TaxTMI 
TaxTMI 
2026 (5) TMI 770
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....ode') against the Order dated 23.10.2024 ("Impugned Order") passed by the National Company Law Tribunal, Ahmedabad Bench ("Adjudicating Authority") in Company Petition (IB) No. Company Petition (IB) No. (IB)/200(AHM) 2024 with IA/1072(AHM)2024 and Company Petition (IB)/199(AHM) 2024 with IA/1068(AHM)2024. UCO Bank, who is the Financial Creditor of the Corporate Debtor, is the Respondent No.1/Respondent Bank, herein. CS & IP Amrish Gandhi, who is the Resolution Professional of Mr. Amit Bhatnagar and Mr. Sumit Bhatnagar, is Respondent No. 2, herein. Indian Overseas Bank, who was the other Financial Creditor of the Corporate Debtor in addition to Respondent No.1 /UCO Bank, is the Intervenor in both the appeals. 2. We will refer both UCO Bank- Respondent No. 1 and Indian Overseas Bank-Intervenor, as "Consortium Banks", since their cause and grounds are same, hereinafter. 3. The Appellants submitted that the Consortium Banks extended a credit facility of Rs. 40 crores to the Corporate Debtor (DPTL) on 15.10.2011, which was renewed on 29.06.2013. Pursuant thereto, a Consortium Agreement dated 31.03.2015 was executed for an aggregate credit facility of Rs. 114.60 crores. Th....
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....which expressly dealt with and extinguished its entire claim. The Appellants contended that the Successful Resolution Applicant took over management of DPIL and made upfront cash payments as well as deferred payments to all financial creditors, including the Respondent Bank, and issued Bond Certificate No. 17 dated 17.09.2022 bearing face value of Rs. 49,96,91,500/- in favour of the Respondent Bank. Thereafter, the Successful Resolution Applicant repurchased the said bonds from the Respondent Bank under the Bond Repurchase Agreement dated 07.10.2022 executed with M/s Gomax. The Respondent Bank further issued an Acknowledgement Letter dated 07.10.2022 to the Successful Resolution Applicant (Consortium of GSEC Ltd. with Rakesh Shah) expressly accepting the treatment of its claims under the approved Resolution Plan as full and final settlement. 7. The Appellants submitted that the dues of the Consortium Banks stood completely extinguished and satisfied in accordance with the approved Resolution Plan of the Corporate Guarantor (DPIL), which is binding on all stakeholders under Section 31 of the Code. The Appellants contended that after a lapse of more than two years from the date of....
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....wledgment of debt or any continuous cause of action that could extend the period of limitation under the Limitation Act, 1963. The proceedings under Section 95 are thus barred by time and the Adjudicating Authority erred in not dismissing the petition on this ground alone. 11. The Appellants contended that the Resolution Professional (Respondent No. 2) had itself issued a No Dues Certificate confirming complete settlement of all dues of the Corporate Guarantor (DPIL) and had also ensured deletion of the name of DPIL from the list of defaulters. Having accepted full and final payment under the Resolution Plan, the Consortium Banks have no locus to pursue any further claim against the Appellants/personal guarantors. The Appellants submitted that once the corporate guarantor's liability has been discharged and the debt extinguished, no residual or balance claim can be enforced against the Appellants under the principle of co-extensiveness of guarantees and the doctrine of discharge by performance. 12. The Appellants submitted that the impugned order dated 23.10.2024 passed by the Adjudicating Authority in Company Petition (IB) No. 200 of 2024 and Company Petition (IB) No. 199 of....
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.... made by DRT-II, Ahmedabad vide judgment and Recovery Certificate dated 06.02.2020 in OA No. 436 of 2018. 18. The Consortium Banks contended that they had extended a credit facility of Rs. 40,00,00,000/- as part of the consortium arrangement. The total sanctioned limit under the Consortium Agreement dated 31.03.2015 was Rs. 114,60,00,000/- (Rs. 40 crores by the Respondent No. 1 + Rs. 50.60 crores by Indian Overseas Bank + additional Rs. 24 crores). The Consortium Banks submitted that the plea of alleged non-disbursement of Rs. 24,00,00,000/- is wholly misconceived, non- jurisdictional under the code, and in any event stands finally adjudicated and rejected by the DRT in the above-referred recovery proceedings. The Consortium Banks contended that the liabilities of the Appellants have been conclusively determined by the DRT for a sum of Rs. 109,11,40,210.00 together with interest at 14.25% p.a. and penal interest at 2% p.a. with effect from 12.04.2018, which adjudication has attained finality. 19. The Consortium Banks submitted that there was never any unilateral variation in the terms of the loan or the Deed of Guarantee dated 31.03.2015 executed by one of the Appellant, Sumi....
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....e remaining unpaid amount of Rs. 1,16,15,08,125/-. The Consortium Banks submitted that the Appellants' failure to pay the said amount despite receipt of the demand notice gave a fresh and valid cause of action to initiate proceedings under Section 95(1) of the Code. The Consortium Banks contended that the petition under Section 95 of the Code satisfies all criteria under Section 95(4) of the Code, including the existence of a debt, occurrence of default, and production of relevant evidence in the form of the DRT judgment, Recovery Certificate and the Deed of Guarantee by the Appellant. 24. The Consortium Banks submitted that the Resolution Professional (Respondent No. 2) submitted its report dated 06.07.2024 filed under Section 99 of the Code, based on due consideration of all facts, claims and documents on record and is not a mechanical reproduction of the petition. The Consortium Banks contended that the Resolution Professional has rightly confirmed the debt and the default amounting to Rs. 122.19 crores after independent scrutiny. 25. The Consortium Banks submitted that their claims are well within the period of limitation. The Consortium Banks contended that the date of d....
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....t Bhatnagar respectively (hereinafter referred to as "Personal Guarantors") for default amount of Rs.122.19 Crores in respect of Deed of Guarantee dated 31.03.2015 executed in favour of the Consortium Bank. We note that Diamond Power Transformers Limited ("DPTL") is the Corporate Debtor and Diamond Power Infrastructure Limited ("DPIL") is Corporate Guarantor to the Corporate Debtor. In respect of the guarantee issued by the Appellants as Personal Guarantors for DPTL, the Consortium Banks have invoked guarantee vide letter dated 06.04.2018. 31. We also take into consideration that the Consortium Banks granted aggregate facility of Rs. 40.00 Crores to the Corporate Debtor DPTL (Under Liquidation) vide sanction letter dated 15.10.2011 which was renewed vide Sanction Letter dated 29.06.2013 & 31.03.2015 at the request of the Corporate Debtor. The Consortium Banks had sanctioned Working Capital facilities vide Consortium Agreement entered with the Corporate Debtor for financial facility of Rs 114.60 Crores. The Corporate Debtor ("DPTL") and others executed various loan/security documents in favour of the Banks from time to time. Similarly, the Appellants as Personal Guarantors also e....
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....er reviewing the documents, no evidence was found suggesting that the Appellant's liability as personal guarantor had been fully discharged. 37. We also take into consideration that the liability of the Personal Guarantor has been calculated to the extent of Rs.122,19,18,337.07 as on 31.03.2024, based upon the Judgment dated 06.02.2020 passed by the DRT, Ahmedabad. 38. After noting rival contentions and going through the facts in the appeals, we find that basically there are only two issues which have been raised by the Appellants in both the appeals i.e., the claims of the Consortium Banks are barred by law of limitation and further entire payment of all creditors including Consortium Banks have fully been paid by the SRA as per approved Resolution Plan, which stand implemented. 39. We shall take first issue of limitation raised by the Appellants (a) It is the case of the Appellants that the Corporate Debtor was declared NPA way back on 30.07.2016 and Consortium Banks invoked personal guarantees against the Appellants on 06.04.2018. The Appellants empathetically pleaded that the Consortium Banks have consistently treated this date of 30.07.2016 as the date of....
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....tee dated 06.04.2018, three years of limitation period for filing the Petition u/s. 95(1) of the Code, was available to the Respondent Banks till 06.04.2021, however, in view of the order dated 06.02.2020 passed by the DRT, Ahmedabad in O.A. No. 436 of 2018, the debt liability of the Appellants/Personal Guarantors were crystalized by giving them two-month period to pay the same from the date of order. Thus, the period of Limitation stood extended for three years w.e.f. order dated 06.02.2020 to 05.02.2023 in terms of section 18 of the Limitation Act, 1963. The decree of guarantee by DRT, Ahmedabad gives a fresh lease to the limitation and a new cause of action to the Applicant. (f) We also note that the Deed of Guarantee were again involved by the Consortium Banks on 25.01.2024, whereas the present applications under Section 95 were filed on 18.05.2024 before the Adjudicating Authority. Thus, we do not find any merit in the contentions of the Appellant w.r.t. limitation, as, the limitation is clearly covered by the series of events and judicial pronouncements as discussed above. 40. Now, we shall deal with another issue raised by the Appellants/Personal Guarantors qua t....
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....f the principal debtor. The said judgment applies to the facts of the present case and completely negates the Appellant's contention that the debt stands extinguished upon approval of the Resolution Plan. 43. This Appellate Tribunal, in case of Roshan Lal Mittal & Ors. v. Rishabh Jain & Ors., Company Appeal (AT) (Insolvency) No. 1558 of 2023, has reiterated that a Resolution Plan does not absolve personal guarantors and that their liability continues notwithstanding the approval of the Resolution Plan. Similarly, the Hon'ble Calcutta High Court in Gouri Shankar Jain v. Punjab National Bank, W.P. No. 10147(W) of 2019 has held that the approval of a Resolution Plan and the acceptance of a haircut by the financial creditors does not impair or extinguish the creditor's right to recover the balance amount from the guarantor. The Appellant's plea that the entire debt stands extinguished subsequent to approval of Resolution Plan is therefore is not sustainable. 44. We also take into consideration that under Section 128 of the Indian Contract Act, 1872, the liability of the guarantor is co-extensive with that of the principal debtor. The Hon'ble Supreme Court in BRS Ventures Investme....
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....ion to the cash (upfront + deferred) payment offered to Secured FCs - RA proposes addl shares in CD as below: Equity shares of face value Rs.10 of corporate debtor which will be held by Secured FCs post cap reductino 2372.87 42.60 431.00 New Equity Shares 21,92,112 Upfront payment as per point No. 3.4.1(5) Deferred payment as per 3.5.1 within 5 years Upfront on trigger date 6. Related Party 28.07 Nil NA 7. Other claims 2.41 Nil NA 8. Equity Shares of face value of Rs. 10 of CD which will be held by existing shareholders other than secured FCs New equity shares 5,04,994 Upfront on trigger date Total Resolution plan amount offered to various class of creditors 501.00 crores 9. Startup and pending capex to be contributed 150.00 As and when required 10. Working capital to be contributed 150.00 As per the requirements of the business 11. Total Fund outlay in the resolution plan equalling Rs. 1900 crores 801.0 crores 47. From above, we note that against the claims of Operational Creditors of Rs. 900.74 Cro....