Disposed

In the matter of Bank of Baroda v. K Gangaprasad, [Cp (IB)/69(CHE)/2022]

NCLT16 Feb 2024CP (IB)/69(CHE)/2022

Case brief

AI extract

What is this about?

This Tribunal, in an application under Section 95(1) of the IBC to initiate Insolvency Resolution Process against a personal guarantor, relied on the Supreme Court judgment in Dilip B Jiwrajka to hold that no judicial adjudication occurs at pre-decisional stages. The Court appointed a Resolution Professional to examine the application and directed the application to be listed for report/hearing.

What did the court decide?

Appointment of Mrs Balasubramanian Mekala as Resolution Professional; direction to pay Rs.25,000/- to RP; application listed for report/hearing on 15.03.2024.

In the matter of Bank of Baroda vs. K Gangaprasad, [Cp… — Insolvency and Bankruptcy | NCLT (2024)

¶1

IN THE NATIONAL COMPANY LAW TRIBUNAL, DIVISION BENCH – II, CHENNAI CP (IB)/69(CHE)/2022

¶2

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

¶3

BANK OF BARODA

¶4

Stressed assets Management Branch JBAS Building, 4^th Floor, No 45, Moore street Chennai- 600001 Also head office at Suraj Plaza-1Sayaji Ganj, Baroda, Gujarat- 390005 …Applicant/Financial Creditor

¶5

Versus-

¶6

K GANGAPRASAD Old no 18, New No 5, 1^st main Dr Muthulakshmi street, Indira Nagar, Valasaravakkam, Chennai- 600017. … Respondent/ Personal Guarantor

¶7

Order pronounced on 16^th February 2024

¶8

CORAM

¶9

SHRI. JYOTI KUMAR TRIPATHI, MEMBER (JUDICIAL) SHRI. RAVICHANDRAN RAMASAMY, MEMBER (TECHNICAL)

¶10

Present:

¶11

For Petitioner : S Sathiyanarayanan, G Thyagarajan C Lokanadham, S venkateshan, B Sridharan, D Pavithra Advocates.

¶12

ORDER

¶13

( Hearing conducted through Video Conferencing )

¶14

The Applicant, Bank of Baroda through Specialized Assets management

¶15

branch has filed this application under Section 95(1) of the Insolvency and

¶16

CP(IB)69(CHE)2022

¶17

Bank of Baroda-vs-K Gangaprasad Page 1 of 7

¶18

Bankruptcy Code, 2016 (“IBC”) for initiating Insolvency Resolution Process against the Personal Guarantor / Respondent K Gangaprasad of

¶19

M/s. GVR Infra Projects Limited The Corporate Debtor against whom,

¶20

CIRP was initiated vide an order dated 17.10.2018 in CP/941/(IB)/2018.

¶21

As per the averments made in the application M/s. GVR Infra Projects 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.

¶22

In Part-III of the application, the Applicant has given the particulars of debt as Rs.234,47,71,269/- ( Rupees Two hundred thirty four crores forty seven lakhs seventy one thousand two hundred sixty nine only )and the default amount is Rs. 196,07,19,882 /-(Rupees one hundred ninety six crore seven lakhs nineteen thousand eight hundred eighty two only) and date of default as 12.08.2020. The Company/Corporate Debtor is under liquidation before Court – II of this Tribunal. The Applicant has placed

¶23

the Deed of guarantee in page 217 , Account statement and Balance sheets

¶24

at Pages 758, , recall notice at Pages 733 along with the demand notice.

¶25

CP(IB)69(CHE)2022

¶26

Bank of Baroda-vs-K Gangaprasad Page 2 of 7

¶27

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

¶28

Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Rules, 2019 to the Personal Guarantor dated 12.08.2020 is placed at Page 746 of the typed set filed along with the application.

¶29

We have heard Learned Counsel for the Applicant and perused the document placed.

¶30

Section 95 of IBC provides that a creditor may apply either by himself, or jointly with other creditors, or through a Resolution Professional to the Adjudicating Authority for initiating an Insolvency Resolution Process under the Section by submitting an application. The application shall be accompanied with details and documents 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 of such default

¶31

or non-payment of debt. It also provides that “the creditor shall provide

¶32

a copy of the application to the debtor and the application shall be in such form and manner.

¶33

CP(IB)69(CHE)2022

¶34

Bank of Baroda-vs-K Gangaprasad Page 3 of 7

¶35

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

¶36

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

¶37

under Section 94 and 95 of IBC, 2016 has summarized in para-86 as

¶38

follows;

¶39

86. We summarise the conclusion of this judgment below:

¶40

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

¶41

(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;

¶42

(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;

¶43

(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;

¶44

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

¶45

CP(IB)69(CHE)2022

¶46

Bank of Baroda-vs-K Gangaprasad Page 4 of 7

¶47

(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;

¶48

(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;

¶49

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

¶50

(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.

¶51

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.

¶52

Considering the above facts and the case supra, we appoint the

¶53

Resolution Professional who will collate all the facts relevant to the

¶54

CP(IB)69(CHE)2022

¶55

Bank of Baroda-vs-K Gangaprasad Page 5 of 7

¶56

examination of the application for the commencement of the Insolvency Resolution Process in respect of the Personal Guarantor.

¶57

In the instant case, the Applicant has not proposed the name of the Resolution Professional Henceforth, this Tribunal based on the latest list furnished by Insolvency and Bankruptcy Board of India applicable for the period between January 2024 – June 2024 appoints Mrs Balasubramanian Mekala with IBBI/IPA-002/IP-N00675/2018-2019/12416 (Email Id: [email protected] ) ( whose AFA is valid till 15.10.2024 ) as Resolution Professional in respect of the Personal Guarantor.

¶58

The Applicant is directed to pay a sum of Rs.25,000/- (Rupees Twenty Five Thousand Only) to the Resolution Professional to meet out the expenses to perform the functions assigned to him.

¶59

The Resolution Professional is directed to examine the application

¶60

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.

¶61