In the matter of Canara Bank vs. Pramod Kumar Agarwal,

National Company Law Tribunal4 June 2024

CitationCP (IB) No.29/ALD/2024

Ratio decidendi

The rule this decision rests on

The Adjudicating Authority, on a creditor's application under section 95 of the Insolvency and Bankruptcy Code, 2016, will admit the application and appoint an Insolvency Resolution Professional where the creditor's petition discloses a default by the personal guarantor; the order does not reach the merits of any one-time settlement proposal, which is left unexpressed, because the existence of an alleged default is what the Authority acts upon at this stage.

Written by Miss Lucy from the judgment below, not taken from a headnote.

Judgment

As delivered

DIVISION BENCH ITEM NO.6IN THE NATIONAL COMPANY LAW TRIBUNALALLAHABAD BENCH, PRAYAGRAJCP (IB) No.29/ALD/2024In the matter of:An application by Creditor to initiate Insolvency ResolutionProcess (Under Rule 7(2) of the Insolvency and Bankruptcy(Application to Adjudicating Authority for InsolvencyResolution Process for Personal Guarantors to CorporateDebtors) Rules, 2019).In the matter of:CANARA BANK,Kamla Nagar Branch, Kamla Nagar,Agra, U.P.cb1469@canarabank.com…Applicant/ Financial CreditorVersusPRAMOD KUMAR AGARWALS/o Shri Madan Lal Agarwal,R/o Plot No.8A/L-12 Lawyers Colony(Khasra No.742, Mauza Mau,Mustkil) Hari Parwat Ward, Agra,Also at :33/7/2C, Basant Market,Balkeshwar, Agra, U.P.Guarantor(s): M/s Shree Basant Oils Ltd.(Under Liquidation v.o.d. 14.12.2021passed in CP (IB) No.504/ALD/2019)…Respondent/ GuarantorCoram:Shri Praveen Gupta : Member (Judicial)Shri Ashish Verma : Member (Technical)Order dated: 4th June, 2024C P (IB) No.29/ALD/2024Appearances (through physical/ virtual hearing):Sh. Ankur Gupta, Adv. : For the Carana Bank/ FCSh. Nilotpal Shyam, Adv. : For the Personal GuarantorsORDER1. Ld. Counsel representing the Financial Creditor ispresent physically.2. Under consideration is an Application CP (IB)No.29/ALD/2024 filed under section 95 of theInsolvency and Bankruptcy Code, 2016 (hereinafterreferred to as “IBC, 2016”) r/w rule 7(2) of the Insolvencyand Bankruptcy (Application to Adjudicating Authorityfor Insolvency Resolution Process for PersonalGuarantors to Corporate Debtor) Rules, 2019(hereinafter referred to as “IB Rules, 2019”) andregulation 4(2) of IBBI (Insolvency Resolution Processfor Personal Guarantors to Corporate Debtors)Regulations, 2019 (hereinafter referred to as “IBRegulations, 2019”) for initiating the InsolvencyResolution Process (hereinafter referred to as “IRProcess”) against personal guarantor, viz., PramodKumar Agarwal, one of the promoter of M/s ShreeC P (IB) No.29/ALD/2024Basant Oils Ltd.3. The factual matrix of the case is that the guarantorhad executed deeds of guarantees in respect of thefacilities entered into between Canara Bank and theCorporate Debtor i.e. M/s Shree Basant Oils Ltd. andthe total maximum debt sanctioned under the workingcapital facilities was Rs.90 Crore. In terms of the facilityagreement the default occurred upon non-payment bythe personal guarantor on 25.11.2019. The “M/s ShreeBasant Oils Ltd.” and the guarantor had failed and/orneglected to make payment as per terms of the saidFacility Agreements.4. The Applicant Bank, thereafter, proceeded to issuestatutory Demand Notice dated 23.01.2024 under Rule7 of the Insolvency and Bankruptcy (Application toAdjudicating Authority for Insolvency ResolutionProcess for Personal Guarantor to Corporate Persons)Rules, 2019.

5. The personal guarantor viz. Pramod Kumar Agarwal has executed personal guarantee on 12.09.2016 in C P (IB) No.29/ALD/2024 favour of the Applicant to secure the repayment of the principal amount of the Facilities alongwith interest payable by “M/s Shree Basant Oils Ltd.” in respect of the Facility Agreement. The Applicant has issued a Demand Notice in Form B on 23.01.2024 under Rule 7(1) of the IB Rules, 2019 but no response has been received.

6. Ld. Counsel representing the Financial Creditor states that there is a default persisting against the Personal Guarantors of M/s Shree Basant Oils Ltd. being the Corporate Debtor.

7. The Ld. Counsel representing the Personal Guarantors in all these cases states that the Personal Guarantors have already settled their outstanding dues with respect to the Union Bank of India as well as the Punjab National Bank, and have also proposed an OTS to the present Financial Creditor namely the Canara Bank as well.

8. The Ld. Counsel representing the Financial Creditor/ Canara Bank however states that the OTS proposed as of now, is not viable in view of the amount of default.

9. Without expressing anything about the merits of the OTS, since

C P (IB) No.29/ALD/2024 there is a default alleged as per the petition filed by the Financial Creditor, let the IRP be appointed.

ORDER

I. It is made known to everyone that on filing this Application by the Applicant/Creditor the interim-moratorium commences in terms of section 96(1)(a) of IBC, 2016.

II. The Applicant/Creditor has not proposed the name of Insolvency Professional in the present application. Hence, this Adjudicating Authority appoints Mr. Deepak Kumar Garg, IBBI Registration No.IBBI/IPA-002/IP-N00796/2019- 2020/12560, R/o I-702A, Ajnara Integrity, Rajnagar Extension, Ghaziabad, Uttar Pradesh, 201017, email: deepakgarg07@rediffmail.com, as Resolution Professional in exercise of the power conferred under section 97(5) of the IBC, 2016 on this Authority. The verification of the said IRP has been carried out by Law Research Associate of this Tribunal, Sarim Husain, and it is found that there

C P (IB) No.29/ALD/2024 is no proceeding pending against the IRP. Upon verification from the website of IBBI, it is found that IRP holds valid authorization till 30.08.2024. The IRP is directed to file declaration within seven days from the date of receiving of this Order to the effect that he fulfils all the requirements for being appointed as Resolution Professional in the matter.

III. The Resolution Professional shall exercise all the powers as enumerated under section 99 of the IBC, 2016 read with the Rules made there under. He is directed to make the recommendations for acceptance or rejection of this Application within a period of ten days as stipulated and envisaged under section 99(1) of the IBC, 2016. The RP shall give a copy of the report under sub-section (7) of section 99 of IBC, 2016 to the Applicant, as soon as the same is filed before this Authority.

IV. The Counsel on record for the Applicant is hereby directed to serve the copy of this Order along with C P (IB) No.29/ALD/2024 copy of the Application and documents on the Resolution Professional by all available modes for information and compliance. Proof of service shall be filed with this Bench for record.

V. Let the matter be adjourned for further hearing on 12th July, 2024.

VI. The Registry is directed to send e-mail copies of the order forthwith to all the parties and their Ld. Counsels for information and for taking necessary steps.

VII. Certified Copy of this order be issued, if applied for, upon compliance of all requisite formalities.

(Ashish Verma) (Praveen Gupta) Member (Technical) Member (Judicial) 4th June, 2024 Kavya Prakash Srivastava (Stenographer)

C P (IB) No.29/ALD/2024

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