Rajendra ‘Raju Mansinghk Vs. Punjab National Bank (formerly United Bank of India) – NCLT Kolkata Bench
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The Court held that on a bare perusal of the the judgment of Supreme Court in Lalit Kumar Jain v. Union of India (2021) ibclaw.in 61 SC, it is clear that the Supreme Court has, in very clear terms, held that discharge of the corporate debtor from a debt owed by it to its creditors, by way of an involuntary process such as insolvency proceedings, does not absolve the guarantor of its liability since it arises out of an independent contract. Thus, the passing of a resolution plan does not ipso facto discharge the personal guarantor. The Court also held that under Section 33(3) of the IBC, Respondent No. 1 certainly has the right to proceed against the collateral securities for recovery of its dues – which are independent of the resolution plan approved by the NCLT. If the resolution plan approved by the Adjudicating Authority is contravened by the concerned corporate debtor, any person other than the corporate debtor, whose interests are prejudicially affected, may make an application to the Adjudicating Authority for an order for liquidation. Where a resolution applicant succeeds as a corporate debtor, but fails to comply with its assurance in terms of the resolution plan, then subsequent step to be taken has been specified in Section 33(3) of the IBC.
The Operational Creditor has issued the demand notice on 07.10.2017. Through its letter dated 14.12.2017, the Managing Director of the Corporate Debtor requested the Operational Creditor to send its representative to the office of the Corporate Debtor with all the papers and documents for settlement of the claim. Issuance of the letter by the Corporate Debtor calling the representative of the Operational Creditor with all the papers to settle the dispute cannot be considered as an acknowledgement of debt in terms of Section 18 of the Limitation Act. However, to apply the benefit of Section 18 of the Limitation Act, it is necessary that before the expiry of the prescribed period of limitation for suit or Application, such acknowledgement must be in writing.
In this case, finance creditor assigned the loan after approval of resolution plan under IBC. Thereafter assignee issue a notice to the guarantor of the Corporate Debtor under SARFAESI Act, 2002. The notice of the SARFAESI Act was responded by the Guarantor stating that pursuant to repayment of amount in terms of the approved resolution plan, all the claims of Assigner stand extinguished and consequently, no claim can be made by the assignee for the same default and that no amount is due and payable to assignee.
Thereafter the Appellant instituted a Civil Suit before the High Court of Madras and the same was dismissed observing that the civil court’s jurisdiction is barred in view of Section 34 of the SARFAESI Act and only DRT had competence to decide the matter.
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Electrosteel Castings Ltd. Vs. UV Asset Reconstruction Company Ltd. – Madras High Court Read Post »
The view expressed by the Supreme Court in State Bank of India v. V.Ramakrishan and Another, reported as [2018] ibclaw.in 29 SC amply demonstrates that neither Section 14 nor Section 31 of the IB Code place any fetters on Banks/Financial Institutions from initiation and continuation of the proceedings against the guarantor for recovering their dues. That being the position, the plea taken by the counsel for the petitioner that all proceedings against the petitioner, who is only a guarantor, ought to be stayed under the SARFESI Act during the continuation of the Insolvency Resolution process qua the Principal Borrower, is rejected as meritless. The petitioner cannot escape her liability qua the respondent/Bank in such a manner. The liability of the principal borrower and the Guarantor remain co-extensive and the respondent/Bank is well entitled to initiate proceedings against the petitioner under the SARFESI Act during the continuation of the Insolvency Resolution Process against the Principal Borrower.
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NCLAT held that having heard learned Counsel for the parties, and in view of the decision of the Hon’ble Supreme Court in State Bank of India Vs. V. Ramakrishnan & Anr. [2018] ibclaw.in 29 SC while we hold that the impugned order directing to include the property of the personal guarantor for liquidation as illegal, also observe that in absence of separate application under Section 60(2) no action can be taken against the moveable and immoveable assets of the personal guarantor. Impugned order to the extent above is set aside. The appeal is allowed. No cost.
NCLAT held that it is not necessary that all the claims as are submitted by the Creditor should be a claim matured on the date of initiation of Resolution Process/admission, even in respect of debt, which is due in future on its maturity, the ‘Financial Creditor’ or ‘Operational Creditor’ or ‘Secured Creditor’ or ‘Unsecured Creditor’ can file such claim. Therefore, the definition of ‘Claim’ as defined under Section 3(6) is to be read along with Section 13 read with Section 15 of the Code.
Even a creditor may choose not to file claim, if not matured and may decide to submit claim on its maturity, after completion of the period of ‘Moratorium’, subject to survival of the ‘Corporate Debtor’. The debt which the ‘Corporate Debtor’ owes for payment in future, if not taken into consideration in the ‘Resolution Plan’ does not extinguish automatically and the creditors, including the ‘Financial Creditor’ or ‘Operational Creditor’ or ‘Secured Creditor’ or ‘Unsecured Creditor’ has rights to claim the same.
For example, if there is a default, a ‘Financial Creditor’ or ‘Operational Creditor’ may file application under Sections 7 or 9 for initiation of CIRP. Once it is initiated, order of ‘Moratorium’ is passed and the advertisement is issued all claimants whether his claim is matured or not are supposed to file claim before the ‘Resolution Professional’. The ‘Resolution Professional’ cannot reject one or other claim on the ground that only the person whose claim has been matured can be looked into and other claim not matured cannot be entertained.