In the matter of Assets Care & Reconstruction Enterprise Limited & Ors. vs. Rajesh Patel & Ors.
- CitationC.P. No. 293 of 2020
Ratio decidendi
The rule this decision rests on
The Tribunal's order admits the application under Section 95(1) of the Insolvency and Bankruptcy Code, 2016, and rests on the principle that, at the Section 95 to Section 99 stage, no judicial adjudication is involved: the Resolution Professional's role is facilitative, and his report to the Adjudicating Authority is recommendatory only, so the Authority may act on a petition that is complete in form under the Section 95 read with 2019 Rules framework without conducting an adjudication of the underlying default. An application under Section 95(1) is complete for the purposes of admission where it is accompanied by the requisite documents and an authorisation for an insolvency professional, and the Tribunal may appoint the proposed insolvency professional as Resolution Professional, directing advance payment of fees by the financial creditor and directing the Resolution Professional to examine the application and report within the prescribed time under Section 99. A substitution of the applicant by an assignee of the debt, allowed on application during the pendency of the petition, operates to place the assignee in the position of the original financial creditor so that the assignee may prosecute the Section 95 petition in its own name.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Appearances: For the Financial Creditor : Adv. Pulkit Sharma a/w. Adv. Vijay Purohit, Adv. S. Jain i/b. P & A Law Offices. For the Respondent : Adv. Rohit Gupta i/b. Adv. Ruturaj V. Bankar.
Per: - SHRI CHARANJEET SINGH GULATI MEMBER (T)
ORDER
1. The Present Company Petition is filed under section 95(1) of Insolvency and Bankruptcy Code, 2016 (“IBC, 2016”) read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (“Rules”) by Altico Capital India Ltd. for initiating Insolvency Resolution Process against Rajesh Patel and others being C.P. No. 293 of 2020
Personal Guarantors of M/s Rajesh Estates and Nirman Limited (Corporate Debtor).
2. As a matter of fact, Vistra ITCL (India) Limited (“Debenture Trustee”) had entered into a Debenture Trust Deed dated 19.03.2019 (“Debenture Trust Deed”) with the Corporate Debtor and certain other persons acting as the Security Providers. Pursuant to the Debenture Trust Deed, the Corporate Debtor had availed financial assistance from the financial Creditor wherein, the Financial Creditor had subscribed to debentures forming a part of the INR 432 Crores non-Convertible debentures issued by the Corporate Debtor pursuant to the Debenture Trust Deed described hereunder (“Facility”).
3. Simultaneously, four similar Debenture Trust Deeds were entered into between the Debenture Trustee and Rajesh Buildspaces Private Limited, Rajguru Developers Private Limited, Rajesh Landmark Projects Private Limited and Rajesh Cityspaces Private Limited, group companies of the Corporate Debtor.
4. Guarantees, vide deeds of Guarantee, all dated 19th March 2019 were furnished by Rajesh Construction Company Private Limited (Corporate Guarantee), Mr. Harish Patel (Personal Guarantee), Mr. Rajesh Patel (Personal Guarantee), Mr. Pratik Patel (Personal Guarantee) and Mr. Priyal Patel (Personal Guarantee) in favour of the Debenture Trustee.
5. In terms of Clause 4 of the Debenture Trust Deed, i.e. ‘Terms of the Debenture’, the Corporate Debtor defaulted in making payments to the Financial Creditor under Debenture Trust Deed. The Financial Creditor served a Notice of Payment Default dated 7th November 2019 to the Corporate Debtor calling upon to make payment of the Overdue Amount of INR 10,34,21,531/- along with the Default Interest compounded up to the date of payment/realization.
C.P. No. 293 of 2020
6. When the Corporate Debtor failed to make payment in terms of the Notice of Payment Default, the Financial Creditor issued a notice dated 11th November 2019, to the persons acting as promotor/director/guarantors/pledgor/mortgagor/security provider in relation to the Facility, thereby invoking the guarantees provided by the Respondents and called upon to forthwith arrange to make payment of the overdue amount.
7. On the 2nd December 2019, the Applicant/Financial Creditor served a Demand Notice on the Personal Guarantors to the Corporate Debtor in accordance with the provisions of the Rules of 2019, calling upon them to make the requisite payment.
8. Since the Personal Guarantors to the Corporate Debtor have failed to make payment of the amounts due, the present petition has been filed.
9. While the matter was pending, the Petitioner filed IA/1062/2021 seeking substitution of the name of the Petitioner as Assets Care & Reconstruction Enterprise Limited (Assignee) in place of the Original Petitioner/Assignor i.e. Altico Capital India Limited. After hearing the parties, this Tribunal vide order dated 05.06.2024 had allowed the said application thereby substituting the name of the Petitioner as Assets Care & Reconstruction Enterprise Limited.
10. The Hon’ble Supreme Court in Dilip B Jiwrajka Vs. Union of India & Ors. Writ Petition (Civil) No. 1281 of 2021 decided on 09.11.2023 held as follows:-
Quote i. No judicial adjudication is involved at the stages envisaged in Section 95 to Section 99 of the IBC; 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 C.P. No. 293 of 2020 the insolvency resolution process which has been preferred under Section 94 or Section 95. The report to be submitted to the Adjudicating Authority is recommendatory in nature on whether to accept or reject the application. Unquote
11. Th e Petition for initiating insolvency resolution process against Personal Guarantors to the Corporate Debtor is complete in accordance with section 95 of Insolvency and Bankruptcy Code, 2016 read with Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019.
12. The Petitioner had proposed the name of the Insolvency Professional, Mr. Pankaj Nahata with registration no. IBBI/IPA-001/IP-P00796/2017- 2018/11363 in the petition. The AFA dated 22.12.2023 is submitted by the Petitioners and according to the said AFA, the authorization is valid till 21.12.2024.
13. Accordingly, we appoint Mr. Pankaj Nahata (Mobile: 9824312705, email: pmnahata@gmail.com) to act as the Resolution Professional (RP) in the Insolvency Resolution Process against Shri Rajesh Patel and others being Personal Guarantors. The fee payable to Resolution Professional (RP) shall be in accordance with the Insolvency and Bankruptcy Board of India (IBBI) Regulations/Circulars/ Directions issued in this regard.
14. This Bench also directs for an advance payment of Rs. 1,00,000/- (Rupees One Lakh only) to be paid by the Financial Creditor to the Resolution Professional (RP) in respect of each case of Personal Guarantors immediately to initiate the process which shall be adjusted towards the fee and expenses payable to the Resolution Professional (RP).
C.P. No. 293 of 2020
15. The Petitioner is directed to serve copy of the Petition and the Order on the Resolution Professional.
16. The Registry is also directed to send a copy of this order to the Resolution Professional for their record.
17. The Registry is further directed to send a copy of this order to the Insolvency and Bankruptcy Board of India for their record.
18. The Resolution Professional is directed to examine the application and to submit its report in accordance with Section 99 of the I&B Code within 10 days, of receipt of this order in each case.
19. List the matter for report of the RP, as and when the report of RP is filed.
Sd/- Sd/- CHARANJEET SINGH GULATI LAKSHMI GURUNG (MEMBER TECHNICAL) (MEMBER JUDICIAL) ---Shaharukh. PS---
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