TaxTMI 
TaxTMI 
2026 (9) TMI 477
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....te debtor, M/s Veer Wires Private Limited, which has availed credit facilities from the financial creditor, namely Abhayudya Cooperative Bank Limited, Buriwali Branch, Mumbai. - The financial creditor sanctioned term loan facilities, namely TL1, TL2, and TL3, amounting to Rs. 18,90,000/-, Rs. 5,50,000/-, and Rs. 24,00,000/-, respectively, vide sanction letter dated 04/01/2020. 3. It is further reflected that, in consideration of the aforesaid credit facilities, the appellant executed a personal guarantee deed dated 31/1/2020 in favour of the financial creditor, undertaking joint and several liabilities for the repayment of the dues of the corporate debtor. 4. It is further reflected that the corporate debtor subsequently availed additional credit facilities from the financial creditor in the nature of a cash credit facility bearing account number CC/383, amounting to Rs. 3,50,000,00/- sanctioned vide sanction letter dated 02/03/2021. 5. It is also reflected that the corporate debtor failed to discharge its financial obligations, and the loan accounts of the corporate debtor were classified as a non-performing asset (NPA) on 31/7/2021. Thereafter, the financial cre....
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....tor and filed his report under Section 99(1) of the Code (through IA No. 1399 of 2026), recommending the admission of the petition for initiation of the insolvency resolution process against the personal guarantor. 11. The financial creditor appears to have filed objections with regard to this report. The adjudicating authority, by passing the impugned order dated 11/5/2026, rejected the application filed by the appellant under Section 100 of the Code, holding that the appellant's intent is not for genuine insolvency resolution, but to frustrate the process of possession initiated by the financial creditor. The appellant, feeling aggrieved by the said order, has filed instant appeal. 12. We have heard learned counsel for the appellant and have perused the record. 13. Ld. Counsel for the Appellant submits that Appellant's earlier application, being CP (IB) No. 1054 of 2023, filed on 1/11/2023, was a genuine and bona fide application filed with the intent of initiating the PIRP and proposing a repayment plan, however, the same was compelled to be withdrawn on 13/10/2025 solely because the original guarantee deed could not be annexed, despite the Appellant's sincere efforts. ....
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..... It is further submitted that the application of the appellant has been dismissed on hyper-technical ground by the Ld. Adjudicating Authority. Therefore, the impugned order passed by the Ld. Adjudicating Authority be set aside. 21. We have heard learned counsel for the appellant and have perused the record and notice that the Learned Adjudicating Authority in the impugned judgment has recalled the principle laid down by this Appellate Tribunal in the case of Syed Sirajis Salikin Khadri (supra), wherein the order passed by the Ld. Adjudicating Authority dismissing the application filed by the personal guarantor under Section 94 of the Code was upheld on the ground of misuse of interim moratorium provisions to stall the proceedings under the SARFAESI Act. It has also distinguished its earlier decision passed in the case of Getz Cables Private Limited (supra). 22. This Appellate Tribunal, in Ashwani Kumar Oberoi v. State Bank of India & Ors., CA (AT) (Ins) No. 741 & 742 of 2026, held that where an application under Section 94 is instituted after recovery proceedings have substantially progressed, particularly after the auction has been concluded and third party rights have been....
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....re auction notice is published on 25.03.2024, the right of redemption of mortgage comes to an end and no right is left in the personal guarantor thereafter. Learned counsel for the appellant has relied on the judgment of the Bombay High Court in 'Arrow Business Development Consultants Private Limited' (supra) in support of his submissions. 16. We however having already found that filing of application under Section 94 by the appellant was clearly abuse of process of the Court, the appellant cannot be allowed to scuttle auction proceedings which have already concluded on 11.04.2024 and were confirmed on 12.04.2024. The Sale Certificate have already been issued in favour of the auction purchaser on 31.05.2024 which was already challenged by the appellant before the DRT in Securitization Application No.340/2024, it is open for the appellant to pursue his remedy before the DRT, where auction held on 11.04.2024 is challenged. 17. We thus are of the view that adjudicating authority has not committed any error in rejecting the two applications filed by the appellant in Section 94 application. Rejection of applications cannot be faulted in the facts and sequence of the ev....
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....rly reveals the intention of the Appellant to stall the recovery proceedings by taking undue benefit of the moratorium provisions. Filing of the Section 94 application at this juncture leaves no room for doubt in our mind that these proceedings were not initiated with the intent of genuine insolvency resolution but as a tool to obstruct lawful recovery of enforcement with the manifest intent of the Appellant being to seek refuge under the moratorium provision under Section 96 of the IBC in an effort to prevent enforcement of possession of the secured residential premises. 15. At this stage we advert our attention to the Getz Cable judgment supra on which the Appellant has placed their reliance. We have no quarrel with the proposition of law laid down in Getz Cable judgment supra that the right under Section 94 given to a personal guarantor/individual cannot be taken away only on the ground that SARFAESI proceedings have been initiated prior to filing of Section 94 application. Be that as it may, it is pertinent to notice that the said judgement has also observed that the Adjudicating Authority has to decide each case depending on the specific ....
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....No.1. The present Section 94 application is clearly yet another salvo on the part of the Appellant to stall the recovery by taking advantage of moratorium. This clearly shows that the Appellant has been ceaselessly orchestrating litigative proceedings and embroiled the Respondent No.1 in these proceedings clearly to subvert the recovery proceedings initiated against them and not for the purpose of the insolvency resolution. In the given fact situation, we are inclined to agree with the findings returned by the Adjudicating Authority that the Appellant had approached the Adjudicating Authority by filing the Section 94 application with an intent other than insolvency resolution". 24. We notice that the notice under Section 13 of the SARAFAESI Act was issued on 31 December 2021 (after the credit facilities advanced to the principal borrower) were classified as NPA on 31/7/2021. 25. It is also evident that in the arbitration proceedings initiated by the financial creditor, an award was passed on 23 June 2023 against the principal borrowers and the guarantors to pay the outstanding dues jointly and severally. 26. We also notice that it is stated by learned adjudicating authorit....