In the matter of SV Buildcon Pvt. Ltd.
- CitationCP(IB)-236/ND/2024
Ratio decidendi
The rule this decision rests on
The Tribunal, having found the application within limitation on the basis of acknowledgements of the debt made by the Corporate Debtor's principal borrower before the limitation period expired, accepted the Financial Creditor's position on limitation and held that the application was not barred under Section 7 of the Insolvency and Bankruptcy Code, 2016. Pendency of proceedings before the Debt Recovery Tribunal under the SARFAESI Act does not bar admission of an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, because Section 238 of that Code gives it overriding effect over the SARFAESI Act proceedings. A corporate guarantor is liable to be proceeded against under Section 7 of the Insolvency and Bankruptcy Code, 2016, as recognised by the Supreme Court in Laxmi Pat Surana v. Union Bank of India, and a dispute as to the quantum of the principal borrower's debt is no ground to refuse admission where the defaulted amount, taken on its own, exceeds the threshold of Rs. 1 crore. An application under Section 7 is to be admitted where the default is established under Section 7(3) and (5) of the Code, and the Tribunal need not return any finding on the actual liability of the principal borrower at the admission stage; it need only be satisfied that the threshold is met.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
PRESENT: For the Applicant : Adv. Hitesh Sachar For the Respondent : Adv. Jagdeep Sharma, Adv. Kartikeya Sharma, Adv. Jugal Bagga, Adv. Sumit Kaushik, Adv. Charanjeet Khatana, Adv. Ritwik Sharma, Adv. C Chet Ram Kaushik Hearing Through: VC and Physical (Hybrid) Mode ORAL ORDER Indubitably the Respondent before us i.e. M/s SV Buildcon Pvt. Ltd. stood as Personal Guarantor qua the financial facilities extended by the Financial Creditor to M/s Suryansh Healthcare Pvt Ltd. The Part-IV of the application indicate the amount of debt and default in repayment of the same. The Part-IV (1) & (2) of the application reads thus:-
CP(IB)-236/ND/2024 Canara Bank vs. M/s SV Buildcon Pvt. Ltd.
CP(IB)-236/ND/2024 Canara Bank vs. M/s SV Buildcon Pvt. Ltd.
CP(IB)-236/ND/2024 Canara Bank vs. M/s SV Buildcon Pvt. Ltd.
CP(IB)-236/ND/2024 Canara Bank vs. M/s SV Buildcon Pvt. Ltd.
2. Ld. Counsel for the Corporate Guarantor opposed the application by espousing:- a) the application is barred by limitation; b) out of principal amount of Rs. 28 crores, an amount of Rs. 20.05 Cr has already been paid to the financial creditor; c) there is dispute regarding the amount of debt repayable by the Principal Borrower/Corporate Guarantor. The O.A. Bearing No. 412 of 2016 filed by the Financial Creditor is pending before DRT-II.
3. As far as first proposition is concerned, the Ld. Counsel for the Financial Creditor could draw our attention to Annexure R-6 to the reply filed by the Corporate Debtor and submitted that admittedly after 22.03.2017, the borrower had repaid certain amount of debt, thus it amounted to acknowledgement by it within three years i.e. before expiry of the period of limitation. After having referred to the letter dated 24.02.2023, he submitted that he also made reference to letter dated 21.02.2024 placed on record as Annexure-R-15 of the reply. Making reference to Para 9 of the letter addressed by the SS Realtech Pvt. Ltd. and the Principal Borrower, he submitted that till
CP(IB)-236/ND/2024 Canara Bank vs. M/s SV Buildcon Pvt. Ltd.
2019, the Principal Borrower paid from its sources an amount of Rs. 14.81 Cr. against the term loans disbursed to both the companies i.e. the Principal Borrower and M/s SS Realtech Pvt. Ltd. Para 9 of the letter dated 21.02.2023 reads thus:- “9. When the above said term loans become NPA in the year 2015, we gave an OTS proposal to the Canara Bank of Rs. 23.80 Cr. and bank gave counteroffer of Rs. 29.10 Cr. on 22.03.2017. That till the time the canrent loan was already repaid finally but despite the facts the bank appropriated the rent forcibly without our consent and also appropriated the rent against this loan in which the can-rent property was never mortgaged and was let out to DMRC. That till 2019 we paid from our sources Rs. 14.81 Cr. against the term loans, disbursed in both the companies amounting to Rs. 25.48 Cr.”
4. As can be seen letter dated 24.02.2023 written by the Principal Borrower to the General Manager of the Financial Creditor, the Principal Borrower could offer settlement to the Financial Creditor on 30.12.2020, 01.03.2021, 13.07.2021, 29.11.2021, 16.12.2021, 03.02.2022, 30.04.2022, 02.07.2022 and 02.08.2022. Thus apparently, there was repayment of amount of debt and acknowledgement of the same before expiry of the period of limitation i.e. 3 years.
5. Ld. Counsel for the Applicant/FC could also refer to balance sheet for the period ending 31.03.2016. It is seen from Page 224 of the paper book/balance sheet that the Principal Borrower had acknowledged the liability to repay the amount of debt. Apparently there had been acknowledgement of amount of debt from time to time before expiry of the period of limitation.
CP(IB)-236/ND/2024 Canara Bank vs. M/s SV Buildcon Pvt. Ltd.
6. In the wake, the plea of delay raised by Ld. Counsel for the Corporate Guarantor is accepted. As far as the second plea raised by Ld. Counsel is concerned, in terms of the provisions of Section 238 of IBC, 2016 the proceedings under IBC have overriding effect over the proceedings under the SARFAESI Act thus pendency of the O.A. No. 412/2016 cannot come in way of maintainability of the present proceedings. Besides even otherwise also, the object of the original application filed before DRT is recovery of debt while that of the present proceeding is to put the Corporate Debtor back to it’s feet and rescue it. Mr. Jagdeep Sharma could also raise the issue of the amount of debt. We may not be oblivious of the fact that in present proceedings we do not record any finding on actual liability of the Principal Borrower from the Corporate Debtor what we need to see is only as to whether the threshold limit is satisfied or not.
7. During the hearing, Ld. Counsel submitted that out of the principal amount of Rs. 28 Cr. an amount of Rs. 20,50,000,00/- has been paid thus admittedly the defaulted amount is more than Rs. 1 Cr. In the wake, the plea regarding dispute in the remaining amount of debt can be no ground to nix the captioned application as admittedly the amount defaulted to be paid is over and above threshold limit of 1 crore.
8. It would not be to our context that to note that in the case of Laxmi Pat Surana vs. Union Bank of India & Anr. (Civil Appeal Bo. 2734 of 2020), Hon’ble Supreme Court ruled that the proceeding under Section 7 of IBC, 2016 can also be instituted against the Corporate Guarantor. To espouse the liability of CP(IB)-236/ND/2024 Canara Bank vs. M/s SV Buildcon Pvt. Ltd.
the Respondent to pay the defaulted amount, the Ld. Counsel for the Applicant could draw our attention to Annexure A-6 of the application. Annexure A-6 is Deed of Guarantee in terms of which the Corporate Guarantor has liability to repay the amount of debt. The relevant excerpt of the Guarantee Agreement reads thus:-
9. Apparently the Principal Borrower/Corporate Debtor had defaulted to pay the amount and the account of corporate guarantee was declared NPA in the year 2015. In view of the aforementioned, the requirement of the provisions of Section 7 (3) & (5) of IBC, 2016 is satisfied and we are left with no option but to admit the present application.
10. In the backdrop, moratorium as provided under Section 14 of IBC, 2016 is declared qua the CD and as a necessary consequence thereof the following prohibitions are imposed, which must be followed by all and sundry: (a) The institution of suits or continuation of pending suits or proceedings against the Respondent including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;
CP(IB)-236/ND/2024 Canara Bank vs. M/s SV Buildcon Pvt. Ltd.
(b) Transferring, encumbering, alienating or disposing of by the Respondent any of its assets or any legal right or beneficial interest therein;
(c) Any action to foreclose, recover or enforce any security interest created by the Respondent in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
(d) The recovery of any property by an owner or lessor, where such property is occupied by or in the possession of the Respondent.
11. As proposed by the Petitioner, Mr. Vivek Parti, having Registration No. IBBI/IPA-001/IP-P00813/2017-2018/11376 and e-mail: v_parti@yahoo.com, is appointed as IRP, subject to the condition that no disciplinary proceeding is pending against him and disclosures as required under IBBI Regulations, 2016 are made by him within a period of one week from this Order.
12. It is further ordered that Mr. Vivek Parti shall take charge of the CIRP of the Corporate Debtor with immediate effect and would take steps as mandated under the IBC specifically under Section 15, 17, 18, 20 and 21 of IBC, 2016 read with extend provisions of IBBI (Insolvency Resolution of Corporate Persons) Regulations, 2016.”
13. The Petitioner is directed to deposit Rs. 2,00,000/- only with the IRP to meet the immediate expenses. The amount, however, will be subject to adjustment by the Committee of Creditors as accounted for by Interim Resolution Professional and shall be paid back to the Financial Creditor. CP(IB)-236/ND/2024 Canara Bank vs. M/s SV Buildcon Pvt. Ltd.
14. A copy of this Order shall immediately be communicated by the Registry/Court Officer of this Tribunal to the Petitioner /Financial Creditor, the Respondent/Corporate Debtor and the IRP mentioned above.
15. In addition, a copy of this Order shall also be forwarded by the Registry/Court Officer of this Tribunal to the IBBI for their records.
Sd/- Sd/- (SUBRATA KUMAR DASH) (ASHOK KUMAR BHARDWAJ) MEMBER (T) MEMBER (J)
Ashima/Ruchita
CP(IB)-236/ND/2024 Canara Bank vs. M/s SV Buildcon Pvt. Ltd.
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