Allowed

In the matter of State Bank of India v. T Pavani, [Ia No. 589 of 2023 in Cp Ib No.126/95/HDB/2022]

NCLT13 Sept 2023IA No. 589 of 2023 in CP IB No.126/95/HDB/2022

Case brief

AI extract

What is this about?

The NCLT approved a repayment plan submitted by a personal guarantor despite the sole creditor's abstention from voting. The court relied on Section 106 and Section 114 of the IBC, concluding that the creditor's neutrality did not preclude Tribunal approval of a reasonable plan.

What did the court decide?

Revised repayment plan approved; debtor to pay Rs. 11 crore in installments; discharge of liability and nullification of security interests upon completion; withdrawal of proceedings directed.

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

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NATIONAL COMPANY LAW TRIBUNAL HYDERABAD BENCH-1

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IA No.589 of 2023

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CP IB No.126/95/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. PAVANI (PERSONAL GUARANTOR) TO M/S CHADALAVADA INFRATECH LTD (CORPORATE DEBTOR)

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Maligi Madhusudhana Reddy Resolution Professional

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CERTIFIED TORUE COPY OF THE VAL

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For M/s Chadalavada Infratech Limited

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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

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ydarabad Beno
दराबाद
NationalC

Appearance

For Applicant:

Party in person

For Creditor: Shri Suryanarayana Raju, Advocate

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For Personal Guarantor: Ms. Sandhya Rani

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NCLT HYD -1 IA No.589 of 2023 IN 2 CP IB No.126/95/HDB/2022 DOO 13.09.2023

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PER: BENCH ORDER

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

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

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Consequent to his taking over charge as Resolution Professional, the Telangana" (Telugu), Prajashakti (Telugu) & "Financial Express" Applicant herein caused public notice calling for claims in "Nava

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(English) on 08-07-2022, calling claims from the Creditors from the
ydarabad Benon
analComidenA
हैदराबाद र
LaT

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IN CP IB No.126/95/HDB/2022 3 DOO 13.09.2023 IA No.589 of 2023 NCLT HYD-1

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creditors by 28th July 2022. The last date for the Resolution Professional to submit his report under section 106 of IBC was 18th August 2022.

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forfeit its right to enforce the Personal Guarantor's security during the 4. It is submitted that the Financial Creditor through its claim form, opted to

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period ofRepayment Plan.

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The Personal Guarantor was asked by the Resolution Professional vide e-

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consultation with the Resolution Professional. mail dated 26.07.2022 and 09.03.2023 to prepare a Repayment Plan in

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Pursuant to public announcement, the Resolution Professional received only one claim i.e. from State Bank of India amounting to Rs. Rs.250,90,45,531/-

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15.08.2022 was placed before the 1st meeting of the creditors on 08-09The 1st repayment plan submitted by the Personal Guarantor on IBBI Registered Valuers to value of land and buildings of the Personal 2022 by the Resolution Professional. As advised by the Creditor, two

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guarantor other than the assets disclosed in the statement of affairs and further advised personal guarantor to disclose the sources of funds that Guarantor and an investigation agency to identify assets of the personal

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the Personal Guarantor would like to brin in to repay according to the

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plan.

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IN IA No.589 of 2023 4 DOO 13.09.2023 CP IB No.126/95/HDB/2022 NCLT HYD-1

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from the appointed agencies who have confirmed that there are no assets reports, placed the same before the creditors and investigation reports It is averred that, the Resolution Professional upon receipt of valuation

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The Resolution Professional held 3rd creditors' meeting on 20th available other than those disclosed in the name of the guarantor. December 2022. After detail deliberations, the revised repayment plan of the Personal Guarantor was approved by the sole creditor SBI.The same was filed before this Tribunal, for approval.

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

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Personal Guarantor, that has been earlier approved by the sole creditor Guarantors so that a collective decision on all the plans can be considered and which is pending before this Tribunal, on the ground that, it had come on commercial grounds and keeping in view, the spirit of the Code. 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 of Smt. T. Pavani in the next meeting along with the plans of other and directed the Resolution Professional to place fresh Repayment Plan

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Accordingly, the Tribunal allowed the withdrawalof Application
on commercial grounds and keeping in view, the spirit of the Code.
H
कुनवि

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NCLT HYD-1 IA No.589 of 2023 CP IB No.126/95/HDB/2022 DOO 13.09.2023 5 IN

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Application IA(IBC).No. 1587/2022 on 06.02.2023, granting liberty to

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file a fresh application if any.

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1. It is further submitted that during the process of insolvency of the guarantor, six creditor's meetings were conducted by the Resolution Professional and based on the discussions, copy of the repayment plan submitted by the guarantor along with the compliance particulars under

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the IBC 2016 and its Regulations, was shared with the Creditor by the resolution professional for their consideration.

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The Resolution Professional has complied the Statement of Affairs in accordance with Regulation 10(1) of the Insolvency and Bankruptcy

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affairs is annexed as Annexure -7. Board of India (Insolvency Resolution Process for Personal Guarantors to the Corporate Debtor) Regulations, 2019. The copy of the statement of

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The revised improved repayment plan submitted by the Guarantor along
with statement of affairs with assets and liabilities was discussed in detail

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in the 6th meeting of creditors. The Copy of revised Repayment Plan is
attached as Annexure-8. Thereafter, the following resolution with respect
to revised repayment plan was placed for e-voting from 6 pm, 3rd April

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2023 to 6 pm, 4th April 2023 by the resolution professional for approval.
Compаsकम्पनीविधि
gerabad Bench

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IN NCLT HYD -1 DOO 13.09.2023 IA No.589 of 2023 CP IB No.126/95/HDB/2022

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Chadalvada Infratech Private Limited for Rs. 11,00,00,000/- with the revised payment schedule of: within 30 days of approval by the Hon'ble Adjudicating Authority - Rs.2,25,00,000/- and within 60 days of the approval of Adjudicating Authority - Rs.8,75,00,000/- be and is by Mr. T. Pavani, Personal Guarantor to the Corporate Debtor M/s. "RESOLVED THAT the Revised Improved Repayment Plan submitted

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hereby approved."

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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 -9. The copy of the voting record where the repayment plan placed for

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SALIENT FEATURES OF THE REPAYMENT PLAN: The revised improved repayment plan (revised as on 13.03.2023) submitted vide Guarantor's letter dated 13.03.2023 is annexed and 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:

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(i) Brief details about the engagement of debtor with the CD:

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The debtor Mrs. T. Pavani, stood as Personal Guarantor to M/s Chadalavada Infratech Ltd the Corporate Debtor in connection with the Company's borrowings from SBI and signed agreements accordingly.

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facilities availed by the Corporate Debtor lComenьकम्पनीविधिअधि
HyderabadBonch

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IN NCLT HYD -1 IA No.589 of 2023

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DOO 13.09.2023 CP IB No.126/95/HDB/2022

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S. No.	Name of the creditor	Amount Claimed	Amount admitted	Security interest if any	voting right%
	Claims fro	m Banks
1	SBI	2,70,61,08,662	2,70,61,08,662	All the part and parcel of the property bearing Sy. No330/EE/admeasuring Ac 2.38 cents situated at Kondakal Village, Shakarpally Mandal, Rangareddy Dist, Vide Doc No. 8043/2007 & All the part and parcel of the property bearing Sy. No. 189/A situated at N	100

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

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It is stated in the repayment plan that the debtor does not have any liabilities within the criteria of excluded debts under Section 79 (15) and as such has not proposed to avail the benefit of excluded asset(s) if any. However, it is stated that the debtor wants to exclude Rs. 1,00,000/- within the criteria of excluded assets under Section 79 (14)

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(iii). Payment to the creditors:

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The debtor has proposed to make payment of Rs.11,00,00,000/- (Rupees Eleven crores only) to the creditor as under:-

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S.No.	Name of the creditor	voting	Amount Rs.
		right %
1	State Bank of India	100	11,00,00,000/-
	Total		11,00,00,000/-

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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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S.No.	Particulars	Amount Rs.
1	With 30 days of the approval of Adjudicating Authority (25%)	2,75,00,000/-
2	With 60 days of the approval of Adjudicating Authority (75%)	8,25,00,000/-
	TOTAL come	11,00,00,000/-
Note:	Resolution process costs will be paid separately.

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द

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8 CP IB No.126/95/HDB/2022 DOO 13.09.2023 IA No.589 of 2023 NCLT HYD-1

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

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(v) Reliefs as claimed by the Personal Guarantor:

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understanding that there shall be no more financial obligations guarantee agreement and issue a Discharge Certificate certifying that her liability as a guarantor to the Corporate Debtor, M/s.

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(a) The amount that is being paid by the Guarantor is on the distinct towards State Bank of India and the Bank shall return her original Chadalavada Infratech Ltd. is totally discharged.

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(b) The State Bank ofIndia shall return the Original documents relating to all the Part and parcel of the Property bearing Sy.no 330/EE admeasuring Ac 2.38 cents situated at kondakal Village, Shankarpally mandal, Rangareddy Dist, Vide Doc No:- 8043/2007.

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(c) All the part and parcel of the property bearing Sy.no 189/A situated 2617/2010 relating to all the family members. District. Vide Doc No:- 3474/2002, 2619/2010, 2618/2010, & at Narsing Village, at ORR Junction, Rajender Nagar Mandal, RR

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(15) The Resolution Professional confirms that he has complied with Section 112 of the Code that -

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(1) The resolution professional has prepared report of the meeting of the

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The report under sub-section (1):
creditors on repayment plan.
onalCompen,
राष्ट्रय
derabadH
उदराबाट

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

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NCLT HYD -1 IA No.589 of 2023 IN CP IB No.126/95/HDB/2022 DOO 13.09.2023 9

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a. the revised repayment plan was not considered for approval as the creditor opted to abstain after repeated modifications thereto;

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b. the lone creditor State Bank of India was present throughout the information of the Hon'ble Adjudicating Authority; meetings conducted in physical mode along with the guarantor, and made part of the minutes of meeting and is attached for ready

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c. the voting record of the creditors for the current meeting has been

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the IBC 2016 and the Insolvency and Bankruptcy Board of India Process for the Personal Guarantor has been conducted in compliance of Debtors) Regulations, 2019". The statement under Regulation 17 by the

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(Insolvency Resolution Process for Personal Guarantors to Corporate The Resolution Professional declares that the "Insolvency Resolution resolution professional is annexed and marked as Annexure -9.

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the meeting. Section 99 and Section 114 and minutes of all meetings has been

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1. circulated to the debtor (guarantor), creditor and to this Tribunal as required under Section 113 and confirmed by the respective members in The Resolution Professional further confirms that he has complied

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submitted by the RP before this Tribunal for its approval. However, Here the case is that the sole member of creditor earlier approved the Repayment plan submitted by the personal guarantor and the same was before decision could be passed on that by this Tribunal, at the behest of the sole creditor, leave granted for withdrawal ofIA (IBC) No. 1587/2022 06.02.2023 granted leave with liberty to file a fresh repayment plan as and for approval of the said Repayment Plan. This Tribunal vide order dated when approved by the COC on the said repayment plan

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IN 10 DOO 13.09.2023 NCLT HYD-1 IA No.589 of 2023 CP IB No.126/95/HDB/2022

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law. Keeping in view the same, IA No. 896/2023 is dismissed as nonmaintainable. on the Repayment plan as dissent as no such provision is there under the

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the creditor to treat their "abstain" vote in the meeting meant for voting Under these circumstances, we are not inclined to consider the request of in the meeting dated 03.04.2023 be treated as dissent. from voting. During the pendency of this Application, RP at the behest of the Creditor filed IA No. 896/2023 to treat the Creditor's "abstain" vote Nor

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wherein the sole creditor neither approveder rejected and opted to abstain

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While it was so the RP filed IA No. 589/2023 seeking approval of the Repayment Plan which was placed before the member of creditor,

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

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Authority within a period of twenty-one days from the last date of section 105 along with his report on such plan to the Adjudicating

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1. (1) The resolution professional shall submit the repayment plan under submission of claims under section 102.

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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 reasonable prospect of being approved and

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dera

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NCLT HYD -1 IA No.589 of2023 CP IB No.126/95/HDB/2022 DOO 13.09.2023 11 IN

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

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

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repayment plan. However, in this case on hand the sole member of conveyed no decision on the approval of the plan. Creditor to either accept or reject or even suggest modifications in the creditor chose to abstain. In the circumstances, the Creditor's meeting 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 RP convened a meeting of the creditor for the purpose of voting of the In the above backdrop ofthe facts, we have heard learned counsel for the

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106 of the Code which confirms that repayment plan is under compliance with section 112 of IBC, 2016. Therefore, keeping in view the provision contained in section 114 (1) we are passing an order on the basis of report prepared by RP under section

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The Resolution Professional also submits that the Insolvency Resolution Process for the Personal Guarantor has been conducted in compliance of the IBC 2016 and the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Personal Guarantors to Corporate

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Debtors) Regulations, 2019.

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etional
CompanVLA
Vaarb

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12 IN NCLT HYD-1 IA No.589 of2023 DOO 13.09.2023 CP IB No.126/95/HDB/2022

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We therefore, hereby approve the repayment plan with effect from the date of this order, with the following directions:-

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plan. completion of the timelines mentioned in the plan, whichever is earlier. against the debtor within one month of the fulfilment of repayment Repayment Plan as per the terms and conditions mentioned therein and

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(c) The creditors shall withdraw all the legal proceedings before various fora obligations by the debtor in accordance with the terms of the repayment

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(b) Upon completion of the Repayment Plan, the Resolution Professional shall comply with the provisions stated in Section 117 of the Code. file his final report soon after the implementation of the plan or upon

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(a) The Resolution Professional shall supervise the implementation of the

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subject to any kind of tax.

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(d) Any liability arising out of the settlement with creditors shall not be

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

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(f) executed by personal guarantor shall not be operative and it shall be treated as null and void. personal guarantor or to others extended based on the personal guarantee property/future property of the personal guarantor stipulating will become collateral/prime security for the credit facilities extended either to the personal guarantor with regard to after acquiredproperty or later acquired The clauses, if any in the loan agreements/documents executed by

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Company

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NCLT HYD -1 IA No.589 of 2023 IN 13 CP IB No.126/95/HDB/2022 DOO 13.09.2023

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(g) The debtor is permitted to share a certified copy of this repayment plan and order ofthis Tribunal approving this repayment plan with third parties including statutory/government authorities wherever needed.

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excluded debts as defined u/s 79(14) if any.

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(h) The approval of the Repayment Plan shall not be construed as waiver of

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(i) The Registry is directed to send a copy ofthis order to IBBI. (j) The Resolution Professional, the Applicant herein shall forward all the Guarantor to IBВІ. records pertaining to Insolvency Resolution Process against the Personal

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Jatade13/9/2025

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Member(Technical) Member (Judicial)
(Charan Singh) (Dr. Venkata Ramakrishna Badarinath Nandula)
13-09-20023

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Binnu

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leen r'

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Deputy Registrar / Assistant Ragistrar / Court Officer
National Company Law Trihunal, Hyderabad Bench

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CERTIFIEL TRUE COPY
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