NCLT Kochi Allows Initiation Of Insolvency Resolution Process Against The Personal Guarantor
The Kochi Bench of NCLT in a bench consisting of Justice Mr.Ashok Kumar Borah (Judicial Member) and Mr. Shyam Babu Gautam (Technical Member) in State Bank of India v. Sahadulla M.I. allows initiation of Insolvency Resolution Process (IRP) against the Personal Guarantor, Mr. Shahdulla M.I. (Respondent) of the Corporate Debtor, M/s. Green Gateway Leisure Limited The Applicant/ State...
The Kochi Bench of NCLT in a bench consisting of Justice Mr.Ashok Kumar Borah (Judicial Member) and Mr. Shyam Babu Gautam (Technical Member) in State Bank of India v. Sahadulla M.I. allows initiation of Insolvency Resolution Process (IRP) against the Personal Guarantor, Mr. Shahdulla M.I. (Respondent) of the Corporate Debtor, M/s. Green Gateway Leisure Limited
The Applicant/ State Bank of India is the Financial Creditor of the Corporate Debtor, who initiated IRP against the Personal Guarantor under Section 95(1) of IBC for default of payment of credit facility sanctioned by the Applicant Bank. As a security towards the facility, the Respondent Guarantor executed a deed of guarantee for the overall limit in favour of the SBI. The credit facility was availed for construction of a five star resort at Bekal, Kasaragod, in a land leased by Bekal Resorts Development Corporation Limited (BRDC), a Kerala Government Undertaking.
The Applicant jointly with other banks issued notices under Section 13(2) of the SARFAESI Act to the Corporate Debtor and Respondent and Applicant Bank also filed application before the Debt Recovery Tribunal for recovery of the due from the Corporate Debtor and the Personal Guarantors, including the Respondent prior to the initiation of IRP.
On failure of the Personal Guarantors to pay the amount, Applicant moved an application under Section 95(1) of the IBC r/w Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for IRP for Personal Guarantors to Corporate Debtor) Rules, 2019, seeking initiation of IRP against the Personal Guarantor, on account of default of payment by the Respondent, Guarantor. On presentation of the Application, vide order dated 6th October 2021, NCLT appointed Mr. Kizhakkekara Kuriakose Jose as Resolution Professional directing him to file report recommending approval of rejection of application under Section 99 of the IBC. The Resolution Professional has filed his report recommending the approval of the Application.
The Respondent Guarantor alleged that the deeds of guarantees and signatures on the documents were forged. NCLT observed that the averment of forgery is only a contention raised by the Respondent Guarantor to escape from the clutches of admission of this application.
Taking into consideration the report filed by the Resolution Professional, which stated that all essentials of Section 95 were satisfied, the Tribunal admitted the application under Section 95 and 100 of IBC for the initiation of IRP against the Personal Guarantor and declared moratorium prohibiting transfer, alienation and disposal of any of the assets of the Respondent, Guarantor.
After coming in to force of Part III of IBC regarding initiation of insolvency resolution process of personal guarantor to Corporate Debtor with effect from 1st December 2019, this is the first case admitted by the Kochi Bench for initiation of Insolvency Resolution Process against a personal guarantor under IBC.
Case Title: State Bank of India v. Sahadulla M.I.
Counsel for Applicant: Vinod P.V., Advocate
Counsel for Respondent: Sivasankar G, Advocate