Allowed

In the matter of State Bank of India v. T. Devender, [Ia No. 587 of 2023 in Cp (Ib) No. 127/95/HDB/2022]

NCLT13 Sept 2023IA No. 587 of 2023 in CP (IB) No. 127/95/HDB/2022

Case brief

AI extract

What is this about?

The Tribunal approved a revised repayment plan submitted by a personal guarantor to a corporate debtor. Despite the sole creditor abstaining from voting, the Tribunal held that the abstention amounted to no decision and approved the plan under Section 114 of the Insolvency and Bankruptcy Code, 2016, granting significant reliefs to the guarantor.

What did the court decide?

The repayment plan was approved; guarantor discharged from liability upon completion; moratorium granted on post-dated cheques and negotiable instruments; relief of security interests granted.

In the matter of State Bank of India vs. T. Devender… — Insolvency and Bankruptcy | NCLT (2023)

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HYDERABAD BENCH-1 NATIONAL COMPANYLAW TRIBUNAL

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IA No.587 of 2023

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CP IB No.127/95/HDB/2022

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Application filed under Section 114 ofIBC 2023

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IN THE MATTER OF

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STATE BANK OF INDIA vs T. DEVENDER (PERSONAL GUARANTOR) TO M/S CHADALAVADA INFRATECH LTD

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(CORPORATE DEBTOR)

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For M/s Chadalavada Infratech Limited Resolution Professional

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CERTIFIED TO BE TRUE COPY OF THE ORIGINAL

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......Applicant/ Resolution Professional

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Date of order 13.09.2023

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Coram

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Shri Charan Singh, Hon'ble Member Technical Dr. N. Venkata Ramakrishna Badarinath, Hon'ble Member Judicial

Appearance

For Applicant:

For Creditor:

Shri Suryanarayana Raju, Advocate

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For Personal Guarantor: Ms. Sandhya Rani, Advocate

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राष्ट्रीयकम्पनीवि

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IN DOO: 13.09.2023 IA No.587 of 2023 CP IB No.127/95/HDB/2022 NCLT HYD BENCH-1

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ORDER PER: BENCH

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Rule 11 of NCLT Rules, 2016, by the Resolution Professional for Mr. T. Devender, Personal Guarantor to Corporate Debtor M/s Chadalavada & Bankruptcy Code, read with 19 of IBBI (Insolvency Resolution Process the Personal Guarantor. Infratech Limited, seeking approval of the repayment plan submitted by for Personal Guarantors to Corporate Debtors) Regulations, 2019 and This Application is filed under Section 112 (1) and 114 of the Insolvency

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Professional. To put precisely, this Tribunal vide order dated 21.06.2022 ordered commencement of Insolvency Resolution Process against T. Devender registration no. IBBI/IPA-001/IP-P00843/2017-18/11427, as Resolution (Personal Guarantor to the Corporate Debtor) to M/s Chadalavada Infratech Ltd and appointed Shri Maligi Madhusudhana Reddy, bearing

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(English) on 08-07-2022, calling claims from the Creditors from the 3. Applicant herein caused public notice calling for claims in "Nava Telangana" (Telugu), Prajashakti (Telugu) & "Financial Express" Consequent to his taking over charge as Resolution Professional, the

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IN 3 DOO: 13.09.2023 NCLT HYD BENCH-1 CP IB No.127/95/HDB/2022 IA No.587 of 2023

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to submit his report under section 106 of IBC was 18th August 2022. It is submitted that the Financial Creditor through its claim form, opted to creditors by 28th July 2022. The last date for the Resolution Professional

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period of Repayment Plan. forfeit its right to enforce the Personal Guarantor's security during the

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The Personal Guarantor was asked by the Resolution Professional vide e- mail dated 26.07.2022 and 09.03.2023 to prepare a Repayment Plan in

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consultation with the Resolution Professional.

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Pursuant to public announcement, the Resolution Professional received Rs.270,61,08,662/-. only one claim i.e. from State Bank of India amounting to Rs.

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further advised personal guarantor to disclose the sources of funds that 15.08.2022 was placed before the 1st meeting of the creditors on 08-09IBBI Registered Valuers to value of land and buildings of the Personal Guarantor and an investigation agency to identify assets of the personal 2022 by the Resolution Professional. As advised by the Creditor, two 7. The 1st repayment plan submitted by the Personal Guarantor on guarantor other than the assets disclosed in the statement of affairs and

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plan.

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IN 4 DOO: 13.09.2023 IA No.587 of 2023 NCLT HYD BENCH-1 CP IB No.127/95/HDB/2022

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reports, placed the same before the creditors and investigation reports

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1. It is averred that, the Resolution Professional upon receipt of valuation

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from the appointed agencies who have confirmed that there are no assets

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available other than those disclosed in the name of the guarantor. The Resolution Professional held 3rd creditors' meeting on 20th

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the Personal Guarantor was approved by the sole creditor SBI. The same December 2022. After detail deliberations, the revised repayment plan of was filed before this Tribunal, for approval.

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moved a. memo seeking withdrawal of the repayment plan submitted by Later the Resolution Professional, at the instance of the Sole Creditor

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andwhich is pending before this Tribunal, on the ground that, it had come Personal Guarantor, that has been earlier approved by the sole creditor

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to the notice of the creditor during a review meeting that the Vote casted in "favour' of the repayment plan was inadvertent, instead of 'against' it and directed the Resolution Professional to place fresh Repayment Plan

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of Shri T. Devender in the next meeting along with the plans of other

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Guarantors so that a collective decision on all the plans can be considered

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Accordingly, the Tribunal allowed the withdrawal of
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IN IA No.587 of 2023 DOO: 13.09.2023 CP IB No.127/95/HDB/2022 NCLT HYD BENCH-1

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Application IA(IBC).No. 1589/2022 on 06.02.2023, granting liberty to file a fresh application if any.

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guarantor, six creditor's meetings were conducted by the Resolution resolution professional for their consideration. submitted by the guarantor along with the compliance particulars under the IBC 2016 and its Regulations, was shared with the Creditor by the Professional and based on the discussions, copy of the repayment plan It is further submitted that during the process of insolvency of the

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accordance with Regulation 10(1) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Personal Guarantors to affairs is annexed as Annexure -6. The Resolution Professional has complied the Statement of Affairs in the Corporate Debtor) Regulations, 2019. The copy of the statement of

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2023 to 6 pm, 4th April 2023 by the resolution professional for approval. with statement of affairs with assets and liabilities was discussed in detail in the 6th meeting of creditors. The Copy of revised Repayment Plan is to revised repayment plan was placed for e-voting from 6 pm, 3rd April attached as Annexure-7. Thereafter, the following resolution with respect The revised improved repayment plan submitted by the Guarantor along

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Nat

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IN IA No.587 of 2023 DOO: 13.09.2023 CP IB No.127/95/HDB/2022 NCLT HYD BENCH-1

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approved." payment schedule of: within 30 days ofapproval by the Authority - Rs.3,75,00,000/- be and is hereby Honʼble Adjudicating Authority - Rs.1,25,00,000/- and within 60 days of the approval of Adjudicating Private Limited for Rs.5,00,00,000/- with the revised Plan submitted by Mr. T. Devender, Personal Guarantor to the Corporate Debtor M/s. Chadalvada Infratech “RESOLVED THAT the Revised Improved Repayment

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However, the sole Creditor has neither approved nor rejected the above resolution and opted to Abstain from voting.

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voting and the creditor opted to abstain is annexed and marked Annexure -8. The copy of the voting record where the repayment plan placed for

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marked as Annexure 7 to the Application. The salient features of the Repayment plan along with the concessions and reliefs prayed for, as extracted from the Repayment plan is given below: 14. SALIENT FEATURES OF THE REPAYMENT PLAN: submitted vide Guarantor's letter dated 13.03.2023 is annexed and The revised improved repayment plan (revised as on 13.03.2023)

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कम्पनीवि

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IN IA No.587 of2023 CP IB No.127/95/HDB/2022 DOO: 13.09.2023 NCLT HYD BENCH-1

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(i) facilities availed by the Corporate Debtor. The debtor has executed personal guarantee for the repayment of credit Chadalavada Infratech Ltd the Corporate Debtor in connection with the Company's borrowings from SBI and signed agreements accordingly. The debtor Mr. T. Devender stood as Personal Guarantor to M/s Brief details about the engagement of debtor with the CD:

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S. No.	Name of the creditor Claims fro	Amount Claimed m Banks	Amount admitted	Security interest if any	voting right %
1	SBI	2,70,61,08,662	2,70,61,08,662	Land bearing Sy. No 189/A admeasuring Ac 0.56 cents situated at Narsingi Village (facing ORR Junction) Rajender Nagar Mandal, Ranga Reddy District, Telangana mortgaged vide Doc no.3473/2002 dated 28.11.1996	100

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(ii) Details of the excluded assets and excluded debts:

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liabilities within the criteria of excluded debts under Section 79 (15) and It is stated in the repayment plan that the debtor does not have any excluded assets under Section 79 (14).

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(iii)

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Payment to the creditors:

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creditor as under:The debtor has proposed to make payment of Rs.5,00,00,000/- to the

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right%
100
Total
voting
Rs.5,00,00,000/-
Rs.5,00,00,000/-
1 State Bank of India
Amount Rs.
S.No. Name of the creditor

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The above amount proposed will be paid in instalments as hereunder

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Proposed Revised Repayment Plan:

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Amount Rs.
1
1,25,00,000/-
S.No.
Authority (25%)
Particulars
With 30 days of the approval of Adjudica
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IN IA No.587 of 2023 DOO: 13.09.2023 CP IB No.127/95/HDB/2022 NCLT HYD BENCH-1

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2	With 60 days of the approval of Adjudicating Authority (75%)	3,75,00,000/-
	TOTAL	5,00,00,000/-
Note:	Resolution process costs will be paid separately.

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(iv) filed. priority over any other creditors. The Guarantor has provided comfort for payment to creditors as stated in the repayment plan which has been letter obtained from the prospective buyer to confirm the source of funds and sale of other personal assets. That such payment shall be made in Sources of funding: The source of funding is from sale of the properties

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(v) Reliefs as claimed by the Personal Guarantor:

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(a) towards State Bank of India and the Bank shall return his original The amount that is being paid by the Guarantor is on the distinct understanding that there shall be no more financial obligations

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(b) on said properties. guarantee agreement and issue a Discharge Certificate certifying that 189/A admeasuring Ac 0.56 cents situated at Narsingi Village his liability as a guarantor to the Corporate Debtor, M/s. The Original Registered documents of the Land bearing Sy. No District, Telangana mortgaged vide Doc no.3473/2002 dated 28.11.1996, to be released along with peaceful physical possession (facing ORR Junction) Rajender Nagar Mandal, Ranga Reddy Chadalavada Infratech Ltd. is totally discharged.

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executed in favour of the creditor. the value ofthe securities offered by him and for personal guarantee The guarantor further submits that the proposed amount is more than

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IN DOO: 13.09.2023 IA No.587 of 2023 CP IB No.127/95/HDB/2022 NCLT HYD BENCH-1

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112 of the Code that -

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(15) The Resolution Professional confirms that he has complied with Section

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(1) The resolution professional has prepared report of the meetingof the creditors on repayment plan.

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(2) The report under sub-section (1):

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с. a. the revised repayment plan was not considered for approval as the the voting record of the creditors for the current meeting has been creditor opted to abstain after repeated modifications thereto;

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made part of the minutes of meeting and is attached for ready meetings conducted in physical mode along with the guarantor, and

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b. the lone creditor State Bank of India was present throughout the information of the Hon'bleAdjudicatingAuthority;

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required under Section 113 and confirmed by the respective members in resolution professional is annexed and marked as Annexure -9. The Resolution Professional declares that the "Insolvency Resolution

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circulated to the debtor (guarantor), creditor and to this Tribunal as (Insolvency Resolution Process for Personal Guarantors to Corporate the IBC 2016 and the Insolvency and Bankruptcy Board of India Debtors) Regulations, 2019". The statement under Regulation 17 by the Process for the Personal Guarantor has been conducted in compliance of

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The Resolution Professional further confirms that he has complied Section 99 and Section 114 and minutes of all meetings has been

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the meeting.

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Repayment plan submitted by the personal guarantor and the same was submitted by the RP before this Tribunalaforits approval. However, this Tribunal, at the behest of Here the case is that the sole member of creditor earlier approved the before decision could be passed ontha

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IN DOO: 13.09.2023 CP IB No.127/95/HDB/2022 IA No.587 of 2023 NCLT HYD BENCH-1

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for approval ofthe said Repayment Plan. This Tribunal vide order dated 06.02.2023 granted leave with liberty to file a fresh repayment plan as and the sole creditor, leave granted for withdrawal of IA (IBC) No. 1589/2022 when approved by the COC on the said repayment plan.

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Repayment Plan which was placed before the member of creditor, While it was so the RP filed IA No. 587/2023 seeking approval of the wherein the sole creditor neither approvedor rejected and opted to abstain the Creditor filed IA No. 895/2023 to treat the Creditor's "abstain" vote from voting. During the pendency of this Application, RP at the behest of in the meeting dated 03.04.2023 as dissent.

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maintainable. the creditor to treat their "abstain" vote in the meeting meant for voting on the Repayment plan as dissent as no such provision is there under the Under these circumstances, we are not inclined to consider the request of law. Keeping in view the same, IA No. 895/2023 is dismissed as non-

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below: 21. Here we are reminded of Proviso 106 (1) & (2), wherein it was held as

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Authority within a period of twenty-one days from the last date of 106. (1) The resolution professional shall submit the repayment plan under submission of claims under section 102. section 105 along with his report on such plan to the Adjudicating

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(2) The report referred in sub-section (1) shall include that-

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(a) the repayment plan is in compliance with the provisions of any law for the time being in force;

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implemented; and (b)the repayment plan has a reasonablerospect of being approved and

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HydarabadRenc

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11 IN DOO: 13.09.2023 IA No.587 of 2023 CP IB No.127/95/HDB/2022 NCLT HYD BENCH-1

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required, to consider the repayment plan: (c) there is a necessity of summoning a meeting of the creditors, if

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meeting of the creditors is not required to be summoned, reasons for the Provided that where the resolution professional recommends that a same shall be provided.

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for approval by this Tribunal. approval of the Repayment plan. In other words, the proviso suggests that RP keeping in viewthe interest of creditor, can submit the repayment plan necessary for the RP to convene a meeting for the purpose of seeking Therefore, as per Section 106 (1) & (2) of the Code, it is not always

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1. RP convened a meeting of the creditor for the purpose of voting of the Repayment plan of the personal guarantor, it was always open for the RP and perused the records. At the outset it may be stated that when the In the above backdrop of the facts, we have heard learned counsel for the repayment plan. However, in this case on hand the sole member of Creditor to either accept or reject or even suggest modifications in the 106 of the Code which confirms that repayment plan is under compliance are passing an order on the basis ofreport prepared by RP under section creditor chose to abstain. In the circumstances, the Creditor's meeting conveyed no decision on the approval of the plan. with section 112 of IBC, 2016. Therefore, keeping in view the provision contained in section 114 (1) we

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The Resolution Professional also submits that the Insolvency Resolution Process for the Personal Guarantor has beenconducted in compliance of the IBC 2016 and the Insolvency and Bankru

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IN DOO: 13.09.2023 CP IB No.127/95/HDB/2022 IA No.587 of2023 NCLT HYD BENCH-1

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Debtors) Regulations, 2019. (Insolvency Resolution Process for Personal Guarantors to Corporate

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We therefore, hereby approve the repayment plan with effect from the

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date of this order, with the following directions:-

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plan. completion of the timelines mentioned in the plan, whichever is earlier. Repayment Plan as per the terms and conditions mentioned therein and against the debtor within one month of the fulfilment of repayment subject to any kind of tax. file his final report soon after the implementation of the plan or upon (b) Upon completion of the Repayment Plan, the Resolution Professional (c) The creditors shall withdraw all the legal proceedings before various fora shall comply with the provisions stated in Section 117 of the Code. obligations by the debtor in accordance with the terms of the repayment (a) The Resolution Professional shall supervise the implementation of the (d) Any liability arising out of the settlement with creditors shall not be

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post-dated cheques shall stand terminated and the liability under such (e) All outstanding negotiable instruments issued by the Personal Guarantor in favour ofthe financial creditor including demand promissory notes and instruments shall stand extinguished.

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(f)

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personal guarantor or to others extended basedon ttie personal guarantee collateral/prime security for the credit facilities extended either to the property/future property of the personal guarantor stipulating will become personal guarantor with regard to after acquired property or later acquired The clauses, if any in the loan agreements/documents executed by

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IN 13 CP IB No.127/95/HDB/2022 DOO: 13.09.2023 IA No.587 of 2023 NCLT HYD BENCH-1

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treated as null and void. executed by personal guarantor shall not be operative and it shall be

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