Eastern Embroidery Collections Pvt. Ltd.

Since a Financial Creditor had initiated action under section 7 of the Code against the Corporate Guarantor, the Application could not have been dismissed on the erroneous assumption that the Application should have been filed against the Personal Guarantor under Section 95 of the Code – Intec Capital Ltd. Vs. Eastern Embroidery Collections Pvt. Ltd. – NCLAT New Delhi

NCLAT held that Respondent ‘Eastern Embroidery Collections Private Limited’ was the Corporate Guarantor of the Principal Borrower ‘Eastern Overseas’, and not a Personal Guarantor. Therefore, in terms of Sub-section (7) and (8) of Sec 3 of I&B Code, 2016 is a Corporate Debtor. Further, the applicable Rules would be ‘Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016’. Therefore, we are of the considered opinion that the Adjudicating Authority committed an error in holding that action should have been initiated against the Personal Guarantor of the Corporate Debtor under Section 95 of the Code instead of proceeding against the Corporate Debtor. In the circumstances stated above, Appeal deserves to be allowed, and the impugned order passed by the learned Adjudicating Authority is liable to be set aside.

Since a Financial Creditor had initiated action under section 7 of the Code against the Corporate Guarantor, the Application could not have been dismissed on the erroneous assumption that the Application should have been filed against the Personal Guarantor under Section 95 of the Code – Intec Capital Ltd. Vs. Eastern Embroidery Collections Pvt. Ltd. – NCLAT New Delhi Read Post »

An application u/s 95(1) of IBC can only be filed after the expiry of period 14 days from the date of service of demand notice under Section 95(4)(b) of the IBC – Intec Capital Limited  Vs. Eastern Embroidery Collections Private Limited  – NCLT New Delhi Bench Court-V

On co-joint reading of Section 95 of IBC with Rule 7 of AAA(IRPPG) Rules, 2019, made it clear, an application under Section 95 shall only be filed, on failure of debtor to pay the debt within the period of 14 days of service of the demand notice, served u/s 95(4) which means an application u/s 95(1) can only be filed after the expiry of period 14 days from the date of service of demand notice under Section 95(4)(b) of the IBC. Applying the aforesaid provisions, when we consider the application filed by the applicant then we noticed that the  applicant/creditor has filed under Section 7 of the IBC not under Section  95 of IBC. Secondly, the applicant has filed the application for initiation of CIRP not against the Corporate Debtor rather against the personal guarantor. Therefore, the applicant is required to submit an application in Form C under Section 95(1) of the IBC and that too after service of demand notice as required under Section 95(4)(b) read with Rule 7 of AAA(IRPPG) Rules, 2019 and if the debt is not paid within 14 days from the date of service of demand notice.(p21-22)

An application u/s 95(1) of IBC can only be filed after the expiry of period 14 days from the date of service of demand notice under Section 95(4)(b) of the IBC – Intec Capital Limited  Vs. Eastern Embroidery Collections Private Limited  – NCLT New Delhi Bench Court-V Read Post »

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