In the matter of State Bank of India vs. S. Gauthama Shankar,

IN THE NATIONAL COMPANY LAW RIBUNAL, DIVISION BENCH – II, CHENNAI CP (IB)/613(CHE)/2020 (filed under Section 95(1) of the Insolvency and Bankruptcy Code, 2016) STATE BANK OF INDIA, Stressed Asset Management Branch Red Cross Building, Montieth Road, Egmore, Chennai – 600 008. Represented by Assistant General Manager … Petitioner / Financial Creditor

Versus Mr. S. Gauthama Shankar, S/o. Singaravelu, F1 Abul Regency, 1st Floor, No. 6, Southmada Street, Srinagar, Colony, Saidapet, Chennai – 600 015.

Also at Old No. 10, New No. 15/17, North Cresent Road, T.Nagar, Chennai – 600 017. … Respondent / Guarantor

Order pronounced on 2nd February, 2024 CORAM SHRI. JYOTI KUMAR TRIPATHI, MEMBER (JUDICIAL) SHRI. RAVICHANDRAN RAMASAMY, MEMBER (TECHNICAL) Present: For Petitioner : Mr. M. L. Ganesh, Advocate

(Hearing through Video Conferencing)

The Applicant, State Bank of India through its Stressed Assets

Management Branch has filed this application under Section 95(1) of the CP (IB) 613(CHE) 2022 State Bank of India, Stressed Assets Management Branch - Vs – Mr. S. Gauthama Shankar

Insolvency and Bankruptcy Code, 2016 (“IBC”) for initiating Insolvency

Resolution Process against the Personal Guarantor / Respondent

Mr. S. Gauthama Shankar of M/s. MPL Cars Private Limited, the Corporate

Debtor against whom, CIRP was initiated vide an order dated 13.08.2019 in CP/885/IB/2018.

2. As per the averments made in the application, M/s. MPL Cars Private

Limited, had taken credit facilities from the Applicant. The Respondent herein had given personal guarantee to the said loan. The Corporate Debtor failed to repay the debt which made the Applicant initiate CIRP against the Corporate

Debtor.

3. In Part-III of the application, the Applicant has given the particulars of debt as Rs.36,50,28,970/- (Rupees Thirty Six Crores Fifty Lakhs Twenty Eight

Thousand Nine Hundred and Seventy only), amount of default as Rs.36,50,28,970/- (Rupees thirty six crores fifty lakhs twenty eight thousand nine hundred and seventy only) and date of default as 06.03.2019. The Company/Corporate Debtor is under liquidation before Court – II of this Tribunal. The Applicant has placed the Deed of Guarantee executed by the Respondent in memo dated 27.12.2023. The Applicant has also filed the statement of accounts at Page 43 including Form-B sent by the Applicant to the Respondent.

CP (IB) 613(CHE) 2022

4. The Demand Notice issued 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 to the Personal Guarantor dated 10.03.2020 is placed at Page 45 – 46 of the typed set filed along with the application.

5. We have heard Learned Counsel for the Applicant.

6. Section 95 of IBC provides that a creditor may apply either by himself, or jointly with other creditors, or through a Resolution Professional to the Adjudicating Authority for initiating an Insolvency Resolution Process under the Section by submitting an application. The application shall be accompanied with details and documents relating to the debts or by the debtor to the creditor as on the date of application, failure by the debtor to pay the debt within a period of 14 days of the service of the Notice of Demand and the relevant evidence of such default or non-payment of debt. It also provides that “the creditor shall provide a copy of the application to the debtor and the application shall be in such form and manner.

7. Hon’ble Supreme Court in the matter of Dilip B Jiwrajka –Vs- Union of India & Ors in Writ Petition (Civil) No 1281 of 2021 while dealing with the jurisdiction of NCLT in relation to adjudication of cases filed under Section 94 and 95 of IBC, 2016 has summarized in para-86 as follows;

CP (IB) 613(CHE) 2022

86. We summarise the conclusion of this judgment below: (i) No judicial adjudication is involved at the stages envisaged in Sections 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 the insolvency resolution process which has been preferred under Section 94 or Section 95. The report to be submitted to the adjudicatory authority is recommendatory in nature on whether to accept or reject the application; (iii) The submission that a hearing should be conducted by the adjudicatory authority for the purpose of determining ‘jurisdictional facts’ at the stage when it appoints a resolution professional under Section 97(5) of the IBC is rejected. No such adjudicatory function is contemplated at that stage. To read in such a requirement at that stage would be to rewrite the statute which is impermissible in the exercise of judicial review;

(iv) The resolution professional may exercise the powers vested under Section 99(4) of the IBC for the purpose of examining the application for insolvency resolution and to seek information on matters relevant to the application in order to facilitate the submission of the report recommending the acceptance or rejection of the application;

(v) There is no violation of natural justice under Section 95 to Section 100 of the IBC as the debtor is not deprived of an opportunity to participate in the process of the examination of the application by the resolution professional;

(vi) No judicial determination takes place until the adjudicating authority decides under Section 100 whether to accept or reject the application. The report of the resolution professional is only recommendatory in nature and hence does not bind the adjudicatory authority when it exercises its jurisdiction under Section 100;

(vii) The adjudicatory authority must observe the principles of natural justice when it exercises jurisdiction under Section 100 for the purpose of determining whether to accept or reject the application;

(viii) The purpose of the interim-moratorium under Section 96 is to protect the debtor from further legal proceedings; and CP (IB) 613(CHE) 2022 (ix) The provisions of Section 95 to Section 100 of the IBC are not unconstitutional as they do not violate Article 14 and Article 21 of the Constitution. 8. Hon’ble Supreme Court has held that no judicial adjudication is involved at the stages envisaged in Sections 95 to Section 99 of the IBC and also there is no violation of natural justice under Section 95 to Section 100 of the IBC as the debtor is not deprived of an opportunity to participate in the process of the examination of the application by the resolution professional. The Respondent / Personal Guarantor will be given an opportunity to file a reply once the RP has filed his Report under Section 99 of IBC, 2016.

9. Considering the above facts and the case supra, we appoint the Resolution Professional who will collate all the facts relevant to the examination of the application for the commencement of the Insolvency

Resolution Process in respect of the Personal Guarantor.

10. In the instant case, the Applicant has proposed the name of the Resolution Professional “Mr. V. Sadhasivam (IBBI/IPA-001/IP-P00958/2017-

2018/11579)”. But upon perusal it is found that the Proposed IP’s AFA expired on 29.07.2022 from the IBBI Portal. Therefore after verification of disciplinary status and remarks, we appoint “Yegnasubramanian” (e-mail:

ysmtvl_61@rediffmail.com) having Registration No. IBBI/IPA-001/IP-P-

02708/2022-23/14227, and AFA valid till 20.08.2024 as Resolution Professional in respect of the Personal Guarantor / Respondent.

CP (IB) 613(CHE) 2022

11. The Applicant is directed to pay a sum of Rs.25,000/- (Rupees Twenty Five

Thousand Only) to the Resolution Professional to meet out the expenses to perform the functions assigned to him.

12. The Resolution Professional is directed to examine the application as set out in Section 97(6) of IBC, 2016 who after examining, may recommend for the acceptance / rejection of the application as provided under Section 97(6) of IBC,

2016, within a period of 10 days as contemplated under Section 99(1) of IBC,

2016.

13. The Applicant is directed to serve copy of the application and the order on the Resolution Professional.

14. List this application for report / hearing on 04.03.2024.

-Sd- -Sd- RAVICHANDRAN RAMASAMY JYOTI KUMAR TRIPATHI Member (Technical) Member (Judicial)

CP (IB) 613(CHE) 2022