Amrit Rajani vs Pegasus Assets Reconstruction Pvt. Ltd ...

(Arising out of the Order dated 20.04.2022 passed by the National Company Law Tribunal, Mumbai Bench- IV in I.A/827/MB/2022 in CP (IB) No.- 529/MB/2021 & CP (IB) No. 529/MB/ 2021.)

IN THE MATTER OF:

Amrit Rajani ...Appellant Erstwhile Director M/S Shri Balaji Entertainments Private Limited Address:- 502, Ghanshyam Chamber, B-12, Link Road, Andheri (W), Mumbai - 400053. (Maharashtra) Versus

1. Pegasus Assets Reconstruction Private Limited 55/56, 5th Floor, Free Press House, Nariman Point, Mumbai - 400-021 ...Respondent (Maharashtra)

2. Shri Balaji Entertainment Private Limited Through Mr. Ganesh Labhchand Jain (CIRP) Regd. Office : B-10, Veera Ind. Estate, New Link Road Andheri (West) Palghar-401506 (Maharashtra)

Present

For Appellants: Mr. Umang Mehta & Mr. Harsh Jain, Advocates.

For Respondents: Mr. Dinkar Singh & Mr. Rohit Singh, Advocates. Comp. App. (AT) (Ins.) No. 476 of 2022

JUDGEMENT

( 23. 01.2025)

NARESH SALECHA, MEMBER (TECHNICAL)

1. The present appeal has been filed U/S 61(1) of the Insolvency and Bankruptcy

Code, 2016 ('Code') by the Appellant i.e., Amrit Rajani, Erstwhile Director of

Shri Balaji Entertainment Private Ltd., the Corporate Debtor/Respondent No. 2

herein against the Impugned Order dated 20.04.2022 passed by the National

Company Law Tribunal, Mumbai Bench (IV) ('Adjudicating Authority') in IA.

No. 827/MB/2022 in Company Petition No. (IB)-529/MB/2021.

2. M/s Pegasus Assets Reconstruction Private Limited, the Financial Creditor,

is the Respondent No. 1 herein.

3. M/s Pegasus Assets Reconstruction Private Limited ("Financial Creditor" and

Respondent No. 1 herein) filed an application being CP (IB) No.529/MB/2021

under Section 7 of the Code for initiating Corporate Insolvency Resolution

Process ('CIRP') against the Corporate Debtor/Respondent No. 2 herein,

claiming financial debt and default of Rs.35,90,56,629/-.

4. The Appellant stated that the Adjudicating Authority while passing the

Impugned Order has erred in admitting the application by not appreciating the

fact that there was no proper ground for admission. The Appellant contented that

the application ought not to have been entertained and was liable for dismissal on

the ground of Maintainability as the Corporate Debtor was not the Borrower or

Page 2 of 34 Comp. App. (AT) (Ins.) No. 476 of 2022

Co-Borrower and Corporate Debtor was also not the Corporate Guarantor of the

Principal Borrower M/s Universal Textile Waterproof Co. India ('UTWC').

5. It is the case of the Appellant that the Respondent No. 1 has failed to

demonstrate the existence of any legally enforceable debt against the Corporate

Debtor. The Appellant contended that the financial debt does not pertain to Shri

Balaji Entertainment Private Ltd., ('Corporate Debtor') which has been

incorrectly described as the Corporate Debtor in the application filed by the

Respondent No. 1. The Appellant further submitted that the purported assignment

in favour of Respondent No. 1 does not include any debt owed by Respondent

No. 2 to SVC Bank or to Respondent No. 1 by way of assignment.

6. The Appellant submitted that UTWC is not a corporate entity and is a

partnership firm and thus it does not fall within the statutory definition of a

"Corporate Debtor" under Section 3(8) r/w Section 3(7) of the Code. It is the case

of the Appellant that consequently Respondent No. 2 cannot be classified as a

"Corporate Guarantor" as defined under Section 5(5A) of the Code, further

invalidating the claim of Respondent No. 1.

7. The Appellant pleaded that the Respondent No. 1's reliance on forged and

unsupported documents exacerbates the flaws in the claim and furthermore, the

invocation of Section 7 of the Code in a summary jurisdiction is wholly

inappropriate given the disputes regarding the authenticity of the documents.

8. It is the case of the Appellant that the Respondent No. 1 has advanced its

claim on inconsistent grounds, alleging that Respondent No. 2 was both a

Page 3 of 34 Comp. App. (AT) (Ins.) No. 476 of 2022

corporate guarantor and a co-borrower. This dual characterization is legally

untenable as the roles of a co-borrower and a corporate guarantor are distinct and

cannot coexist in the same transaction. Even Form-1 submitted by Respondent

No. 1 does not unequivocally proceed on the basis that the Corporate Debtor acted

as a corporate guarantor.

9. The Appellant further submitted that the Respondent No. 1 had not

established compliance with Section 25 of the Multi-State Cooperative Societies

Act, 2002 ('Cooperative Act') which governs membership requirements for

cooperative banks. The Appellant argued that without proof of membership, SVC

Bank could not have extended financial facilities to the Corporate Debtor or to

the principal borrower, rendering the agreements void under Section 20 of the

Indian Contract Act, 1872 due to the parties' mistaken belief regarding

membership.

10. The Appellant contended that without membership in SVC Bank, neither the

principal borrower nor the alleged Corporate Debtor could have availed financial

facilities. The Appellant stated that the Respondent No. 1 has failed to substantiate

the claim that either entity was a member of the bank, making the purported

financial transactions legally untenable.

11. The Appellant contended that the Adjudicating Authority violated the

principles of natural justice by admitting the Section 7 Application as the

Respondent No. 1 introduced crucial documents, including a ledger copy of SVC

Page 4 of 34 Comp. App. (AT) (Ins.) No. 476 of 2022

Bank, through written submissions, depriving the appellant of the opportunity to

contest their validity.

12. The Appellant submitted that the deed of assignment executed between SVC

Bank and Respondent No. 1 did not fulfil the statutory requirements under the

SARFAESI Act, 2002. The assigned financial assets do not qualify as "financial

assistance" under the Act, rendering the assignment void. The Appellant further

submitted that Respondent No. 2 did not request or receive any financial facilities

from SVC Bank. The Appellant alleged that blank documents were signed by

them in good faith which were subsequently manipulated by SVC Bank and/or

Respondent No. 1 and further underscore the absence of any genuine financial

transaction involving the Corporate Debtor.

13. The Appellant submitted that the alleged corporate guarantee relied upon by

Respondent No. 1 is invalid. The Appellant stated that the corporate guarantee

documents pertain to an entity distinct from the principal borrower, and the lack

of proper execution, coupled with alleged forgery and unauthorized alterations,

renders the guarantee unenforceable.

14. The Appellant relied on the judgment of the Hon'ble Supreme Court of India

in the matter of Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset

Reconstruction Co. Ltd. [(2021) SCC Online SC 313], which holds that

uninvoked guarantees cannot form the basis of a claim under the Code. It is the

case of the Appellant that the Respondent No. 1 failed to demonstrate invocation

of the alleged corporate guarantee, further invalidating its claim. Page 5 of 34

Comp. App. (AT) (Ins.) No. 476 of 2022

15. The Appellant submitted that Form 1, filed by Respondent No. 1 was

incomplete and failed to establish a direct liability of the alleged Corporate

Debtor. The form does not substantiate the calculation of debt or demonstrate how

Respondent No. 2 is liable for the alleged financial assistance extended to UTWC.

16. The Appellant also contended that notices under Section 13(2) of the

SARFAESI Act, 2002 cannot be equated with notices invoking guarantees. The

absence of proper invocation of the guarantee further undermines the Respondent

No. 1's claim. The Appellant also submitted that Respondent No. 1's reliance on

transactions prior to 2018 makes the application barred by limitation.

Additionally, the absence of supporting evidence, such as account opening forms

or disbursement requests, further invalidates the claim.

17. The Appellant contended that the Corporate Debtor had not received any

amounts from SVC Bank, the assignor, which purportedly assigned its financial

assets to the Respondent No. 1 under a Deed of Assignment dated 27.02.2020. It

is the case of the Appellant that from inception in 2011, the financial facilities

were provided to UTWC, and the Corporate Debtor was treated solely as a

corporate guarantor. The Appellant asserted that the Books of Accounts of the

Corporate Debtor does not reflect any sums due to the Financial Creditor or SVC

Bank. The Appellant further submitted that the mere use of the term "co-

borrower" does not suffice to evidence a financial debt. No disbursement was

made by SVC Bank to the Corporate Debtor, nor was any charge registered with

the Registrar of Companies, as required under the Companies Act, 2013.

Page 6 of 34

Comp. App. (AT) (Ins.) No. 476 of 2022

18. The Appellant submitted that fresh financial facilities extended in 2018 were

contrary to RBI guidelines prohibiting evergreening of loans. The Appellant

pleaded that since the root and basis of the loan are illegal, Sections 142 and 143

of the Indian Contract Act, 1872, are attracted, rendering the contract of guarantee

invalid and unenforceable.

19. The Appellant submitted that no debt had been adjudicated as due and payable

by the Corporate Debtor or the principal borrower/UTWC to Respondent No. 1

or its predecessor, SVC Bank. The Appellant stated that the proceedings are

premature and not maintainable. The Appellant elaborated that Respondent No. 1

had suppressed material facts, including a reply dated 06.02.2020 to the

SARFAESI notice, wherein the claims of SVC Bank were disputed.

20. The Appellant contended that no notice invoking the corporate guarantee had

been served on the Corporate Debtor. The statement of accounts and certificates

annexed to the petition are uncertified as per the Bankers' Book Evidence Act and

cannot be relied upon. Furthermore, the alleged guarantee was invalidated by

SVC Bank under Sections 142 and 143 of the Indian Contract Act, 1872. The

appellant also contended that the Corporate Debtor was discharged as a surety

under Section 139 of the Contract Act due to omissions by the Respondent No. 1

and its predecessor, SVC Bank.

21. The Appellant argued that the Deed of Assignment does not support the

Respondent No. 1's claim, as it fails to evidence a valid financial debt owed by

the Corporate Debtor. The Appellant stated that the CIBIL report relied upon by

Page 7 of 34 Comp. App. (AT) (Ins.) No. 476 of 2022

the Respondent No. 1 does not reflect any default by the Corporate Debtor as a

co-borrower or corporate guarantor.

22. Concluding his arguments, the Appellant urged this Appellate Tribunal to

dismiss the Impugned Order and allow his appeal.

23. Per contra, the Respondent No. 1 denied all the averments made by the

Appellant in the present appeal

24. The Respondent No. 1 stated that the account of the Corporate Debtor was

classified as Non-Performing Asset ("NPA") on 02.12.2019, with the date of

default being 01.06.2019. The Respondent No. 1 further stated that the Corporate

Debtor was both a co-borrower and a Corporate Guarantor under the loan

agreement, primarily in relation to a loan extended to UTWC.

25. The Respondent No. 1 submitted that on 31.07.2018, to effectuate the sanction

letter dated 18.06.2011, the Corporate Debtor provided a corporate guarantee for

the loan. According to the Respondent No. 1, UTWC defaulted on repayment of

loan on 01.06.2019, leading to UTWC being declared as a NPA on 02.12.2019.

The Respondent No. 1 stated that SVC Bank issued a notice under Section 13(2)

of the SARFAESI Act, 2002, demanding repayment of Rs. 29,89,96,940/-.

Subsequently, on 27.02.2020, a Deed of Assignment was executed between SVC

Bank and the Respondent No. 1 regarding assignment of financial assistance,

given to Respondent No. 2 by the SVC Bank, and the Respondent No. 1 stepped

into the shoes of the Financial Creditor. The Respondent No. 1 further asserted

Page 8 of 34 Comp. App. (AT) (Ins.) No. 476 of 2022

that as per the Financial Statement of Accounts dated 30.04.2021, the debt owed

by the Corporate Debtor amounted to ₹35,90,56,629/-.

26. The Respondent No. 1 submitted that on 18.05.2021, he filed Company

Petition No. 529/MB/2021 under Section 7 of the Code against the Corporate

Debtor based on Corporate Debtor's status as co-borrower/ Corporate guarantor

and which was admitted by the Adjudicating Authority vide Impugned Order

dated 20.04.2022.

27. The Respondent No. 1 submitted that SVC Co-operative Bank had sanctioned

various credit facilities to UTWC a partnership firm, which were duly guaranteed

by the Corporate Debtor and the Corporate Debtor was also co-borrower. As of

30.04.2021, the total outstanding debt amounted to Rs. 35,90,56,629/-,

comprising Rs. 30,51,73,950/- (principal) and Rs. 5,38,82,679/- (interest). The

Respondent No. 1 elaborated that UTWC was the principal borrower, while the

Corporate Debtor served as co-borrower and as the corporate guarantor for the

loans. Initially, SVC Co-operative Bank sanctioned a Term Loan of Rs. 2037.87

Lakhs and an overdraft limit of Rs. 423.29 Lakhs against property per the sanction

letter dated 18.06.2011. Subsequently, on 19.07.2018, the Bank sanctioned an

LRD (Lease Rental Discounting) Term Loan, whereby the original term loan

facility was replaced by Rs. 2456 Crores, bringing the total sanctioned amount to

Rs. 2879.29 Crores. The Respondent No. 1 further stated that UTWC provided its

mortgaged property on lease, with repayments routed through lease rental

receivables. Necessary security documents were executed, including a corporate

Page 9 of 34 Comp. App. (AT) (Ins.) No. 476 of 2022

guarantee by the Corporate Debtor and personal guarantees by Appellant/Mr.

Amit Rajani and Ms. Pooja Rajani in favour of SVC Co-operative Bank.

28. The Respondent No. 1 highlighted that UTWC committed a default on

01.06.2019, leading to the loan account of the Corporate Debtor being classified

as a NPA on 02.12.2019. Subsequently, on 09.12.2019, SVC Co-operative Bank

issued a notice under Section 13(2) of the SARFAESI Act, 2002, demanding

repayment of Rs. 29,89,96,940/- as of 30.11.2019. On 27.02.2020, a Deed of

Assignment was executed in favour of the answering Respondent, whereby all

loans and outstanding dues from UTWC and the Corporate Debtor were assigned

to the Respondent No. 1.

29. The Respondent No. 1 further elaborated that ledger copies from SVC Co-

operative Bank indicated that the Corporate Debtor was a member of the bank

and received dividends for 100 shares (bearing Distinctive Numbers 14603192 to

14603291). Additionally, minutes from a Board Meeting dated 24.07.2018

confirmed the membership of the Corporate Debtor with SVC Co-operative Bank

Ltd.

30. The Respondent No. 1 negated contentions raised by the Appellant that the

Corporate Debtor does not fall within the definition of 'Corporate Guarantor'

under Section 5(5A) of the Code and stated that this is contradicted by

documentation where the Corporate Debtor has been referred to as such. The

Respondent No. 1 also denied the assertion that the Corporate Debtor is not a

Page 10 of 34 Comp. App. (AT) (Ins.) No. 476 of 2022

borrower or co-borrower as it has signed documents indicating its acceptance of

the roles of corporate guarantor.

31. The Respondent No. 1 also denied the claims of the Appellant regarding non-

compliance with RBI guidelines as irrelevant as they do not negate existing

financial obligations and also further submitted that no violation has taken place

of RBI guidelines. The Respondent No. 1 asserted that sufficient evidence exists

regarding invocation of guarantees through notices issued under applicable laws.

The Respondent No. 1 also refuted the argument of the Appellant regarding

membership in SVC Bank being a prerequisite for financial facilities which stands

countered by submitted evidence confirming membership status.

32. The Respondent No. 1 submitted that the Adjudicating Authority did not find

any merit in the contentions of the Corporate Debtor with respect to the petition

being incomplete and defective and has correctly admitted the process of

Insolvency against the Corporate Debtor.

33. Concluding his arguments, the Respondent No.1 submitted that the Appeal

being frivolous is liable to be dismissed with cost.

Findings

34. We have already noted facts of the case and background of financial

facilities while recording pleadings of the parties, hence, we shall not repeat the

same for the purpose of brevity. Suffice to note that certain financial facilities in

terms of Term Loan as well as working capital facilities were granted to UTWC

Page 11 of 34 Comp. App. (AT) (Ins.) No. 476 of 2022

by SVC Corporative Bank. It is noted that the Corporate Debtor gave its corporate

guarantee as well as became co-borrower of the said financial facilities. The

Principal Borrower i.e., UTWC could not repay the loan and service interest

liability, therefore, an application was filed under Section 7 of the Code for a

default amount of Rs. 35,90,56,629/- as on 30.04.2021, which was admitted by

the Adjudicating Authority after passing the Impugned Order dated 20.04.2022.

35. The Appellant had challenged the Impugned Order primarily on the

following grounds :-

(I) The Principal Borrower UTWC was not a corporate entity, hence, could

not have been covered under definition of Corporate Debtor in terms of

Section 8(3) of the Code and therefore, the Corporate Debtor could not

have been described as corporate guarantor or co-borrower in terms of

Section 5 and section 5(A) of the code.

(II) The Corporate Debtor did not receive any amount from original

Financial Creditor i.e., SVC Bank or assignee of the loan i.e.,

Respondent No. 1 herein and therefore, the Corporate Debtor cannot be

held liable for any debt.

(III) The Corporate Debtor cannot be termed as corporate guarantor as well

as co-borrower.

(IV) The Principal Borrower UTWC or the Corporate Debtor were not a

member of SVC Bank which is mandatory required of The Multi-State

Page 12 of 34 Comp. App. (AT) (Ins.) No. 476 of 2022

Co-operative Societies Act, 2002, hence, no proceedings could have

been taken by SVC Bank.

(V) The Respondents took advantage of the facts that the Appellants and

other director of the Corporate Debtor were same as partners in the

principal borrower UTWC and therefore, the Financial Creditor

manipulated the documents of principal borrower for establishing the

debt. The Appellant also raised issues about admissibility of the

Additional Documents.

(VI) There was no invocation of guarantee by the Financial Creditor and

thus, there was no liability for the Corporate Debtor to pay the same.

36. Since, these points are interconnected and inter dependent, they shall be

dealt in conjoint manner in the following discussions :-

(I) Status of Corporate Debtor as corporate guarantor and co-

borrower.

(II) The Corporate Debtor did not receive any amount from original

Financial Creditor i.e., SVC Bank or assignee of the loan i.e.,

Respondent No. 1 herein and therefore, the Corporate Debtor

cannot be held liable for any debt.

(a) We have already noted that the principal borrower received financial

facilities over a period of time from SVC Bank.

Page 13 of 34 Comp. App. (AT) (Ins.) No. 476 of 2022

(b) It has been brought out that for securing such financial facilities, the

corporate debtor gave its corporate guarantee along with becoming

co-borrowers.

(c) It is the case of the Appellant that since the principal borrower

UTWC was a partnership firm and not a corporate entity, the

Corporate Debtor could not have furnished the corporate guarantee.

On the other hand, the Respondent No. 1 brough out that sanction

letters dated 18.06.2011 and 19.07.2018 clearly refers Shri Balaji

Entertainment Private Ltd., (Corporate Debtor) as corporate

guarantor as well as co-borrower and various representative of

Corporate Debtor had signed these documents under both heading

i.e., as co-borrower and corporate guarantor.

(d) At this stage, we would like to look into the first sanction letter of

SVC Bank dated 18.06.2011 which reads as under :-

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Comp. App. (AT) (Ins.) No. 476 of 2022

Page 15 of 34 Comp. App. (AT) (Ins.) No. 476 of 2022

Page 16 of 34 Comp. App. (AT) (Ins.) No. 476 of 2022

Page 17 of 34 Comp. App. (AT) (Ins.) No. 476 of 2022

Page 18 of 34 Comp. App. (AT) (Ins.) No. 476 of 2022

(e) From above letter dated 18.06.2011, it is noted that the letter was

addressed to "Universal Textile Waterproof Co. India (Co-borrower

: Whiz Enterprises Private Limited and Shri Balaji Entertainment

Private Limited), B/12, Veera Industrial Estate, Link Road, Andheri

(West), Mumbai - 400058..

(f) We further note that under the heading of corporate guarantee in the

said letter, following is recorded "Corporate Guarantee : Whiz

Enterprises Private Limited and Shri Balaji Entertainment Private

Limited".

(g) We further note that on general terms and conditions at Serial No. 3,

it is stipulated that "Corporate Guarantee : Whiz Enterprises Private

Limited and Shri Balaji Entertainment Private Limited".

(h) The above sanction letter of SVC Bank dated 18.06.2011 was

granted and accepted by all concerned parties which is evident from

the letter reproduced as under :-

Page 19 of 34

Comp. App. (AT) (Ins.) No. 476 of 2022

(i) From above acknowledgment letter, we note that the directors of the

Corporate Debtor signed along with seal of the Corporate Debtor in

the capacity of co-borrower as well as the Corporate Guarantor at

two different places.

Page 20 of 34

Comp. App. (AT) (Ins.) No. 476 of 2022

(j) Now , we will take into account the second sanction letter dated

19.07.2018 of SVC bank which reads as under:-

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Comp. App. (AT) (Ins.) No. 476 of 2022

Page 22 of 34 Comp. App. (AT) (Ins.) No. 476 of 2022

Page 23 of 34 Comp. App. (AT) (Ins.) No. 476 of 2022

(k) From above letter, we note that the letter was addressed to the

Corporate Debtor and the Corporate Debtor was labelled and

addressed as co-borrower.

(l) Above sanctioned letter has been replied by various parties including

the Corporate Debtor and has signed the letter as co-borrower as well

as corporate guarantor which is evidenced from the following

documents :-

Page 24 of 34

Comp. App. (AT) (Ins.) No. 476 of 2022

(m) We also take into account the mortgaged deed singed between the

principal borrower and the Corporate Debtor on 31.07.2018 with the

SVC Bank Limited to establish the relationship of the Corporate

Debtor.

(n) Thus, it absolutely becomes clear from the various documents that

the Corporate Debtor acted as co-borrower as well as Corporate

Guarantor for the financial facilities obtained by the principal borrower

UTWC.

(o) In this connection, we note that the principal borrower along with

other parties including the Corporate Debtor had filed Writ Petition

under Article 32 challenging the validity of Section 2 of SARFAESI

Act, 2002 vide W.P (C) No. 398 of 2020 before the Hon'ble Supreme

Court of India. In the Writ Petition, they have referred clearly that the

petitioner no. 3 Shri Balaji Entertainment Private Ltd., was a co-

borrower. Thus, it does not lie in the mouth of the Appellant to take

any contrary position than what has already been admitted by him

before the Hon'ble Supreme Court of India. Therefore, on this point,

we do not find any error in the Impugned Order and we do find any

merit in the contention of the Appellant.

Page 25 of 34

Comp. App. (AT) (Ins.) No. 476 of 2022

(III) The Status of the Corporate Debtor as member of the SVC Bank

(a) It is the case of the Appellant that neither principal borrower UTWC

nor the Corporate Debtor was a member of the SVC bank which is

mandatory requirement in terms of The Multi-State Co-operative

Societies Act, 2002.

(b) On the other hand, we have noted from the pleadings of the

Respondent No. 1 that ledger copies of SVC Bank clearly reveal that

the Corporate debtor was a member of the SVC Bank and was

receiving dividend to the extent of 100 shares (bearing distinct No.

14603192 to 14603291).

(c) In this connection, we would like to factor in the account statement

of SVC Bank Limited from 02.08.2018 to 24.02.2020 in connection

with term loans which clearly indicate that under account detail, loan

was sanctioned to UTWC and the Corporate Debtor jointly as co-

borrowers. The said ledger account is reproduced as under :-

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Comp. App. (AT) (Ins.) No. 476 of 2022

(d) There are several similar documents which has been submitted by

the Respondent No. 1, however, we are referring to only one

document for ready reference to indicate that the Corporate Debtor

Page 27 of 34 Comp. App. (AT) (Ins.) No. 476 of 2022

was indeed reflected as co-borrower in the ledger account of SVC

Bank.

(e) We also note that the Corporate Debtor in its board of director

meeting held on 24.07.2018 clearly recorded that the company (the

Corporate Debtor) is already a member of the SVC Bank. The said

letter is reproduced as under :

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Comp. App. (AT) (Ins.) No. 476 of 2022

(f) Thus, it is clear that the Corporate Debtor was member of the SVC

Bank and therefore we do not find any merit in the pleadings of the

Appellant account or error in the Impugned Order.

(IV) Invocation of the Corporate Guarantee.

(a) The Appellant pleaded that no invocation of guarantee was done by

the Financial Creditor and therefore, the Corporate Debtor is not

liable to make such payments. 'In this connection, we note that

Financial Creditor had filed its petition under Section 13 (2) of the

SARFAESI Act, 2002 under which the Corporate Debtor both in

capacity of co-borrower/ as well as Corporate Guarantor was called

upon to make the payment due to default of principal borrower.

(b) The relevant portion of the said notice dated 09.12.2019 is

reproduced as under :-

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Comp. App. (AT) (Ins.) No. 476 of 2022

Page 30 of 34 Comp. App. (AT) (Ins.) No. 476 of 2022

Page 31 of 34 Comp. App. (AT) (Ins.) No. 476 of 2022

(c) From above, it is very clear that the SVC Bank has called upon all

concerned parties including the Corporate Debtor to make the

payment of Rs. 29,89,96,940/- along with interest from 01.12.2019

as indicated in the table therein till the date of actual payments within

60 days of receipt of the said notice.

(d) We find merit in the pleadings of the Appellant that he had invoked

corporate guarantee and asked Corporate Debtor to make payment.

We find suitable reasoning has been given by the Adjudicating

Authority in the Impugned Order.

(e) Thus, we do no find any error in the Impugned Order on this account.

(V) The alleged manipulation of record by Financial Creditor and issue

of Additional Documents.

(a) The Appellant conceded that the director of the Corporate Debtor as

well as the partners of the principal borrower i.e., UTWC are the

same persons but argued that the record furnished by them as

partners including blank signed papers have been manipulated by the

Financial Creditor in fraudulent manner.

(b) During pleading, no concrete evidence has been reproduced by the

Appellant to establish the said allegations. We have already noted

that the documents produced by the SVC Bank clearly stipulate

Page 32 of 34 Comp. App. (AT) (Ins.) No. 476 of 2022

responsibilities of the Corporate Debtor as co-borrower and

Corporate Guarantor.

(c) We note that an application was filed under Rule 11 of the NCLAT

Rules, 2016 seeking our permission to place on record the

documents appended with the application as additional documents,

which was allowed by this Appellate Tribunal and our order dated

12.12.2022 reads as under: -

"We have heard counsel for the parties and perused the record. The documents Annexure R/1 (a to d) are the ledger account of M/s Shri Balaji Entertainment Pvt. Ltd. whereas another document Annexure R/2 is the writ petition filed by six entities including Shri Balaji Entertainment Pvt. Ltd. before the Hon'ble Supreme Court. In so far as the writ petition is concerned, it is a part of the judicial record and the ledger account is a part of the accounts maintained by the SVC Co- operative Bank Ltd.; therefore, these documents are required to be taken on record in order to reach to a conclusion as to whether the application filed under Section 7 of the Code, should have been allowed or not. Accordingly, the application is allowed and these documents R/1 (a to d) and R/2 appended with the application are taken on record..."

(Emphasis Supplied)

(d) As such, we do not find any merit in the contention of the Appellant

regarding issue of additional documents filed by Respondent No. 1

Page 33 of 34 Comp. App. (AT) (Ins.) No. 476 of 2022

to be non-admissible. We observe that the same plea was taken by

the Appellant before the Adjudicating Authority and the same was

not considered favourably by the Adjudicating Authority.

(e) As such, we do not find any merit in the submissions made on this

account by the Appellant.

37. In view of detailed examination of various issues brought out in the present

appeal, we do not find any merit in the Appeal. Appeal devoid of any merit stand

rejected. No costs. I.A, if any, are closed.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

[Mr. Indevar Pandey] Member (Technical)

Sim

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