NCLT Jaipur (01.09.2021) ) In the matter of Shripal Choudhari [CP (IB) No. 150/ 94/ JPR/ 2020] held that;
Though the above referred Regulations, specifically does not bar the appointment of an Advocate/Authorized Representative who appears for the Applicant in the CP under Section 94/95 of the IBC for appointment as Resolution Professional in the same case, if he is eligible to be appointed as such, however, in the fitness of things and in the interest of justice, it is not preferable for appointing the same counsel/Authorized Representative as the Resolution Professional.
Excerpts of the order;
The instant Application is filed by Mr. Shripal Chaudhari (for brevity ‘Guarantor’/‘Applicant’) in Form-A under Section 94 of the Insolvency and Bankruptcy Code, 2016 (for brevity ‘IBC’ / ‘Code’) read with Rule 6(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantor to Corporate Debtors) Rules, 2019 (‘Rules’). The prayer made is to initiate insolvency resolution process in respect of the Applicant-Mr. Shripal Choudhari, himself being the Personal Guarantor for Emgee Cable & Communications Limited (‘Corporate Debtor’).
# 2. It is submitted that the Corporate Debtor is undergoing liquidation proceedings. It is also submitted that an amount of Rs. 23,11,42,466/- as on 31.03.2017 is total secured debt by financial institutions namely, Dena Bank, SIDBI, Edelweiss Retail Finance Ltd. against personal guarantor.
# 3. In this regard on perusal of Form No. CHG-1 dated 22.08.2016, it is noted that the Applicant along with two others have given personal guarantee against the financial facility of Rs. 46,28,00,000/- provided by Dena Bank to the Corporate Debtor. It is apparent from Form No. CHG -1 dated 04.09.2015 and 31.10.2015, no personal guarantee has been provided against the loan given by Small Industrial Bank of India and Edelweiss Retail finance Limited respectively to the Corporate Debtor. Form CHG -1 is annexed as Annexure-1 to the Application.
# 4. The Applicant has annexed notice dated 28.05.2018 issued under Section 13(2) of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) by the Dena Bank. It is also seen that vide letter dated 02.06.2018 Dena Bank has exercised the bank's right of set off and transferred the credit balance of Rs. 3,29,464.75 from Applicant’s saving account towards overdue sum of Rs. 40.66 crore in account of the Corporate Debtor. In view thereof instant Application is filed by the Applicant for initiation of insolvency resolution process of itself.
# 5. The Application has been filed in respect of debts which are not excluded debts as enumerated under Section 79(15) of the Code. It is noted that no application under chapter III of Part II of the Code has been admitted before this Adjudicating Authority in respect of the Applicant/ Debtor during the period of twelve months preceding the date of submission of the instant Application.
# 6. As stipulated under Section 96 (1) of the Code interim moratorium commences from the date of filling of the Application under Section 94 or 95. Accordingly in the instant matter interim moratorium commences from 21.07.2020 i.e., from the date of filing of the instant Application, in relation to all the debts and interim moratorium shall cease to have effect on the date of admission of the Application. During the interim-moratorium period-
(i) any pending legal action or proceeding in respect of any debt shall be deemed to have been stayed; and
(ii) the creditors of the Applicant/debtor shall not initiate any legal action or proceedings in respect of any debt. As per Section 96(3) of the Code, the provisions of sub-section 96(1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.
# 7. The Applicant has proposed the name of Insolvency Professional, Mr. Vijendra Bangar for appointment as Resolution Professional. The written consent to act as resolution professional in Form-A provided under Regulation 4(2) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulation, 2019 is annexed with the Application. The IP has submitted that he is eligible to be appointed as Resolution Professional and no disciplinary proceedings are pending against him, and does not suffer from any disability to act as Resolution Professional. However, it is noticed that Mr. Vijendra Bangar who is proposed to be appointed as the Resolution Professional in the instant case is also the Authorized Representative of the applicant-Guarantor and who argued the matter on behalf of the applicant-Guarantor before this Tribunal. Regulation No. 4 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019 reads as under:-
“4. Eligibility of resolution professional.
(1) An insolvency professional shall be eligible to be appointed as a resolution professional for a resolution process, if-
(a) he, the insolvency professional entity of which he is a partner or a director, and all the partners and directors of the said insolvency professional entity are independent of the guarantor;
(b) he is not subject to any ongoing disciplinary proceeding or a restraint order of the Board or of the insolvency professional agency of which he is a professional member; and
(c) the insolvency professional entity of which he is a partner or a director, or any other partner or director of such insolvency professional entity does not represent any party in the resolution process.
Explanation.- For the purposes of this sub-regulation, -
(i) a person shall be considered independent of the guarantor, if he-
(a) is not an associate of the guarantor;
(b) is not a related party of the corporate debtor; and
(c) has not acted or is not acting as interim resolution professional, resolution professional or liquidator in respect of the corporate debtor;
(ii) the expression “related party” shall have the meaning assigned to it in sub-section (24) of section 5.
(2) An insolvency professional, other than who has filed an application under section 94 or 95 on behalf of a guarantor or a creditor, as the case may be, shall provide a written consent in Form A to the Adjudicating Authority before his appointment as resolution professional in a resolution process.”
# 8. Regulation 3(a) of the same Regulations defines the word “associate” as under:-
“(a) “associate” in relation to a creditor, a resolution professional or professionals engaged by resolution professional, as the case may be, shall have the same meaning as assigned to it in relation to a debtor in sub-section (2) of section 79;”
# 9. Though the above referred Regulations, specifically does not bar the appointment of an Advocate/Authorized Representative who appears for the Applicant in the CP under Section 94/95 of the IBC for appointment as Resolution Professional in the same case, if he is eligible to be appointed as such, however, in the fitness of things and in the interest of justice, it is not preferable for appointing the same counsel/Authorized Representative as the
Resolution Professional.
# 10. In this view of the matter, we select Mr. Jai Prakash Rawat, bearing Registration No. IBBI/IPA-001/IP-P-01969/2020-2021/13039, e-mail ID: ipjprawat@gmail.com, Mobile No. 9785842000, appearing at Sr. No. 3 of the panel of IPs for NCLT Jaipur Bench valid from 01.07.2021 to 31.12.2021 which has been prepared and recommended by IBBI, to be appointed as Resolution Professional in this matter. The said Resolution Professional is directed to file his written consent with this Tribunal, within three days of receipt of this order.
# 11. In this matter, the Resolution Professional, Mr. Jai Prakash Rawat, shall exercise all the powers as enumerated under Section 99 of the Code read with Rules made thereunder. He is directed to make the recommendations with reasons in writing for acceptance or rejection of this Application within the stipulated time as envisaged under the provisions of Section 99 of the Code. The Resolution Professional shall provide a copy of the report under subsection 7 of Section 99 to the Creditor as soon as the same is filed before this Adjudicating Authority. The Applicant shall provide a copy of application along with this order to IBBI for its records.
# 12. The Applicant is directed to serve the copy of this order along with copy of the Application and documents on the Resolution Professional by all modes for information.
# 13. List the CP on 07.10.2021.
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