for the outstanding debt of Rs. 780.22 Crores. b) Demand notices and Recovery Certificate validly invoked the guarantee and the petition under Section 95 was maintainable. c) Service was duly affected through multiple permissible modes, including email, postal delivery, publication (substituted service), and electronic messaging. The Appellant was aware of the proceedings but chose not to participate. d) The plea of limitation is untenable in light of the Recovery Certificate dated 23.01.2019 and subsequent demand notices. e) The assignment of debt to Omkara ARC does not vitiate the proceedings, as rights seamlessly pass to the assignee under Section 5(3) of the SARFAESI Act. f) The Appellant's claim of non-service and ignorance is contrary to the documentary record and appears to be a deliberate attempt to evade liability. Accordingly, the Appeal is dismissed. Given the Appellant's conduct in suppressing material facts, raising false pleas of non-service, and pursuing parallel proceedings, we find it appropriate to impose exemplary costs. The Appeal is dismissed with costs of Rs. 5,00,000/- (Rupees Five Lakhs), to be depo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ocument/ncltdoc/casedoc/040411 4004902023 /04 / Order - Challenge / 04 _ order - Challange_004_1712146777378943845660d49593bc01.pdf The undersigned can be contacted for any clarification and seeking Copy of report filed under section 99 of the IBC, 2016. Sd/- Rajender Kumar Jain (Regn No.IBBI/IPA-001/IP-P00543/2017-18/10968) Resolution Professional in the matter of PG to Krishna Engg. Works Limited Email id: [email protected] Mobile Number: 9875921490 Date: 12.04.2024 Place: Chandigarh Document 3 मठडर मठà¥à¤ ा à¤à¤¾à¤ णेवा मेठमीमेलटी, चंडीवाड़ में रे à¤à¤¿à¤ ी 18.03.2024 टे वरम टी पालटा ववरे रेषà¥à¤Ÿà¥‡ मटà¥à¤¤à¥…मड à¤à¥Œà¤®à¤Ÿà¤® मटेघलसà¥à¤¸à¥€à¤²à¥‡à¤•à¤° ठंड घकà¥à¤®à¥à¤ मी मà¥....
X X X X Extracts X X X X
X X X X Extracts X X X X
....¥‡ हिà¤à¤¾à¤œà¥€à¤—उ ताऱà¥à¤µà¤Ÿà¤°) के छिपेतट टी ठनंल बेतर उ घनà¥à¤¤à¤° मेटा ठटिर गà¥à¤²à¤¢à¤¤à¤à¤¾ रकà¥à¤¤ नठरा ठिसà¥à¤Ÿà¥‡à¤® टिंडा तमà¥à¤Ÿà¤¾ है। विधिनि, मंदामà¥à¤ªà¥…म के विपेनà¥à¤Ÿ री तरह à¤à¤ े मॅलॅलमीटी रे मिडी 18.032024 से तरम की मपीड पà¥à¤°à¥‡à¤®à¤Ÿ वरà¥à¤šà¥€ डिकी से बà¥à¤°à¤¿à¤¯à¤²à¤µà¤ª धडिंग' से ठगी डेतिमा त....