Disposed

In the matter of Aditya Birla Finance Limited v. Vijayalakshmi Subburaj, [CP(IB)/13(CHE)/2024]

NCLT19 Feb 2024CP(IB)/13(CHE)/2024

Case brief

AI extract

What is this about?

NCLT Division Bench received an application under Section 95 of IBC against a personal guarantor. The court relied on Supreme Court precedents regarding natural justice and adjudication stages. It appointed an Interim Resolution Professional to examine the application and submit a report within 10 days, noting the next hearing date.

What did the court decide?

Appointment of Mr. Ravindra Beleyur as Interim Resolution Professional with a mandate to submit a report within 10 days.

In the matter of Aditya Birla Finance Limited vs… — Insolvency and Bankruptcy | NCLT (2024)

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IN THE NATIONAL COMPANY LAW TRIBUNAL, DIVISION BENCH – I, CHENNAI

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CP(IB)/13(CHE)/2024

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(filed under Section 95(1) of the Insolvency and Bankruptcy Code, 2016

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M/s. Aditya Birla Finance Limited,

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Represented by its Authorized Representative, Mr. Sujit Ganesh Unit #10&12, 4^th and 6^th Floor, Oval, Venkatanarayana Road, T.Nagar Chennai-600 017 .....Applicant -Vs-

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Mrs. Vijayalakshmi Subburaj, No. 2/650, Vishved River View Enclave, IAS IPS Colony, 3^rd Main Road, Manapakkam, Chennai – 600116 ....Respondent

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Order pronounced on 19^th February, 2024

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CORAM:

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SANJIV JAIN, MEMBER (JUDICIAL) VENKATARAMAN SUBRAMANIAN, MEMBER (TECHNICAL)

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Present:

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For Petitioner : Pavithra Advocate For Respondent : K Jagannathan Advocate

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O R D E R

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( Hearing through Video Conferencing )

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The Applicant, M/s Aditya Birla Finance Ltd through its

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Authorised Representative has filed this application under Section

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CP(IB)13(CHE)2024 Aditya Birla Finance Limited vs Mrs. Vijayalakshmi Subburaj

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Page 1 of 7

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95(1) of the Insolvency and Bankruptcy Code, 2016 (“IBC”) for initiating Insolvency Resolution Process against the Personal Guarantor/ Respondent Mrs. Vijayalakshmi Subburaj of the Corporate Debtor against whom, CIRP was initiated vide an order dated 29.08.2018 in CP/114/IB/CB/2018. Thereafter a Liquidation of the Corporate Debtor was ordered by Court – II of this Tribunal vide order dated 12.06.2019.

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As per the averments made in the application, M/s Velohar Infra Private Limited had taken credit facilities from the Applicant. The Respondent herein had given personal guarantee to the said loan. The Corporate Debtor failed to repay the debt which made the Applicant initiate CIRP against the Corporate Debtor.

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In Part-III of the application, the Applicant has given the particulars of debt as Rs.3,65,28,644 (Rupees Three Crores Sixty Five Lakhs Twenty Eight Thousand Six Hundred and Forty Four Only), amount of default as Rs.3,65,28,644 (Rupees Three Crores Sixty Five Lakhs Twenty Eight Thousand Six Hundred and Forty Four Only) and date of default as 03.11.2017. The Applicant has placed the Deed of Guarantee executed by the Respondent and Mortgage of Title Deeds.

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CP(IB)13(CHE)2024 Aditya Birla Finance Limited vs Mrs. Vijayalakshmi Subburaj

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Page 2 of 7

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The documents are placed at Page 49-102 . The Applicant has also filed the statement of accounts at Page 113-142 .

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The Demand Notice issued under Rule 7(1) of the Insolvency

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and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Rules, 2019 to the Personal Guarantor dated 08.06.2023 is placed at Page 150 of the typeset filed along with the application.

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We have heard Learned Counsel for the Applicant.

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Section 95 of IBC provides that a creditor may apply either by

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himself, or jointly with other creditors, or through a Resolution Professional to the Adjudicating Authority for initiating an Insolvency

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Resolution Process under the Section by submitting an application. The application shall be accompanied with details and documents

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relating to the debts or by the debtor to the creditor as on the date of application, failure by the debtor to pay the debt within a period of 14 days of the service of the Notice of Demand and the relevant evidence

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of such default or non-payment of debt. It also provides that “the

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creditor shall provide a copy of the application to the debtor and the

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application shall be in such form and manner.

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CP(IB)13(CHE)2024 Aditya Birla Finance Limited vs Mrs. Vijayalakshmi Subburaj

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Page 3 of 7

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The Hon’ble Supreme Court in the matter of Dilip B Jiwrajka –

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Vs- Union of India &Ors in Writ Petition (Civil) No 1281 of 2021 while dealing with the jurisdiction of NCLT in relation to adjudication of cases filed under Section 94 and 95 of IBC, 2016 has summarized in

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para-86 as follows;

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86. We summarise the conclusion of this judgment below:

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(i) No judicial adjudication is involved at the stages envisaged in Sections 95 to Section 99 of the IBC;

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(ii) The resolution professional appointed under Section 97 serves a facilitative role of collating all the facts relevant to the examination of the application for the commencement of the insolvency resolution process which has been preferred under Section 94 or Section 95. The report to be submitted to the adjudicatory authority is recommendatory in nature on whether to accept or reject the application;

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(iii) The submission that a hearing should be conducted by the adjudicatory authority for the purpose of determining ‘jurisdictional facts’ at the stage when it appoints a resolution professional under Section 97(5) of the IBC is rejected. No such adjudicatory function is contemplated at that stage. To read in such a requirement at that stage would be to rewrite the statute which is impermissible in the exercise of judicial review;

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(iv) The resolution professional may exercise the powers vested under Section 99(4) of the IBC for the purpose of examining the application for insolvency resolution and to seek information on matters relevant to the application in order to facilitate the submission of the report recommending the acceptance or rejection of the application;

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(v) There is no violation of natural justice under Section 95 to Section 100 of the IBC as the debtor is not deprived of an

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CP(IB)13(CHE)2024 Aditya Birla Finance Limited vs Mrs. Vijayalakshmi Subburaj

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Page 4 of 7

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opportunity to participate in the process of the examination of the application by the resolution professional;

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(vi) No judicial determination takes place until the adjudicating authority decides under Section 100 whether to accept or reject the application. The report of the resolution professional is only recommendatory in nature and hence does not bind the adjudicatory authority when it exercises its jurisdiction under Section 100;

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(vii) The adjudicatory authority must observe the principles of natural justice when it exercises jurisdiction under Section 100 for the purpose of determining whether to accept or reject the application;

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(viii) The purpose of the interim-moratorium under Section 96 is to protect the debtor from further legal proceedings; and

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(ix) The provisions of Section 95 to Section 100 of the IBC are not unconstitutional as they do not violate Article 14 and Article 21 of the Constitution.

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The Hon’ble Supreme Court has held that no judicial adjudication is involved at the stages envisaged in Sections 95 to Section 99 of the IBC and also there is no violation of natural justice under Section 95 to Section 100 of the IBC as the debtor is not deprived of an opportunity to participate in the process of the examination of the application by the resolution professional. The Respondent/ Personal Guarantor will be given an opportunity to file a reply once the RP has filed his Report under Section 99 of IBC, 2016.

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CP(IB)13(CHE)2024 Aditya Birla Finance Limited vs Mrs. Vijayalakshmi Subburaj

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Page 5 of 7

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Considering the above facts and the case supra, we appoint the Resolution Professional who will collate all the facts relevant to the examination of the application for the commencement of the Insolvency Resolution Process in respect of the Personal Guarantor.

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In the instant case, the Applicant has proposed the name of the Resolution Professional Mr. Ravindra Beleyur . Upon verification of disciplinary status with the IBBI portal, we appoint Mr. Ravindra Beleyur, with Reg. No. IBBI/IPA-001/IP-P-00189/2017-2018/10368, (email Id: [email protected]) w hose AFA is valid till 18.09.2024, as Interim Resolution Professional in respect of the Personal Guarantor/Respondent.

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The Resolution Professional is directed to examine the application as set out in Section 97(6) of IBC, 2016 who after examining, may recommend for the acceptance / rejection of the application as provided under Section 97(6) of IBC, 2016, within a period of 10 days as contemplated under Section 99(1) of IBC, 2016.

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