State Bank Of India vs Shri Rohitash Khanduja

IN THE MATTER OF: UV Asset Reconstruction Company Ltd. ....Appellant

Vs.

Manmohan Kumar Khanduja ....Respondent

With

Company Appeal (AT) (Ins) No. 1050 of 2022 & I.A. No. 3049, 3050 of 2022 & 4062 of 2023

IN THE MATTER OF: UV Asset Reconstruction Company Ltd. ....Appellant

Vs.

Neera Khanduja ....Respondent

With

Company Appeal (AT) (Ins) No. 1051 of 2022 & I.A. No. 3051, 3052 of 2022 & 4063 of 2023

IN THE MATTER OF: UV Asset Reconstruction Company Ltd. ....Appellant

Vs.

Rohitash Khanduja ....Respondent

Present: For Appellant: Mr. Dhruv Dewan & Ms. Sanjukta Roy, Advocates. For Respondent: None

Company Appeal (AT) (Ins) No. 1049, 1050, 1051 of 2022 -2-

ORDER

(Hybrid Mode)

Per: Justice Rakesh Kumar Jain (Oral)

06.08.2024: This order shall dispose of three appeals bearing

Company Appeal (AT) (Ins) No. 1049 of 2022 titled as 'UV Asset

Reconstruction Company Ltd. Vs. Manmohan Kumar Khanduja'

(hereinafter referred to as the first appeal), Company Appeal (AT)

(Ins) No. 1050 of 2022 titled as 'UV Asset Reconstruction Company

Ltd. Vs. Neera Khanduja' (hereinafter referred to as the second

appeal) and Company Appeal (AT) (Ins) No. 1051 of 2022 titled as

'UV Asset Reconstruction Company Ltd. vs. Rohitash Khanduja'

(hereinafter referred to as the third appeal). As all these appeals

have arisen from a common order dated 13.07.2022 passed by the

National Company Law Tribunal, Cuttack Bench by which CP (IB)

No. 58/CB/2021 filed in the first appeal, CP (IB) No. 57/CB/2021

filed in the second appeal and CP (IB) No. 66/CB/2021 filed in the

third appeal by the State Bank of India under Section 95 of IBC,

2016 (in short 'Code') R/w Rule 7(2) of the Insolvency and

Bankruptcy (Application to Adjudicating Authority for Insolvency

Resolution Process for personal guarantors to Corporate Debtors)

Rule 2019, have been dismissed.

Company Appeal (AT) (Ins) No. 1049, 1050, 1051 of 2022 -3-

2. Initially, all the three appeals were filed by the State Bank of

India. However, during the pendency of these appeals I.A. No. 4330,

4331 of 2023 & 4329 of 2023 were filed by the present appellant,

namely, UV Asset Reconstruction Company Ltd. for its substitution

as appellant in place of the State Bank of India on the ground of the

assignment. These applications were allowed by this Court vide its

order dated 24.11.2023 and UV Asset Reconstruction Company Ltd.

was substituted as the appellant in place of the State Bank of India.

3. The brief facts of the case are that the Corporate Debtor (BSR

Diagnostic Limited) availed a term loan of Rs.33,75,00.000/- from

the Axis Bank Limited in the year 2011. Since, the Corporate

Debtor failed to repay the loan, the Financial Creditor, namely, Axis

Bank filed CP No. 1283/I&BP/NCLT/MAH/2017 under Section 7 of

the Code. The said application was admitted on 29.09.2017 and the

CIRP commenced.

4. The Corporate Debtor secured a loan of Rs. 50 crores from the

State Bank of India vide loan agreement dated 25.03.2013. It

availed further enhanced loan from the said bank and the

respondents in all the three appeals gave personal guarantee,

executed the deeds of guarantee on 25.03.2013, supplementary

Company Appeal (AT) (Ins) No. 1049, 1050, 1051 of 2022 -4-

deed on 15.04.2015 and for the enhanced loan, executed

supplementary deed of guarantee on 15.04.2015 and 29.06.2015.

5. In this case, the resolution plan submitted by

M/s Tricounty Premier Hearing Services was approved by the

Adjudicating Authority on 22.01.2019. As per the resolution plan,

the total dues of the Financial Creditor were settled at Rs. 45 crores

which were to be paid in the following tranches:

i. Upfront payment of Rs. 12 Crores within 60 days from the date of order of

the AA.

ii. Payment of Rs. 26 Crores by 31.03.2019, without any interest.

iii. Payment of Rs. 3 Crores by 31.03.2020, with an interest of 8.00% p.a. on

reducing balance from April 2019.

iv. Payment of Rs. 4 Crores by 31.03.2021, with an interest of 800% p.a., on

reducing balance from April 2019

6. However, the SRA paid some amount but the entire amount

was not paid, therefore, the CoC recommended liquidation of the

Corporate Debtor pursuant to which an application bearing MA No.

32/CTB/2020 was filed by the Financial Creditor (State Bank of

India) on 17.09.2019 on the ground that the resolution applicant

failed to make the payment as per the resolution plan.

Company Appeal (AT) (Ins) No. 1049, 1050, 1051 of 2022 -5-

7. While this application was pending, the SBI filed applications

bearing CP (IB) No. 58/CB/2021, CP (IB) No. 57/CB/2021 and CP

(IB) No. 66/CB/2021 under Section 95 of the IBC against all the

three personal guarantors on 25.10.2021. Two applications i.e. CP

(IB) No. 58/CB/2021, CP (IB) No. 57/CB/2021 were admitted on

03.02.2022 and RP was appointed and application CP (IB) No.

66/CB/2021 was admitted on 21.12.2021 and RP was appointed.

8. When the CIRP proceedings against the Personal Guarantors

were initiated, the liquidation order was passed in MA No.

32/CTB/2020 in respect of the Corporate Debtor on 09.03.2022.

9. The Tribunal thereafter while dealing with all the three

applications filed by the SBI against the Personal Guarantors in

which order of admission was passed on 03.02.2022 and

21.12.2021, dismissed all the three applications vide impugned

order dated 13.07.2022 on the ground that on the date of filing of

the application on 25.10.2021 there was no legally enforceable debt

against the respondents because the resolution plan was approved

and had not been set aside.

10. Counsel for the appellant has submitted that the Ld. Tribunal

has not appreciated Clause 3 and 19 of the approved resolution

Company Appeal (AT) (Ins) No. 1049, 1050, 1051 of 2022 -6-

plan in which it was categorically provided that the liability of the

personal guarantors shall be extinguished on payment of the

amount stated under Clause 8.3 of the resolution plan.

11. It is further submitted that since there is no compliance of

Clause 8.3 of the resolution plan as the entire amount has not been

paid, therefore, the liability of Personal Guarantor has not been

extinguished as on the date of filing of the application on

25.10.2021 and the same situation is continued till today.

12. It is further submitted that since the payment has not been

made by the Corporate Debtor in terms of the approved resolution

plan, therefore, the right of the Financial Creditor, vis-a-vis, the

personal guarantors has not extinguished.

13. No one has put in appearance on behalf of the respondent i.e.

personal guarantors in all the three cases from the last two dates.

14. We have heard counsel for the appellant and perused the

record with his able assistance.

15. The only issue involved in this case is as to whether the

appellant had no locus standi to maintain the application filed

under Section 95 on 25.10.2021 if the SRA has not adhered to

Company Appeal (AT) (Ins) No. 1049, 1050, 1051 of 2022 -7-

Clause 8.3 (ii) of the approved resolution plan submitted in respect

of the Corporate Debtor?

16. In order to appreciate the submissions made by counsel for

the appellant we need not to narrate the facts again for the sake of

brevity but it would be suffice to say that it was categorically

provided in Clause 8.3(ii) of the approved resolution plan that the

liability of the personal guarantor shall be extinguished only on the

payment of the amount stated in Clause 8.3 (ii) (a) of the approved

resolution plan which has not been complied with because some

payments have been made and not the entire payment of Rs. 45

crores mentioned in the said clause. Therefore, even if the

liquidation order was passed on 09.03.2022 which is subsequent to

the filing of the application dated 25.10.2021, it makes no

difference to the Appellant for proceeding against the personal

guarantors for the purpose of recovery of the amount of loan for

which they stood as guarantors.

17. Thus, in view of the above, the order passed by the Tribunal is

found to be patently erroneous in so far as it has recorded its

finding in respect of point 3 decided in the said appeal. No other

Company Appeal (AT) (Ins) No. 1049, 1050, 1051 of 2022 -8-

point has been raised. In view of the aforesaid discussion, the

appeal succeeds and the order is set aside.

18. As a result thereof, all the applications, namely, CP (IB) No.

58/CB/2021, CP (IB) No. 57/CB/2021 and CP (IB) No.

66/CB/2021 are hereby restored and the matter is remanded back

to the Ld. Tribunal to decide the same in accordance with law. The

parties are directed to appear before the Tribunal on 03.09.2024.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

[Mr. Indevar Pandey] Member (Technical)

sa/rr

Company Appeal (AT) (Ins) No. 1049, 1050, 1051 of 2022