Indian Bank vs Anjanee Kumar Lakhotia

(Arising out of Order dated 24.01.2025 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi Bench, Court-III in IB-654(PB)/2023)

IN THE MATTER OF:

INDIAN BANK SAM LARGE BRANCH 17, PARLIAMENT STREET NEW DELHI- 1 10 O01 E-Mail: armbdelhi@indianbank.co.in .... Appellant

Vs

1. ANJANEE KUMAR LAKHOTIA B-37, 1st FLOOR, SWAMI NAGAR, MALVIYA NAGAR, NEW DELHI- 1 10017 Email- delhi@mblinfra.com

2. STATE BANK OF INDIA (Representing New Working Capital Consortium) STRESSED ASSETS MANAGEMENT BRANCH-II -1 lth FLOOR, JAWAHAR VYAPAR BHAWAN S.T.C. BUILDING, JANPATH, 1 TOLSTOY MARG NEW DELHI- 1 10 001 E-Mail: agmcll.50950@sbi.co.in ; agm3infra2.sarg@sbi.co.in

3. ROSHAN LAL JAIN RESOLUTION PROFESSIONAL AN-46 B, SHALIMAR BAGH NORTH WEST DELHI DELHI- 110088 Email: roshanljain@yahoo.co.in .... Respondents

Cont'd.../ -2-

Present:

For Appellant: Mr. Amod K. Dalela, Mr. Pradeep Pandey, Advocates.

For Respondents: Mr. Arusuya Salwan, Mr. Rachit Wadhwa, Advocates for R-1.

Mr. Abhijeet Sinha, Sr. Advocate with Ms. Shweta Dubey, Ms. Kanishka Prasad, Advocates for R-2.

Mr. Sumit Sinha, Advocate with Mr. Roshan Lal Jain in person for R-3.

JUDGMENT

ASHOK BHUSHAN, J.

This appeal has been filed by the Indian Bank challenging the order

dated 24.01.2025 passed by the Adjudicating Authority (National Company

Law Tribunal), New Delhi Bench, Court-III by which an application under

Section 95(1) filed by the Indian Bank has been rejected by the Adjudicating

Authority under Section 100 of the I&B Code.

2. Brief facts of the case necessary to be noticed for deciding this appeal

are:

(i) Erstwhile Allahabad Bank has granted various financial

facilities to the Corporate Debtor - M/s MBL Infrastructure

Limited in the year 2010 onwards. The financial facilities

Company Appeal (AT) (Insolvency) No. 458 of 2025 -3-

were extended to the Corporate Debtor by consortium of

banks lead bank being State Bank of Mysore.

(ii) The deed of guarantee dated 17.02.2016 was executed by

the Appellant in favour of the State Bank of Mysore - the

lead Bank.

(iii) The accounts of the Corporate Debtor were declared NPA

on 21.12.2016. The Corporate Debtor - M/s MBL

Infrastructure Limited was admitted to CIRP by order dated

30.03.2017 passed by NCLT, Kolkata Bench.

(iv) The Allahabad Bank now Indian Bank has filed its claim in

the CIRP of the Corporate Debtor and was member of the

CoC. In the CIRP of the Corporate Debtor, the Respondent

No.1 - Anjanee Kumar Lakhotia, the Suspended Director of

the Corporate Debtor submitted a Resolution Plan. The

Resolution Plan dated 22.11.2017 proposed by Anjanee

Kumar Lakhotia - Respondent No.1 herein was approved

with 78.50% vote share of the CoC. NCLT, Kolkata vide

order dated 18.04.2018 also approved the Resolution Plan.

(v) Approval of the Resolution Plan by NCLT was

unsuccessfully challenged before this Tribunal and the

Hon'ble Supreme Court. The Resolution Plan submitted by

Company Appeal (AT) (Insolvency) No. 458 of 2025 -4-

the Suspended Director was ultimately received approval

by the Hon'ble Supreme Court vide judgment dated

18.01.2022 in CA 8411 of 2019. NCLT, Kolkata Bench has

directed the Working Capital Consortium of the Corporate

Debtor to take necessary steps for the implementation of

the approved Resolution Plan on 11.03.2022, which was

upheld by this Tribunal by order dated 23.05.2023. Order

of this Tribunal dated 23.05.2023 was also upheld by the

Hon'ble Supreme Court.

(vi) Under the Resolution Plan, the debt of all the lenders was

restructured and was proposed to be paid in phased

manner. The Respondent No.1 herein, the Personal

Guarantor was required to submit a fresh guarantee to the

consortium of bank. A new Deed of Guarantee dated

04.07.2024 was executed by the Respondent No.1 in favour

of the SBICAP Trustee Company Limited.

(vii) The Appellant was one of the dissenting Financial Creditor

who did not voted for approval of Resolution Plan. By virtue

of approval of plan, the dissenting financial creditor was

entitled to receive liquidation value in priority.

(viii) Subsequent to the approval of plan, an application under

Section 95(1) was filed by the Indian Bank being IB-

Company Appeal (AT) (Insolvency) No. 458 of 2025 -5-

654(PB)/2023 Application was filed to initiate insolvency

process against the Personal Guarantor - Anjanee Kumar

Lakhotia.

(ix) The State Bank of India filed an application for

impleadment in Section 95(1) application, which although

was opposed by the Appellant but the Adjudicating

Authority passed an order dated 26.07.2024 allowing the

Intervention Application P-7 filed by the State Bank of

India. The State Bank of India opposed the application filed

under Section 95(1). It was contended by the State Bank

of India that there are procedures laid down in the inter-se

agreement on enforcement of security interest. The

restructured debt under the Resolution Plan is secured by

new Personal Guarantee which has been given by the

Respondent No.1 on 04.07.2024. It is submitted that

dissenting Financial Creditor cannot be allowed to initiate

proceeding for personal insolvency of the Personal

Guarantor which himself was Resolution Applicant whose

Resolution Plan was approved. The value of the personal

guarantee as existing in 2017 given by Anjanee Kumar

Lakhotia was noticed in the Resolution Plan and debt of all

lenders including the Indian Bank was restructured and

Company Appeal (AT) (Insolvency) No. 458 of 2025 -6-

mode and manner of payment to all lenders was given in

the Resolution Plan.

(x) By order dated 01.04.2025, the State Bank of India was

allowed time to file an Additional Affidavit bringing extract

of Resolution Plan. In pursuance to order dated

01.04.2025, State Bank of India has filed an Additional

Affidavit bringing on record relevant extract of the

Resolution Plan of the Corporate Debtor.

(xi) The Adjudicating Authority after hearing the parties and

considering all the materials on record rejected the

application under Section 95(1) filed by the Appellant by

order dated 24.01.2025. Aggrieved by which order, this

appeal has been filed.

3. We have heard Shri Amod K. Dalela, learned counsel for the

Appellant, Shri Arusuya Salwan, learned counsel appearing for the

Respondent No.1 - Personal Guarantor, Shri Abhijeet Sinha, learned senior

counsel appearing for Respondent No.2 - State Bank of India and learned

counsel appearing for the Resolution Professional.

4. Learned counsel for the Appellant submits that the personal

guarantee although was given to the State Bank of Mysore - lead bank but

the personal guarantee has to be treated to be given to all members of the

Company Appeal (AT) (Insolvency) No. 458 of 2025 -7-

consortium and after approval of the Resolution Plan, the personal

guarantee given by Resolution No.1 dated 17.02.2016 shall not extinguish.

Indian Bank was fully entitled to initiate process for insolvency resolution

of the Personal Guarantor. The personal guarantee given by Respondent

No.1 was rightly invoked by the Indian Bank before filing Section 95

application. It is submitted that Resolution Plan of the Corporate Debtor

which was approved in the year 2017 does not affect the personal guarantee

given by the Respondent No.1. Learned counsel for the Appellant has also

relied on judgment of Hon'ble Supreme Court in "Lalit Kumar Jain vs.

Union of India, (2021) 9 SCC 321" in support of his submission that

approval of Resolution Plan shall not extinguish the personal guarantee

given by the Personal Guarantor. Learned counsel for the Appellant

submits that mere fact that a fresh personal guarantee has been taken from

Respondent No.1 by the consortium of banks shall not retrospectively

extinguish the personal guarantee given by Respondent No.1.

5. Learned counsel for the State Bank of India refuting the submission

of the Appellant contend that the Resolution Plan was submitted by

Respondent No.1 - the Promoter and Personal Guarantor himself. The debt

of all lenders were restructured in the Resolution Plan and was to be paid

in the phased manner. The Personal Guarantor himself having given the

Resolution Plan, a fresh personal guarantee was executed by the Personal

Guarantor on 04.07.2024 for implementation of the approved Resolution

Plan. It is submitted that in view of obtaining fresh guarantee, the Indian

Company Appeal (AT) (Insolvency) No. 458 of 2025 -8-

Bank which is dissenting Financial Creditor cannot proceed to file an

application under Section 95 against the Respondent No.1. It is submitted

that the Appellant being dissenting Financial Creditor, who has not

approved the Resolution Plan is entitle for liquidation value as per Section

30(2) of the I&B Code. In view of the approved Resolution Plan by

Respondent No.1 - Suspended Director of the Corporate Debtor himself, all

aspects of the matter including value of the assets of the Personal

Guarantor as was existing in the year 2017 have taken note of in the

Resolution Plan. Contents of the Resolution Plan and treatment to the

claims of all lenders clearly makes it impermissible to the Appellant to

initiate any proceeding under Section 95(1) against the Personal Guarantor.

6. We have heard learned counsel for the Appellant and perused the

record.

7. The fact that in the CIRP of the Corporate Debtor - M/s MBL

Infrastructure Limited, Resolution Plan submitted by the Promoter i.e.

Respondent No.1 was approved by the NCLT in the year 2017 is matter of

record. The approval of the Resolution Plan was challenged before this

Tribunal and ultimately, in Hon'ble Supreme Court and the Hon'ble

Supreme Court also approved the Resolution Plan of the Corporate Debtor.

In the year 2023, the consortium of banks has decided to implement the

Resolution Plan and the Hon'ble Supreme Court vide order dated

08.01.2024 dismissed the appeal filed by the Bank of Baroda challenging

Company Appeal (AT) (Insolvency) No. 458 of 2025 -9-

the order of this Tribunal affirming the order of NCLT. Observation made

by the Hon'ble Supreme Court has been noticed in Para 12(f) of the

impugned order, which is as follows:

"f. The Hon'ble Supreme Court vide its judgment dated 18.01.2022 dismissed the Appeal filed by the Bank of Baroda. The Hon'ble Supreme Court held that the Resolution Applicant was not eligible under Section 29A, noticing the subsequent facts, including the fact that the Resolution Applicant has already infused Rs.63 crores and the Corporate Debtor is an on-going concern, the Hon'ble Supreme Court did not interfere with the order approving the Resolution Plan and was of the view that Resolution Plan be implemented and held that:

"63. We need to take note of the interest of over 23,000 shareholders and thousands of employees of the Respondent No.1. Now, about Rs. 300 crores has also been approved by the shareholders to be raised by the Respondent No. 1. It is stated that about Rs. 63 crores has been infused into the Respondent No.l to make it functional. There are many on-going projects of public importance undertaken by the Respondent No.1 in the nature of construction activities which are at different stages.

64. We remind ourselves of the ultimate object of the Code, which is to put the corporate debtor back on the rails. Incidentally, we also note that no prejudice would be caused to the dissenting creditors as their interests would otherwise be secured by the resolution plan itself, which permits them to get back the liquidation value of their respective credit limits. Thus, on the peculiar facts of the present case, we do not wish to disturb the resolution

Company Appeal (AT) (Insolvency) No. 458 of 2025 -10-

plan leading to the on-going operation of the Respondent No.1.""

8. The submission of the Appellant that pursuant to approval of

Resolution Plan there is subsisting personal guarantee was considered and

contention of the Appellant have been noticed in Para 15 and 16 of the

judgment and the Adjudicating Authority in Para 17 has made following

observation:

"17. The learned Counsel for the State Bank of India submitted that, following the approval of the Resolution Plan, the loan of the Corporate Debtor was effectively restructured, and the security interest was modified. Accordingly, the Respondent No. 1's previous personal guarantee dated 17.02.2016 was extinguished, and a new Deed of Guarantee dated 04.07.2024 was executed by Respondent No.1 in favor of SBICAP Trustee Company Limited. Notably, the implementation of the Resolution Plan is underway, and the Hon'ble Supreme Court has acknowledged that the Successful Resolution Applicant has already infused Rs.63 Crores. In terms of the approved Resolution Plan, the following documents were executed between the Consortium Lenders and Respondent No.1 representing Corporate Debtor on 04.07.2024:

(i). Working Capital Consortium Agreement

(ii). Working Capital Term Loan Agreement

Company Appeal (AT) (Insolvency) No. 458 of 2025 -11-

(iii). Personal Guarantee for Working Capital Facility and working capital term loan facility

(iv). Debenture Trust Deed

(v). Security Trustee Agreement in respect of working capital facility and working term loan facility

(vi). Debenture Trustee Appointment Agreement

(vii). Inter-se Agreement (amongst Working Capital Lenders)

(viii). Deed of Hypothecation"

9. It has been submitted by learned counsel for the State Bank of India

that following the approval of Resolution Plan, the loan of the Corporate

Debtor was effectively restructured and security interest was relinquished

and pervious personal guarantee dated 17.01.2017 was extinguished and

new personal guarantee dated 04.07.2024 was executed in favour of

SBICAP Trustee Company Ltd. Fresh personal guarantee has been

executed by the Respondent No.1 which has been noticed in Para 17 of the

judgment. In Para 20 of the judgment, the Adjudicating Authority has

again observed that fresh personal guarantee has been executed by the

Personal Guarantor on 04.07.2024. When the debt of all lenders was

restructured and security interest were extinguished by asking the

Personal Guarantor to submit a fresh personal guarantee to the consortium

of bank, we are of the view that relying on the earlier personal guarantee

the Appellant cannot proceed to put the Personal Guarantor into personal

Company Appeal (AT) (Insolvency) No. 458 of 2025 -12-

insolvency who himself is the Resolution Applicant whose Resolution Plan

has been approved upto Hon'ble Supreme Court.

10. The Adjudicating Authority after considering relevant facts and

circumstances has rightly not admitted Section 95 application filed by the

Appellant. In Para 2.3 of the Resolution Plan, as has been brought on the

record along with the Additional Affidavit, which contemplate submission

of personal guarantee to the Consortium of Working Capital Lender. It is

useful to extract the following part of the extract of Resolution Plan from

Para 2.3:

"Personal guarantee of Sh A.K.Lakhotia to cons ortium working capital lenders, equipment/ECB lenders as per the resolution plan. The net Worth of guarantor as on 31.3.2017 is Rs. 18.37 crs."

11. The liabilities of the Personal Guarantor on 31.03.2017 was assessed

as Rs.18.37 Crores which was taken into account in the Resolution Plan

and considering the outstanding, Lenders included letter of credit of Bank

Guarantees and a composite plan was submitted which was approved. The

letter dated 22.10.2017 addressed to the Resolution Professional by the

Resolution Applicant - Anjanee Kumar Lakhotia is part of the record at

page 5-6 of the Additional Affidavit, which reads as follows:

"AK Lakhotia B-37, 1st Floor, Soami Nagar New Delhi 110017 Date: November 22, 2017

Company Appeal (AT) (Insolvency) No. 458 of 2025 -13-

Mr. Sanjeev Ahuja Resolution Professional MBL Infrastructures Ltd.

Sir

Resolution Plan

This has reference to COC meetings hold on 29th June, I 0th August, 4th September, 16th October, 2017, 151 November, 2017, 13th November, 2017 and 18th November, 2017 where the resolution plan submitted by me in terms of the Insolvency & Bankruptcy Code 2016 was discus ed. Further amendments have been made in the Resolution Plan as per the suggestions made by COC members and PNB Investment Services Ltd, the financial advisors of COC.

In terms of requirement of Insolvency & Bankruptcy Code 2016 read with Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, I confirm that the resolution plan inter-alia, provide for the following measures required for implementing it:

a) Sale of some of the assets which are encumbered. Please refer to page no. 16, 43, 44, 67 of Resolution Plan.

b) Modification of security interest. Please refer to page no. 16-19, 41-67 of Resolution Plan.

Company Appeal (AT) (Insolvency) No. 458 of 2025 -14-

c) Curing or waiving of any breach of the terms of any debt due from the corporate debtor. Please refer to page no. 45, 68 of Resolution Plan.

d) Reduction in the amount payable to creditors. Nil.

e) Extension of maturity date or change in interest rate or other telms of debt due from corporate debtor. Please refer to page no. 16-19, 41-67 of Resolution Plan.

f) Amendment of the constitutional documents of the Corporate Debtor. A provision in the resolution plan which would other- wise require consent of the members of the Corporate Debtor under the constitutional document of the corporate debtor shall take effect notwithstanding that such consent has not been obtained. Please refer to page no.

66, 73 of Resolution Plan

g) Issuance of securities of the Corporate Debtor, for cash, property, securities or in exchange for claims or interest. Please refer to page no. 16, 19, 43, 45, 67, 72, 73 ofresolution plan.

h) Obtaining necessary approval from Central and State Government or other

Company Appeal (AT) (Insolvency) No. 458 of 2025 -15-

authorities. Please refer to page no. 19, 43, 50, 67, 68, 73 of Resolution Plan.

i) Does not contravene any of the provision of the law for the time being force.

Please refer to page no. 68 of Resolution Plan.

Further the Resolution Plan provides details of the sources of funds that will be used to pay:"

12. The above indicate that the Resolution Plan included clause for

modification of security interest, issuance of securities of the Corporate

Debtor, for cash, property, securities or in exchange for claims or interest.

The Resolution Plan, thus, dealt with all securities.

13. There can be no quarrel to the proposition laid down by the Hon'ble

Supreme Court in "Lalit Kumar Jain vs. Union of India" (Supra) that

approval of Resolution Plan shall not ipso facto be treated extinguishment

of personal guarantee. The present is a case where it is the Personal

Guarantor, who has given guarantee, had submitted the Resolution Plan

where Resolution Plan was approved. The assets of the Personal Guarantor

as existing on the date when personal guarantee was given i.e. on

31.03.2017 has taken note of in the Resolution Plan and with respect to

securities and all claims of lenders Resolution Plan provide for payment to

lenders.

14. Learned counsel for the Appellant apart from relying on judgment of

"Lalit Kumar Jain vs. Union of India" (Supra) has placed reliance on

Company Appeal (AT) (Insolvency) No. 458 of 2025 -16-

several other judgments of this Tribunal and the Hob'ble Supreme Court.

Learned counsel for the Appellant has relied on judgment of Hon'ble

Supreme Court in "Maharashtra State Electricity Board vs. Official

Liquidator, High Court of Ernakulam, 1982 AIR 1497" where the

Hon'ble Supreme Court held that under Section 128 of the Indian Contract

Act, 1872, the liability of the Guarantor is co-extensive with that of the

Principal Debtor unless specified otherwise, and the liquidation of the

Principal Debtor does not absolve the Guarantor of liability. There can be

no dispute to the above proposition that liability of the Guarantor is

coextensive with the Principal Debtor but present is a case where effect and

consequence of the approval of the Resolution Plan has to be considered

and looked into.

15. Learned counsel for the Appellant has also relied on judgment of this

Tribunal in "Kunwar Raj Bhagat vs. Gujarat Hydrocarbons and Power

SEZ Ltd. and Anr., Company Appeal (AT) (Ins.) No.1096 of 2020",

where it was held that liability of the Guarantor remains even if the

Principal Borrower's debt is discharged under the Resolution Plan. The

Judgment of Hon'ble Supreme Court in "Lalit Kumar Jain vs. Union of

India" we have already notice that the Hon'ble Supreme Court categorically

laid down that approval of Resolution Plan shall not ipso facto extinguish

the guarantee of the Personal Guarantors.

Company Appeal (AT) (Insolvency) No. 458 of 2025 -17-

16. The next judgment of Hon'ble Supreme Court relied by learned

counsel for the Appellant in "Committee of Creditors of Essar Steel

India Ltd. vs. Satish Kumar Gupta, (2020) 8 SCC 531" is also with the

same proposition that sanction of Resolution Plan and finality imparted by

Section 31 of I&B Code does not per se operate as discharge of Guarantor's

liability.

17. Judgment of Hon'ble Supreme Court in "BRS Ventures Investment

Ltd. vs. SREI Infrastructure Finance Ltd. and Anr., Civil Appeal

No.4565 of 2021" has been relied where the Hon'ble Supreme Court has

laid down that payment of a sum under the Resolution Plan of Corporate

Guarantor does not extinguish the liability of Principal Borrower to repay

the entire loan amount, after deducting the amount recovered from the

Guarantor. There can be no quarrel to the proposition laid down by the

Hon'ble Supreme Court in above cases.

18. The Hon'ble Supreme Court in "Narendra Singh Panwar vs.

Pashcimanchal Vidyut Vitran Nigam Ltd." vide its judgment dated

12.01.2023 has reiterated proposition laid down in "Lalit Kumar Jain vs.

Union of India" that approval of Resolution Plan does not ipso facto

absolve the Guarantor of his or her liability, which arises out of an

independent contract of Guarantee. To the same effect is judgment of this

Tribunal in "Roshan Lal Mittal & Ors. Vs. Rishabh Jain and Ors." as

well as judgement of this Tribunal in "UV Asset Reconstruction Company

Company Appeal (AT) (Insolvency) No. 458 of 2025 -18-

Ltd. vs. Electrosteel Castings Ltd., Company Appeal (AT) (Ins.) No.975

of 2022 decided on 24.01.2024".

19. The judgments relied by learned counsel for the Appellant, as noted

above, clearly lays down that by approval of Resolution Plan, the personal

guarantee is not ipso facto discharged. The present is a case where

Resolution Plan has been submitted by the Personal Guarantor himself and

we have noted certain features of the Resolution Plan and the fact that

Resolution Applicant has been asked to submit a fresh personal guarantee

which personal guarantee has again been executed by the Personal

Guarantor. The Appellant being a dissenting Financial Creditor, who has

opposed the Resolution Plan, is entitled for liquidation value as payment in

the Resolution Plan to which proposition learned counsel for the Appellant

has no objection. We have already noticed the submission of the parties

and come to the conclusion that application under Section 95 filed by the

Applicant has rightly been rejected by the Adjudicating Authority.

20. The State Bank of India as the lead bank of the consortium who has

approved the Plan had filed an Intervention Application in Section 95

application and opposed the move of the Applicant - Indian Bank to initiate

personal insolvency against the Personal Guarantor, who was permitted to

intervene by the Adjudicating Authority and the State Bank of India has

brought all relevant facts and material before the Adjudicating Authority

Company Appeal (AT) (Insolvency) No. 458 of 2025 -19-

relying on which the Adjudicating Authority has rejected the Section 95

application filed by the Indian Bank.

21. We, thus, are of the view that no grounds have bene made out to

interfere with the order impugned in the present appeal. Appeal is

dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical)

NEW DELHI

21st May, 2025

Archana

Company Appeal (AT) (Insolvency) No. 458 of 2025