In the matter of IDBI Bank Limited vs. Shamik Apparao,

Brief facts: 1. The present petition is filed u/s. 95 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC, 2016") r/w. Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 by IDBI Bank Ltd.(hereinafter referred to as “Applicant/Financial Creditor”) for the purpose of initiating insolvency process against Shri Shamik Apparao (hereinafter referred to as the “Respondent/Personal Guarantor/Guarantor”) for recovery of Rs.54,67,08,945.07 /- (Rupees Fifty-Four Crore Sixty Seven Lakhs Eight Thousand Nine Hundred and Forty-Five Rupees Seven Paisa only) together with further interest at contractual rates with effect from 01.08.2020. The Date of Default, as specified in Part-III of the present petition, is 15.05.2019. 2. The present Application has been filed by IDBI Bank Ltd. bearing CIN L65190MH2004GOI148838 through authorized Representative Shri. Sanjay Nikam having business address at IDBI Tower, WTC Complex, Cuffe Parade, Mumbai City, Maharashtra - 400005. 3. The Respondent is an Indian resident having present address at 2 | Pa ge

THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH - I C.P. (IB) No. 1222/MB/2020 Flat no. 121, Samudra Mahal, Dr. A B Road, Worli, Mumbai - 400018. 4. The Respondent is a personal guarantor for Tag Offshore Limited (hereinafter referred to as the “Corporate Debtor”) incorporated on 21.03.2003 having CIN U63090MH2003PLC139657 and having its registered office at Unit no. B 002-Ground Floor, Everest Nivara Infotech Park Plot no. D-3, TTC Industrial Area, Turbhe, MIDC Navi Mumbai, Thane - 400705. 5. The account of the Corporate Debtor turned NPA on 15.05.2019 and accordingly personal guarantee was invoked by the Applicant on 10.06.2019. The total amount in default is INR 54,67,08,945.07 (Rupees Fifty-Four Crore Sixty-Seven Lakhs Eight Thousand Nine Hundred and Forty-Five Paisa Seven Only) i.e. USS 70,40,551.38 and expenses of Rs. 2,02,71,429.18 together with further interest at contractual rates with effect from 01.08.2020 till the disposal of the present matter. (USD/INR- 74.7722 as per RBI Ref. rate dated 31.07.2020). 6. The Applicant had issued demand notice dated 11.08.2020 in prescribed Form B under section 95 of the Code which was duly delivered to the Respondent on 18.08.2020, however, there was no response from the Respondent to the said demand notice within the stipulated period i.e.14 days from the date of receipt of the said demand notice, hence the Applicant has filed this Petition. 7. Further, the Applicant had filed IA 1651/2021 for urgent hearing of the main petition filed against the Personal Guarantor of the Corporate Debtor. Since the matter was taken up on 31.01.2022, the said IA was disposed of on 31.01.2022.

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THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH - I C.P. (IB) No. 1222/MB/2020 8. Vide order dated 24.07.2023, this bench had appointed Mr. Pardeep Kumar Sethi, as Resolution Professional having Registration No. IBBI/IPA-001/IP-P00711/2017-2018/11265 having his address at Unit No. 1121, Building No. II, 2nd Floor, Solitare Corporate Park, Chakala, Andheri-Kurla Road, Andheri-(E), Mumbai – 400 093 to examine the petition and file his report within 10 days from the date of communication of the said order. 9. The Resolution Professional has filed an Interlocutory Application being IA No. 4689 of 2023 for submitting report u/s 99(1) of the Code on record. The same was taken on record and the said Interlocutory Application is allowed and disposed of vide order dated 19.10.2023. 10. The ground(s) for admission of the present application, as recorded in the said RP report, are reproduced in-verbatim as hereinafter: “Sr. Requireme Submission of the resolution Complianc no. nts under Professional e with the S.99 of the requiremen IBC ts under Section 99 of IBC 1. S.99 (1) The Resolution Professional YES The examined the Application resolution under Section 95 of IBC, along professional with the documents annexed shall thereto. examine the The present Report is being application filed by the Resolution referred to Professional within the in section stipulated time i.e.. within 10 94 or days of receiving Certified section 95, order copy. as the case may be,

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THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH - I C.P. (IB) No. 1222/MB/2020 within ten days of his appointme nt, and submit a report to the Adjudicati ng Authority recommend ing for approval or rejection of the application. 2. S. 99(2) The Resolution Professional YES Where the had sent intimation under application section 99 (2) of IBC to the The has been Personal Guarantor seeking Resolution filed under details of repayment of debt Professional section 95, claimed as unpaid by the had sent the applicant along with copy of intimation resolution Bank Statement of the account and a list of professional or any other document details may evidencing repayment of debt, required to require the through mail on 02.08.2023 prove debtor to and documents had also been repayment prove sent through speed post on of the debt repayment 03.08.2023 at the address claimed in of the debt available with the application claimed as undersigned. Information to the unpaid by from Personal Guarantor is Personal the creditor awaited. Guarantor by and the furnishing - The copy of intimation mail & same is (a) evidence requirement list sent to awaited. of electronic Personal Guarantor on transfer of 02.08.2023 & receipt of speed Further, as the unpaid post is enclosed as Annexure-2 per the amount Loan from the Account bank Statement account of received the debtor; from the 5 | Pa ge

THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH - I C.P. (IB) No. 1222/MB/2020 (b) evidence Applicant of (IDBI encashment Bank) for of a cheque updated issued by debt as on the debtor; 24.07.2023, or it is found (c) a signed that USD acknowledg 6,84,198.52 ment by the was creditor recovered on accepting 18.01.2023 receipt of from sale of dues. exclusive secured assets of the CD with the Applicant in FCTL-II A/c. 168867610 0000028. The copy of Loan Ac statement of FCTL A/c- II as on 24.04.2023 received from the Applicant vide e-mail 01.08.2023 is enclosed as Annexure- 3. 3. S. 99(3) The outstanding debt for YES Where the which an application has been debt for filed is -registered with which an National E- Governance application Services Limited as per the has been report dt. 19.09.2020.

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THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH - I C.P. (IB) No. 1222/MB/2020 filed by a creditor is registered with the informatio n utility, the debtor shall not be entitled to dispute the validity of such debt. 4. S. 99(4) As mentioned above, the YES For the Resolution Professional had purposes of sought certain details/ examining information from the an Applicant vide mail sent on application 27.07.2023, 31.07.2023 & , the 14.08.2023 and resolution information/documents were professional sought from the Personal may seek Guarantor vide mail sent on such further 02.08.2023 & through speed informatio post sent on 03.08.2023 at the n or address available with the explanatio undersigned. n in connection The copy of mail sent to the with the Personal Guarantor on application 02.08.2023 is already enclosed as Annexure-2. as may be required from the The copy of mail sent to the debtor or Applicant on 27.07.2023 & the creditor 31.07.2023 are enclosed as or any Annexure-4. other person who, in the opinion of the resolution professional, may provide

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THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH - I C.P. (IB) No. 1222/MB/2020 such informatio n. 5. S. 99(5) The requisite information had YES The person been received from the from whom Applicant within given informatio timelines. n or explanatio However, information is NO n is sought awaited from the Personal under sub- Guarantor till date. section (4) shall furnish such informatio n or explanatio n within seven days of receipt of the request. 6. S. 99(6) The Resolution Professional YES The has examined the application resolution and additional professional information/documents shall received from the Applicant. examine the As per the Application filed application u/s 95, the outstanding and amount as on 31.07.2020 ascertain stands at INR 54,67,08,945/-that - . (a) the application Further, as per the Statement satisfies the of FCTL-II Loan A/c as on requiremen 24.07.2023 provided by the ts set out in Applicant, it is found that section 94 USD 6,84,198.52 was or 95; recovered on 18.01.2023 from (b) the sale of exclusive secured assets applicant of the CD with the Applicant has in FCTL-provided A/c,1688676100000028. informatio Consequently, the aggregate

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THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH - I C.P. (IB) No. 1222/MB/2020 n and given outstanding debt amount explanatio (including interest) as on n sought by 24.07.2023 stands at INR the 65,10,65,729/-. resolution The copy of mail received on professional 01.08.2023 & 02.08.2023 under sub-from Applicant for updated section (4). debt as on 24.07.2023, corresponding Loan A/c Statements & calculation of Outstanding amount as on 24.07.2023 are attached as Annexure-5. It is ascertained that the application satisfies the requirements set out in section 95 of the IBC. 7. S. 99(7) The Application & annexures YES After filed by the creditor u/s 95 and examinatio the additional information / n of the documents received from the application Applicant for their updated under sub-debt as on 24.07.2023 have section (6), been examined by the RP. he may recommend acceptance or rejection of the application in his report. 8. S. 99(8) Since, the application has been NOT Where the filed u/s 95 of IBC, the said APPLICA resolution provisions are not applicable. BLE professional finds that the debtor is eligible for a fresh start under Chapter II, the resolution

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THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH - I C.P. (IB) No. 1222/MB/2020 professional shall submit a report recommend ing that the application by the debtor under section 94 be treated as an application under section 81 by the Adjudicati ng Authority. 9. S. 99(9) As mentioned above, the YES The outstanding debt as on resolution 31.07.2020 for which professional application had been filed by shall record the creditor u/s 95, is INR the reasons 54,67,08,945/-, It is found for from the supporting recommend documents annexed with the ing the application that the said debt acceptance is registered with Information or rejection Utility. of the application Further, as per the additional in the documents received from the report Applicant on 01.08.2023 & under sub- 02.08.2023, it is found that section (7). USD 6,84,198.52 was recovered on 18.01.2023 from sale of exclusive secured assets of the CD with the Applicant in FCTL- A/c.1688676100000028.Cons equently, the aggregate outstanding debt amount (including interest) as on 10 | Pa ge

THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH - I C.P. (IB) No. 1222/MB/2020 24.07.2023 stands at INR 65,10,65,729/-. In view of the same & various facts mentioned under above points, it is recommended that the Application may be accepted. 10. S. 99(10) The Resolution Professional YES The shall provide a copy of the resolution Report to the Creditor and professional Personal Guarantor upon shall give a filing. copy of the report under sub-section (7) to the debtor or the creditor, as the case may be. In view of the aforesaid, I hereby recommend the acceptance of the captioned Application filed by the Financial Creditor under Section 95 of the IBC” Submissions of the Respondent: The Respondent has challenged the present Application on the following grounds: 11. The Respondent has submitted that he was the Promoter Director of a company called Tag Offshore Limited (now in liquidation) ("TOL") till 24.04.2019 when TOL came to be admitted into the Corporate Insolvency Resolution Process ("CIRP") under the provisions of the IB Code by virtue of an order passed by National Company Law Tribunal, Mumbai in Company Petition No. 54/1&8/2019 against TOL. Despite being aware of the same, Applicant Bank has opted to stay outside the liquidation process

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THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH - I C.P. (IB) No. 1222/MB/2020 and rather chose to enforce its security interest. Applicant Bank has received a substantial amount from selling the vessels charged by TOL in Applicant's favour. 12. In the year 2016, the IDBI Bank Ltd. ("Applicant Bank") granted the said Facility to TOL (now in liquidation) to the extent of USD 10.275 million (equivalent to Rs. 69 crores) in form of Foreign Currency Term Loan ("FCTL") vide 2 separate sanction letters dated 22 June 2016 and 26 October 2016, respectively, (collectively referred to as "the sanction letters"). 13. Pursuant to issuance of the said sanction letters and in accordance with the terms thereof, TOL and its promoters directors executed all requisite documents for creating charge on security/collaterals, issued corporate and personal guarantees for the same and other incidental documents. 14. At the time when ONGC decided to terminate their existing charter-hire arrangements in order to take advantage of the fallen market prices, TOL had approximately 16 vessels that were in service for charter hire arrangements with ONGC. Therefore, the sudden and arbitrary decision on the part of ONGC - a state-owned public sector entity seriously imperiled TOL's business operations and led to a substantial fall in TOL's operating margins. In view thereof, the management of TOL (including the Petitioners) made multiple representations dated 14 August 2018, 27 August 2018 and 16 October 2018 to ONGC to reverse the terminations and to continue abiding by the terms of the existing arrangements. 15. In fact, ONGC's actions had widescale repercussions for the entire industry which prompted the Indian National Shipowners Association ("INSA") too to make their own representation dated

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THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH - I C.P. (IB) No. 1222/MB/2020 06 October 2017 to ONGC on behalf of its members. Further, INSA also approached the Competition Commission of India ("CCI") by filing Case No. 1 of 2018 seeking necessary directions against ONGC from terminating its arrangements with members of INSA. The Petitioners believe that the proceedings are currently pending with the Hon’ble NCLAT, who vide order dated 17 October 2019 continued the interim order passed by the Competition Commission of India on 15 June 2018, with regard to clause 14.2 of the 'Special Contract Conditions" (SCC). 16. The adverse change in the business environment was brought about by market forces that were beyond the control of TOL. As a result, in order to sustain its operations at this crucial juncture, TOL sought necessary financial assistance from its lenders, including but not limited to Bank. 17. TOL had successfully repaid an amount of approximately Rs.16 crores towards the availed facilities till March 2019. However, no further repayment was done by TOL. 18. Pertinently, the management of TOL (including me) made numerous requests to the lender banks of TOL, including Bank and offered various options such as restructuring of the facility, one time settlement offers, etc. However, despite extensive efforts on the part of the Petitioners and the management of TOL, no financial support was forthcoming. 19. In April 2019, Company Petition No. 54/1&8/2019 was filed by one of TOL's operational creditors ie. R IH Petroleum Private Limited, before the Mumbai Bench of the National Company Law Tribunal ("Adjudicating Authority") seeking to initiate the Corporate Insolvency Resolution Process against TOL in accordance with Section 9 of the Insolvency and bankruptcy

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THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH - I C.P. (IB) No. 1222/MB/2020 Code, 2016 ("IBC"). 20. By way of its order dated 24 April 2019, the Adjudicating Authority admitted Company Petition No. 54/1&B/2019 as a result of which the CIRP against TOL was initiated under the provisions of the IBC. 21. As no resolution plan was received and/or approved, Resolution Professional of TOL moved an application under Section 33 of the IBC ("Liquidation Application") before the Adjudicating Authority seeking to initiate liquidation proceedings against TOL. The Liquidation Application was allowed by the Adjudicating Authority vide its order dated 26 September 2019 and the liquidation proceedings came to be initiated against TOL. Presently TOL is under liquidation and the liquidator is in charge of TOL. Pertinently, the Applicant Bank is not part of the Stakeholders committee as it chose to stay outside of the liquidation 22. Applicant had charged over two vessels ie Tag- 20 & Tag-Navya, Vessel Tag-Navya has been sold by Applicant and sale proceeds thereof may have been adjusted by Bank. Further, Applicant is yet to sell vessel Tag 20. If the same is sold, the substantial amount of the alleged outstanding would be reduced. 23. The Respondent has further suggested that sale of vessel Tag 20 should substantially reduce the alleged outstanding claimed in the present Application. Findings: 24. Heard learned counsel for Applicant and Respondent and perused the record.

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THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH - I C.P. (IB) No. 1222/MB/2020 25. Upon perusal of the documents on record, it is clearly established that the Corporate Debtor has committed defaults in repayment of loan amount granted by the Financial Creditor. Mr. Shamik Apparao, Personal Guarantor to Tag Offshore Limited has also committed default in repayment of loan facility demanded by the Financial Creditor after invocation of Personal Guarantee. The Application filed by the Creditor satisfies the requirement as set out in Section 95 of the Code. 26. It is well established that the liability of surety is co-extensive with that of the principal debtor. Be that as it may, law on extinguishment of claim against personal guarantor and/or third party on approval of Resolution Plan has been well-settled by Hon’ble Supreme Court in Lalit Kumar Jain vs. Union of India and Ors. [(2021) 9 SCC 321], wherein the Hon’ble Supreme Court has held that approval of resolution plan does not ipso facto discharge a Personal Guarantor (of a Corporate Debtor) of her/ his liability under the contract of guarantee. In paragraph (126) of the said judgement, the Hon’ble Supreme Court held as hereunder: “126. For the foregoing reasons, it is held that the impugned notification is legal and valid. It is also held that approval of a resolution plan relating to a corporate debtor does not operate so as to discharge the liabilities of personal guarantors (to corporate debtors). The writ petitions, transferred cases and transfer petitions are accordingly dismissed in the above terms, without order on costs.” 27. Considering the above facts and circumstances and upon perusal of the documents on record, the C.P. (IB) 1222/MB/2023 filed under Section 95 of the IBC, 2016 is hereby Admitted and the 15 | Pa ge

THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH - I C.P. (IB) No. 1222/MB/2020 Insolvency Resolution Process stands initiated against Mr. Shamik Apparao viz. the Respondent herein. We hereby direct as hereinafter: I. Initiate Insolvency Resolution Process against the Respondent/Personal Guarantor and moratorium in relation to all the debts is declared, from today i.e. date of admission of the application, and shall cease to have effect at the end of the period of 180 days, or this Tribunal passes order on the repayment plan under Section 114 whichever is earlier as provided under Sec 101 of IBC, 2016. During the moratorium period, a. Any pending legal action or proceeding in respect of any debt shall be deemed to have been stayed, and b. The creditors of the debtor shall not initiate any legal action or proceedings in respect of any debt; and c. The debtor shall not transfer, alienate, encumber, or dispose of any of his assets or his legal rights or beneficial interest therein; d. The provisions of this section shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. II. The Resolution Professional viz. Mr. Pradeep Kumar Sethi Insolvency Resolution Professional, having Registration No.IBBI/IPA-001/IP-P00711/2017- 2018/11265, having registered address at Unit No. 1121, Building No. II, 2nd Floor, Solitare Corporate Park, Chakala, Andheri-Kurla Road, Andheri-(E), Mumbai – 400 093. [E-mail: Peekay.sethi@gmail.com; Mobile

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THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH - I C.P. (IB) No. 1222/MB/2020 no.:8422928145] is directed to cause a public notice published on behalf of the Adjudicating Authority within 7 days of passing this Order on the website of the NCLT Mumbai Bench, inviting claims from all Creditors, within 21 days of such issue. The notice under Sub Section (1) of Section 102(2) shall include: - a. details of the order admitting the application; b. particulars of the resolution professional with whom the claims are to be registered; and c. the last date for submission of claims. III. The publication of notice shall be made in two newspapers, one in English and other in Vernacular, which have wide circulation in the State where the Corporate Debtor and Personal Guarantor resides. The Resolution Professional shall furnish two spare copies of the notice to the Registry for the record. IV. The Resolution Professional, in exercise of the powers conferred under Section 104, shall prepare a list of creditors on the basis of: a. the information disclosed in the application filed by the debtor under Sections 94 or 95, as the case may be, and b. claims received by the Resolution Professional under Section 102 within 30 days from the date of the notice. The debtor shall prepare a repayment plan under Section 105, in consultation with the Resolution Professional, containing a proposal to the Creditors for restructuring of his debts or affairs. The repayment plan may authorize or require the 17 | Pa ge

THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH - I C.P. (IB) No. 1222/MB/2020 Resolution Professional to: a. carry on the debtor, business or trade on his behalf or in his name: or b. realise the assets of the debtor; or c. administers or dispose of any funds of the debtor. The repayment plan shall include the following, namely; a. justification for preparation of such repayment plan and reasons based on which the creditors may agree upon the plan; b. provision for payment of fee to the Resolution Professional; c. such other matters as may be specified. V. The Resolution Professional shall submit the repayment plan along with his report on the plan to this Authority within a period of 21 days from the last date of submission of claims, as provided under Section 106. VI. In case the Resolution Professional recommends that a meeting of the creditors is not required to be called, he shall record the reasons thereof. If the Resolution Professional is of the opinion that a meeting of the creditors should be summoned, he shall specify the details as provided under Section 106(3) of IBC, 2016. The date of meeting should not be less than 14 days or more than 28 days from the date of submission of the Report under sub-section (1) of Section 106 of IBC, 2016, for which at least 14 days’ notice to the creditors (as per the list prepared) shall be issued by all modes. Such notice must contain the details as provided under the provisions of Section 107 of IBC, 2016.

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THE NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH - I C.P. (IB) No. 1222/MB/2020 VII. The meeting of the creditors shall be conducted in accordance with Sections 108, 109, 110 & 111 of IBC, 2016. The Resolution Professional shall prepare a report of the meeting of the creditors on repayment plan with all details as provided under Section 112 of IBC, 2016 and submit the same to this Tribunal, copies of which shall be provided to the Debtor and the Creditors. It is made clear that the Resolution Professional shall perform his functions and duties in compliance with the Code of Conduct provided under Section 208 of IBC, 2016. VIII. The Resolution Professional shall submit his periodic reports before this Tribunal, every 30 days. IX. The Applicant is directed to deposit INR 2,00,000/- (Indian Rupees Two lakhs) to the bank account of the Resolution Professional within one week, towards his fees. This shall be subjected to the rules and regulations under the provisions of the Insolvency and Bankruptcy Code, 2016. X. The Registry is directed to communicate a copy of order, report and application within seven working days and upload the same on the website immediately after the pronouncement of order.

Sd/- Sd/- PRABHAT KUMAR JUSTICE V. G. BISHT MEMBER (TECHNICAL) MEMBER (JUDICIAL) <MK>

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