Mr. Mehulkumar Arvindbhai Patel ... vs Central Bank Of India Limited And Anr

In the matter of: Mehulkumar Arvindbhai Patel ....Appellant Vs. Central Bank of India & Anr. ...Respondents

Company Appeal (AT) (Insolvency) No. 1414 of 2024 & I.A. No. 5134 of 2024

In the matter of: Khushboo Mehulkumar Patel ....Appellant Vs. Central Bank of India & Anr. ...Respondents

Company Appeal (AT) (Insolvency) No. 1512 of 2024 & I.A. No. 5488 of 2024

In the matter of: Arvinbhai Kachrabhai Patel ....Appellant Vs. Central Bank of India & Ors. ...Respondents For Appellant Mr. Palash S Singhai, Mr. Harshal Sareen, Advocates. For Respondents Mr. Tushar Singh, Ms. Khyati Jain, Ms. Akshra Arshi, Advocates 2

ORDER

(Hybrid Mode)

11.09.2024: These three Appeals have been filed by the Personal

Guarantor challenging the order passed by the Adjudicating Authority

admitting Section 95 application filed by the Financial Creditors. The

Adjudicating Authority by the impugned order after perusing the report of the

IRP admitted Section 95 application which is challenged.

2. Counsel for the Appellant challenging the order submits that the

Adjudicating Authority in the order has observed that the guarantee was

invoked by notice under Form B which cannot be invocation of guarantee since

notice in Form B can be issued only after invocation of guarantee. It is further

submitted that the date of default given in Section 95 application is

28.05.2021 whereas by notice dated 31.03.2022 guarantee has been invoked

as now submitted by the Bank.

3. Counsel for the Bank refuting the submissions of the Counsel for the

Appellant contends that the guarantee of the personal guarantor was invoked

by notice dated 31.03.2022 which was also referred to and relied in Section

95 application filed by the Central Bank and the said notice has been brought

along with the Additional Affidavit as Annexure B. It is submitted that in notice

dated 31.03.2022 payments be made within 60 days, hence, mention of date

of default is in accordance with the notice.

3

4. We have considered the submissions of the Counsel for the parties and

perused the record.

5. The notice dated 31.03.2022 has been brought on record along with the

Additional Affidavit filed by the Bank as Annexure B. Paragraph 2 of the notice

provides as follows:-

"2. We have to inform you that the borrower has committed default in payment of its liabilities and consequently, the account has been classified as non- performing asset. A copy of the notice dated 31.03.2022 under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act. 2002 sent by us to the borrower is enclosed. Since the borrower has committed defaults. in terms of the guarantee, you have become liable to pay to us the outstanding amount of loan/credit facilities aggregating Rs. 186,28,54,457.71ps. (Rupees One Hundred Eighty Six Crores Twenty Eight Lakhs Fifty Four Thousand Four Hundred Fifty Seven and Paise Seventy One Only) comprising of Rs.71.59,66,339,03ps. (BoB), Rs.40,72,81,130.71ps. (SBI), Rs.31.98,19,241.25ps.

(CBI), Rs.20,75,92,879.02ps. (PNB) and Rs.21,21,94.867.70ps (SIBL) as on 31.12.2021 plus further interest thereon from 01.01.2022 at the contractual rate with monthly rests plus penal interest at the agreed rates, costs, charges and expenses till payment and call upon you to pay the said amount within 60 days from the date of this notice. Please note that interest will continue to accrue at the rates specified in para-6 of the notice dated 31.03.2022, served on the borrower (copy enclosed)"

4 6. A perusal of paragraph 2 clearly indicate that the guarantee was invoked

and the guarantors were required to make the payment within 60 days from

the date of notice. The submission of the Appellant that Adjudicating Authority

has observed that the guarantee was invoked by notice issued under Form B

cannot be accepted since in Section 95 application there was specific pleading

that guarantee was invoked on 31.03.2022 which notice was also part of the

application. Observations made by the Adjudicating Authority referring to

notice under Form B cannot be relied on when there is clear notice for invoking

the guarantee. As far as submission of the Appellant that date of default was

mentioned in the application was not incorrect when the guarantee was

invoked on 31.03.2022 and 60 days' time was allowed, the default mentioned

after 60 days from 31.03.2022 cannot give any right to the Appellant to

challenge the date of default and the said default is in accordance with the

notice dated 31.03.2022. We thus, do not find any substance in the

submission of the Counsel for the Appellant.

7. Counsel for the Appellant submits that there are two other Banks apart

from the Central Bank and with the other Banks, personal guarantors are

taking steps to settle the issue. He submits that composite settlement has

been submitted.

8. Counsel for the Central Bank submitted that no settlement has been

entered with the Central Bank. He submits that scheme proposed by the

Appellant has already been rejected by all the Banks. 5

9. Be that as it may, it is not necessary for us to record any finding in these

Appeals. In event, if settlement takes place, it is always open for the Appellant

to bring on record before the Resolution Professional.

10. With these observations, we dismiss the Appeals.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical) Anjali/nn