NCLT New Delhi-II (16.08.2021) in State Bank of India Vs. Ms. Jaya Singh [Company Petition No. (IB)-411(ND)2021] held that;
Since the Applicant has not served the Demand Notice to the Personal Guarantor, as required mandatorily under Section 95(4)(b) of IBC 2016 read with Rule 7 (1) of the (Application to Adjudicating Authority for Insolvency Resolution Process of Personal Guarantors to Corporate Debtors) Rules, 2019, we are not inclined to proceed further in the matter.
Further, the date of NPA has also not been disclosed by the Applicant. Overall, the Application lacks material pleadings as to how the debt has become due and payable.
Excerpts of the order;
Under consideration is the Application preferred by State Bank of India (the ‘Applicant/Financial Creditor’), under Section 95(1) read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for IRP for Personal Guarantors to Corporate Debtor) Rules, 2019. The Application is filed by the SBI for initiating the Insolvency Resolution Process (the “IR Process") against Ms. Jaya Singh (hereinafter, referred to as Personal Guarantor/Debtor), who is the Guarantor of M/s Energo Engineering Projects Limited (the ‘Corporate Debtor’).
# 2. It is stated that the Applicant through its subsidiary erstwhile State Bank of Mysore (“SBM”) in consortium with Punjab National Bank, erstwhile State Bank of Hyderabad (“SBH”), erstwhile State Bank of Bikaner & Jaipur (“SBBJ”) and erstwhile State Bank of Travancore (“SBT”), which have merged with the Applicant vide Gazette Notification dated 22.02.2017, together had disbursed credit facilities to the tune of Rs.747.50 crore to the Corporate Debtor in terms of the Working Capital Consortium agreements. The total dues of the Applicant Creditor as on 15.12.2018 for the credit facilities granted to the Corporate Debtor, as mentioned in the Part III of the Application stood at Rs. 794,00,32,924.21,
# 3. It is contended by the Applicant that Ms. Jaya Singh executed the Deeds of Personal Guarantee dated 02.03.2013, 11.06.2014, 22.11.2014 and 08.01.2015 in the capacity of a Personal Guarantor in favour of the Applicant, thereby guaranteeing payment of all the debts (in respect of the underlying Loan Agreements) due and payable by the Borrower/Corporate Debtor to the Applicant in case of default by the Corporate Debtor.
# 4. It is submitted by the Applicant that the Corporate Debtor has failed to repay the said loans and therefore, it has invoked the guarantee by sending a recall notice dated 24.12.2018 to the Corporate Debtor as well as the Personal Guarantor.
# 5. It is further submitted by the Applicant that the Principal Bench of this Adjudicating Authority vide Order dated 21.08.2018 in IB-160/ND/ 2017 in the matter of M/s. Levon Valves Pvt. Ltd. Vs. Energo Engineering Projects Ltd. has initiated Liquidation proceedings under IBC 2016, against the Corporate Debtor.
# 6. It is averred by the Applicant that it had sent a Notice dated 29.06.2021 in Form B under Rule 7(1) of Insolvency & Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process of Personal Guarantors to Corporate Debtors) Rules, 2019 to the Personal Guarantor, demanding payment of total outstanding amount of Rs.794,00,32,924.21/-.
# 7. It is on account of this default in discharging its repayment obligations by the Personal Guarantor, the Applicant/Personal Guarantor has preferred the present Application under Section 95 read with Section 60(2) of the Code.
# 8. We have heard the Ld. Counsel for the Applicant on 09.08.2021 and gone through the averments made in the Application.
# 9. While going through the Petition, we find that the Notice of Demand as required to be served to Personal Guarantor under Section 95(4)(b) of IBC 2016, has been sent by the Applicant to one Mr. Dinesh B. Singh, who is not a party to the present case. Further no Notice of Demand has been placed on record which has been served to Ms. Jaya Singh, the Respondent/Personal Guarantor herein.
# 10. Here, it is worthwhile to refer to the contents of the Rule 7 (1) of the (Application to Adjudicating Authority for Insolvency Resolution Process of Personal Guarantors to Corporate Debtors) Rules, 2019, which reads as below :
“7. Application by creditor.- (1) A demand notice under clause (b) of sub-section (4) of section 95 shall be served on the guarantor demanding payment of the amount of default, in Form B.”
# 11. Since the Applicant has not served the Demand Notice to the Personal Guarantor, as required mandatorily under Section 95(4)(b) of IBC 2016 read with Rule 7 (1) of the (Application to Adjudicating Authority for Insolvency Resolution Process of Personal Guarantors to Corporate Debtors) Rules, 2019, we are not inclined to proceed further in the matter.
# 12. That we also observe that the facts in the synopsis written at Page 1-2 of the Application are at variance with the facts mentioned in the Part III of the Application. Further, the date of NPA has also not been disclosed by the Applicant. Overall, the Application lacks material pleadings as to how the debt has become due and payable.
# 13. That we are constrained to observe that the Application has been filed in a casual manner by the Applicant Bank. The Applicant should have been diligent enough in filing the Application under Section 95 of IBC 201, since under this section the moment the Application is filed, interim moratorium under Section 96(1)(a) of IBC 2016 gets triggered, which could cause prejudice to other creditors of the Corporate Debtor.
# 14. In the light of the reason detailed in the para 10 above, the Petition is Dismissed.
# 15. However, liberty is granted to the Applicant to file a fresh Application on the same cause of action, after duly serving the Demand Notice to the Personal Guarantor concerned.
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