Hemant Bohra vs State Bank Of India And Anr

Comp. App. (AT) (Ins) No. 1097 of 2024 IN THE MATTER OF: Hemant Bohra ...Appellant

Versus

State Bank of India & Anr. ...Respondents Present: For Appellant : Mr. Akshay Goel, Harsh Jadon, Adv. For Respondent : Mr. Siddharth Sangal, Chirag Sharma, Richa Mishra, Harshita Agrawal, Adv. for R1 Mr. Abhishek Devgan, Vishal H., Adv. for RP/R2

JUDGMENT

Per: Justice Rakesh Kumar Jain:

This appeal is against the order dated 28.03.2024 by which I.A No.

232/JPR/2021 filed by the Resolution Professional (in short 'RP') under

Section 99(1) r/w Section 99(7) of the Insolvency and Bankruptcy Code,

2016 (in short 'Code'), recommending admission of the application filed by

the Creditor (State Bank of India) under Section 95 of the Code for initiation

of Insolvency Resolution Process (IRP) against the personal guarantor

(Appellant), has been admitted.

2. In brief, the Appellant, suspended director of the Corporate Debtor

(M/s Bohra Industries Ltd.) (BIL) gave a guarantee to the Respondent (State

Bank of India) in respect of a sanction letter dated 10.08.2017 for loan of an

amount of Rs. 68.5 Cr. and executed a supplementary deed of guarantee

dated 05.09.2017.

3. BIL was admitted into CIRP in a petition bearing CP No. (IB)-

157/7/JPR/2019 vide order dated 07.08.2019 passed by the Tribunal.

Comp. App. (AT) (Ins) No. 1097 of 2024 2

4. The Respondent issued a demand notice on 25.08.2020 to the

Appellant regarding unpaid dues of BIL, in terms of Rule 7(1) of the IBBI

(Application to Adjudicating Authority for Insolvency Resolution Process for

Personal guarantor to CD) Rules, 2019 (Rules). The said notice was delivered

to the Appellant on 19.09.2020 alongwith computation of the amount of

default and other particulars but the appellant did not make any response

to the demand notice.

5. The respondent, after 14 days from the date of service of demand

notice, filed the petition under Section 95 in prescribed from C on

09.03.2021 and delivered its copy to the Appellant on 29.08.2020. The total

debt for which the personal guarantee was given by the Appellant in respect

of the CD including interest as on 25.08.2020 was Rs. 70,73,95,918.49/-.

6. The application was filed through the RP bearing registration no.

IBBI/IPA-001/IP/P-01480/2018-19/12269, having been appointed by the

Respondent. It has been recorded in the order that the Appellant did not file

any submissions till the date of hearing of the said application. The Tribunal

recorded in para 7 of its order dated 16.07.2021 that "based on the

submissions made by the Applicant and the documents produced and

placed on record before this bench, the bench has no doubt in its mind that

there is a default on the part of the personal guarantor by not fulfilling the

debt owed to the CD, i.e. Bohra Industries Limited, as per the Deed of

Guarantee entered between the parties through the Deed of Guarantee

dated 05.09.2017."

7. The Tribunal confirmed the appointment of the RP and directed him to

make the recommendations with reasons in writing for acceptance or

Comp. App. (AT) (Ins) No. 1097 of 2024 3

rejection of the Application within the stipulated time as envisaged under

the provisions of Section 99 of the Code and further directed him to provide

a copy of the report drawn under sub-section 7 of Section 99 to the creditor

as soon as the same is filed before the Tribunal and in terms of Rule 9 of the

Rules shall provide copy of application with copy of the order to IBBI for its

records. The order dated 16.07.2021 by which the appointment of the RP

was confirmed and direction was issued to make recommendation in terms

of Section 99 on the application filed under Section 95 was not challenged

by the Appellant by way of an appeal and has attained finality.

8. The RP has prepared and submitted its report dated 23.07.2021 in

which he made the following observations:-

"4. That on further perusal of the application it is noted that the Corporate Debtor defaulted on repayment of the availed credit facility and subsequently, the creditor served the Demand Notice, dated 09.05.2019, under section 13(2) of SARF AESI Act, 2002 on the Corporate Debtor and personal guarantor, demanding the repayment of complete outstanding amount of Rs. 68.52 cr. along with future interest. The same is evident from the demand notice attached on Page No. 126 of the application filed by the creditor under section 95 of the Code. True copy of the demand notice dated 09.05.2019 u/s 13(2) of SARFAESI is annexed herewith and duly marked as Annexure- C.

5. That it is further observed from page no. 30 of the application fi led by the creditor through the Applicant, that the Hon ' ble NCLT, Jaipur Bench vide order dated 07.08.201 9 admitted the application filed by STCI Finance Limited under section 7 of the code, for initiating the Corporate Insolvency Resolution Process in respect of Bohra Industries Limited, Corporate Debtor to which Mr. Hemant Bohra is the Personal Guarantor, and appointed Mr. Naresh Venna (Insolvency Professional) as the Interim Resolution Professional for the Corporate Debtor. Further it is evident from Page No. 137 of the main Application that Mr. Naresh Verma (IRP of the CD), admitted the claim of SBI to the tune of Rs 70.72 crores as enshrined in the list of

Comp. App. (AT) (Ins) No. 1097 of 2024 4

Creditors fi led with the Hon'ble Tribunal. True Copy of the order dated 07.08.2019 for commencement of CIRP of Bohra Industries Limited (Corporate Debtor) along with list of Creditors are annexed herewith and marked as Annexure-D(Colly).

6. That on perusal of the application filed by the creditor through the applicant, it is noted that the creditor has also uploaded the record of default by the corporate debtor on the Information Utility (NeSL). The same is evident from the report of NeSL dated 21.08.2020 attached at Page No. 38 of the application filed by the creditor through the applicant. True Copy of the NeSL report dated 21.08.2020 is annexed herewith and marked as Annexure-E.

7. That on further reviewing the application, the RP has noted that the Creditor has issued a demand notice dated 25.08.2020 in requisite FORM B, as required under rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process For Personal Guarantors to Corporate Debtor) Rules, 2019, demanding the total outstanding debt of Rs. 70.73 Cr. The demand notice is annexed at Page No. 171 of the application filed by the creditor under section 95 of the code. True copy of the demand notice (FORM B) dated 25.08.2020 is annexed herewith and duly marked as Annexure- F.

8. That on further perusal of the application and the order dated 16.07.2021 of this Hon'ble Tribunal it is observed that the Guarantor has not responded to the demand notice issued by the State Bank of India.

9. That the Applicant vide email dated 16.07.2021 intimated the creditor (State Bank of India) regarding the order of Hon'ble NCLT, Jaipur for appointment of Mr. Manohar La! Vij as the Resolution Professional under section 97 of Insolvency and Bankruptcy Code, 2016, for the insolvency resolution process of Mr. Hemant Bohra, Personal Guarantor of Bohra Industries Limited. True Copy of the intimation email dated 16.07.2021 sent to SBI is annexed herewith and marked as Annexure-G.

10. That the RP, vide email as well as letter dated 16.07.2021 and 17.07.2021 requested the Personal Guarantor (PG) of Corporate Debtor Bohra Industries Limited, Mr. Hemant Bohra, to submit the proof for repayment of debt, if any made to the Creditor in response to the demand notice dated 25.08.2020 sent by the Creditor under Rule 7(1) of the Personal Guarantor Insolvency Rules. True Copy of email sent on 16.07.2021 and

Comp. App. (AT) (Ins) No. 1097 of 2024 5

17.07.2021 sent to Mr. Hemant Bohra is annexed herewith and duly marked as Annexure-H.

11. That due to the on-going restrictions imposed on account of COVID-19 the Resolution Professional could not arrange a physical meeting with the Personal Guarantor but a virtual meeting through "ZOOM" was organized on 19.06.2021. It is pertinent to note that the Personal Guarantor, Mr. Hemant Bohra, acknowledged the existence of debt and stated that he has not made any payment in capacity of a guarantor towards the debt due by the corporate debtor (Bohra Industries Limited) to State Bank of India.

12. That the Personal Guarantor in his emails dated 21.07.2021 has not denied the existence of debt and has stated that no payment has been made by the personal guarantor against the credit facilities provided to the borrower Bohra Industries Limited, Corporate Debtor. True copy of the email ls dated 21.07.2021 by Mr. Hemant Bohra is annexed herewith and duly marked as Annexure-I.

13. That on going through the documents attached with the application filed under section 95 of the code, a self-sworn affidavit dated 28. 11.20 18 by Mr. Hemant Bohra affirming the net worth of the Personal Guarantor as on 31.03.2018 is noted on Page No. 23, The details of the net worth as per the affidavit is reproduced hereunder for ready reference:

14. That further, this Hon'ble Tribunal in the order dated 16.07.2021 for appointment of resolution professional under section 97 of the code has held that there is a default on part of the personal guarantor by not fulfilling the debt owed to the

Comp. App. (AT) (Ins) No. 1097 of 2024 6

corporate debtor. The relevant para of the order dated 16.07.2021 is reproduced hereunder for ready reference: -

"7. Based on the submissions made by the Applicant and the documents produced and placed on record before this Bench, the Bench has no doubt in its mind that there is a 'default ' on the part of the Personal Guarantor by not fulfilling the debt owed to the Corporate Debtor, i.e. Bohra Industries Limited, as per the Deed of Guarantee entered between the parties through the Deed of Guarantee dated 05. 09.201 7."

9. The Tribunal after considering its report, admitted the application vide

its impugned order dated 28.03.2024 and hence, the present appeal has

been preferred under Section 61 of the Code.

10. Counsel for the Appellant has vehemently argued that the Tribunal

has committed an error in deciding in para 7 of the order dated 16.07.2021

that the Appellant has committed a default. It is further submitted that

having been biased with the said finding, the RP has recorded its finding in

para 14 of the report dated 23.07.2021 that the default has already been

held to have been committed by the Appellant, therefore, the impugned

order suffers from non-application of mind. In this regard, he has relied

upon a decision of this Court rendered in the case of Mr. Ravi Ajit Kulkarni

Vs. State Bank of India, CA (AT) (Ins) No. 316 of 2021 contending that

observation in regard to default at the stage of acting on the application filed

under Section 95 is unwarranted because the consideration for default has

to be made in terms of Section 100 of the Code.

Comp. App. (AT) (Ins) No. 1097 of 2024 7

11. It is also submitted that the Tribunal has not appreciated the fact that

out of 68.5 Cr., the Respondent had received Rs. 25.21 Cr.

12. On the other hand, Counsel for the Respondent has argued that the

issue which has been raised during the course of hearing has not been

raised in the appeal. It is also submitted that observation made in para 7 of

the order dated 16.07.2021 is not the sole criteria for the RP to arrive at the

conclusion that the Appellant was in default while submitting its report

dated 23.07.2021. It is further submitted that in paragraphs 4 to 13 of the

report shows the independent finding recorded by the RP to arrive at the

conclusion that there is a default on the part of the Appellant regarding non-

payment of dues of the Respondent which were claimed by way of a demand

notice. He has also submitted that the repayment plan as submitted by the

Appellant has already been rejected by the creditors by 100% vote and the

RP has filed its report concerning the same before the Tribunal.

13. We have heard Counsel for the parties and perused the record.

14. There is no dispute that the Appellant stood as a guarantor for the

loan availed by the CD. A supplementary deed of guarantee was executed on

05.09.2017. There is also no dispute that the CD has already been admitted

into CIRP. The Respondent Bank has proceeded in accordance with law by

filing the application under Section 95 through the RP appointed by it. The

Respondent served a demand notice dated 25.08.2020 on the Appellant

about the unpaid debts of the CD in terms of Rule 7(1) of the Rules and

evidence has been led that the said notice was duly delivered to the

Appellant on 19.09.2020 to which there is no response to deny its liability.

The application under Section 95 was filed after the expiry of 14 days after

Comp. App. (AT) (Ins) No. 1097 of 2024 8

the date of service of demand notice and was duly served upon the Appellant

who did not file any response. The Tribunal in the said facts and

circumstances confirmed the appointment of the RP and ordered the RP to

make recommendation as prescribed under Section 99 of the Code but in

para 7 of the order dated 16.07.2021, has observed that there is a default on

the part of the Appellant for not fulfilling its promise in regard to the debt

owed by the CD. The judgment relied upon by the Appellant in the case of

Mr. Ravi Ajit Kulkarni (Supra) may be of some help to the Appellant had the

RP not given independent finding in its report dated 23.07.2021 which we

have already reproduced in the earlier part of this order, for a quick

reference, in which it has been categorically said that "in the virtual meeting

organized on 19.06.2021, the Appellant acknowledged the existence of debt

and stated that he has not made any payment in capacity of guarantor

towards the debt due by the CD of the Respondent Bank" Section 99(2)

provides that the debtor has to prove repayment of the debt claimed as

unpaid by the creditor by furnishing evidence of electronic transfer of the

unpaid amount from the bank account of the debtor, evidence of

encashment of a cheque issued by the debtor or a signed acknowledgment

by the creditor accepting receipt of dues whereas in the present case the

Appellant categorically denied to have made payment which was sufficient to

hold that there is a default. It is inconsequential that in para 14 of the

report, the RP has made a reference of para 7 of the order dated 16.07.2021.

In so far as the argument raised by the Appellant that the Respondent Bank

has already received 25.1 Cr. out of 68.5 Cr. is concerned, it is suffice to

Comp. App. (AT) (Ins) No. 1097 of 2024 9

mention that the remaining amount of claim of the Respondent still exist

which is more than the threshold.

15. No other point has been raised.

16. Thus, in view of the aforesaid facts and circumstances, we do not find

any merit in the present appeal and hence the same is hereby dismissed. No

costs.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

[Mr. Indevar Pandey] Member (Technical)

New Delhi 14th November, 2024 sheetal

Comp. App. (AT) (Ins) No. 1097 of 2024