NCLAT (22.03.2022) in Chandresh Jajoo Vs. Siemens Financial Services Pvt. Ltd. & Anr. [Comp. App. (AT) (Insolvency) No. 284 of 2022 ] held that;
Thus, what has to be served is the copy of application which has been “submitted”. What is contemplated is that the application in Form C should be “submitted” and then the Creditor should serve forthwith a copy of the application to the Guarantor and the Corporate Debtor for whom the Guarantor is a Personal Guarantor.
The procedure thus prescribed will give the Personal Guarantor notice of the application already filed before the Adjudicating Authority. Section 95(5) requires Creditor to provided copy of the application “made under sub-section (1)” to the Debtor. Thus, serving advance copy is not contemplated.
Following principles of natural justice, (AA ) give limited notice to Personal Guarantor to appear referring to the Interim Moratorium that has commenced as per terms of Section 96.
Then the next stage is of appointing Resolution Professional as per Section 97 read with Rules and Regulations.
Third stage will be Resolution Professional acting in terms of Section 99 and submitting Report.
At the fourth stage comes in adjudication of the application under Section 100 which ought to be decided by giving hearing to parties keeping in view Application, evidence collected and report under Section 99.”
In the present case, the Appellant has been served copy of the Application under Section 95(1) as per the requirements of the statute and since the Appellant was well aware of the date and appeared on the date before the Adjudicating Authority, we see no reason to direct for issue of any limited notice to the Appellant, he being aware of the proceedings.
Excerpts of the order;
22.03.2022: Heard Learned Counsel for the Appellant and Learned Counsel for the Respondents.
# 2. This Appeal has been filed against the order dated 15.02.2022 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi, Court-III by which order the Resolution Professional has been appointed and he was asked to submit a report in terms of Section 99 of the Insolvency and Bankruptcy Code, 2016 (“Code” for short).
# 3. Learned Counsel for the Appellant submits that the Adjudicating Authority had not issued limited notice to the Appellant although copy of the Application filed under Section 95(1) was served on the Appellant and on the date 15.02.2022, the Appellant’s counsel appeared and has made submission that already there is an order of interim moratorium against the Corporate Debtor.
# 4. Learned Counsel appearing for the Respondent submits that the copy of the Application under Section 95(1) was duly served as well as demand notice and thereafter Application was filed on which Resolution Professional who was named in the Application has been appointed.
# 5. We have considered the submissions of the Learned Counsel for the parties and perused the record.
# 6. Learned Counsel for the Appellant has placed reliance on the judgment of this Tribunal in “Mr. Ravi Ajit Kulkarni vs. State Bank of India- Company Appeal (AT) (Ins.) No. 316 of 2021”. Paras 24 and 44 of the judgment are to the following effect:-
“24. Section 95(5) requires the Creditor to provide copy of the application under sub-section (1) to the Debtor. This section needs to be read with Rule 3(1)(g) reproduced above. It is evident from reading the Section alongwith the Rule that what Creditor has to serve is copy of the application “made under sub-section (1)” to the Debtor. Reading Rule 7(2) with Rule 3 shows that the application filed under sub-section (1) of Section 95 shall be submitted in „Form C‟ and that the Creditor will serve forthwith “a copy of the application” to the Guarantor and the Corporate Debtor for whom the Guarantor is a Personal Guarantor. Thus, what has to be served is the copy of application which has been “submitted”. What is contemplated is that the application in Form C should be “submitted” and then the Creditor should serve forthwith a copy of the application to the Guarantor and the Corporate Debtor for whom the Guarantor is a Personal Guarantor. The procedure thus prescribed will give the Personal Guarantor notice of the application already filed before the Adjudicating Authority. Section 95(5) requires Creditor to provided copy of the application “made under sub-section (1)” to the Debtor. Thus, serving advance copy is not contemplated.
44. In substance, once the application is “filed” (as per Section 95, 96 read with Rule 10) the Adjudicating Authority has to act on it, and following principles of natural justice, give limited notice to Personal Guarantor to appear referring to the Interim Moratorium that has commenced as per terms of Section 96. Then the next stage is of appointing Resolution Professional as per Section 97 read with Rules and Regulations. Third stage will be Resolution Professional acting in terms of Section 99 and submitting Report. At the fourth stage comes in adjudication of the application under Section 100 which ought to be decided by giving hearing to parties keeping in view Application, evidence collected and report under Section 99.”
# 7. This Tribunal has already in the above judgment in para 44 has observed that a Corporate Debtor is entitled for limited notice by the Adjudicating Authority before stage for admission or rejection comes.
# 8. In the present case, the Appellant has been served copy of the Application under Section 95(1) as per the requirements of the statute and since the Appellant was well aware of the date and appeared on the date before the Adjudicating Authority, we see no reason to direct for issue of any limited notice to the Appellant, he being aware of the proceedings. The stage of admission or rejection of the Application has not yet arrived and at the stage of admission or rejection of the Application, the Appellant can raise all the objections before the Adjudicating Authority opposing the admission of the Application. It is for the Adjudicating Authority to consider the pleas of both the parties and pass appropriate order as contemplated under Section 100 of the Code. We make it clear that we are not expressing any opinion on the merits of the case of either of the parties and it is for the Adjudicating Authority to pass appropriate order after considering the report of the Resolution Professional under Section 100.
# 9. Learned Counsel for the Appellant seeks liberty to submit representation before the Resolution Professional with regard to the facts of the Appellant’s case. It is open for the Appellant to give Application/ Representation to the Resolution Professional within one week from today. It is for the Resolution Professional to consider whether there is any requirement of giving any Additional Report or not.
# 10. With the above observations, the Appeal is disposed of.
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