NCLT Kolkata Remits Repayment Plan U/S 114(3) Of IBC To Committee Of Creditors Due To Non Consideration Of Detective Report

Brief Facts:

The present application has been filed by Resolution Professional (RP) under section 112 of the Insolvency and Bankruptcy Code, 2016 (Code) seeking approval of the Repayment Plan under section 114 of the code and also seeking condonation of delay in filing the present application.

UCO bank as a financial creditor filed a company petition under section 95 of the Code against Shankar Poddar ("Personal Guarantor" or "PG") seeking initiation of the Personal Insolvency Resolution Process. Resolution Professional submitted her report in which admission of the application was recommended. After considering the merits of the case and report of the Resolution Professional the application was admitted under section 100 of the Code.

Contentions:

The Counsel for Resolutional Professional submitted that since the final repayment plan was submitted on 03.09.2024 and the same was approved on 03.10.2024, the RP could not file the application earlier. As such, the RP has prayed for the condonation of delay in filing the present application for approval of repayment plan in terms of Section 114 of the Code.

Observations:

The Tribunal noted that while deliberating on the revised plan of the personal guarantor at the second meeting of creditors, a creditor suggested appointing a detective agency to investigate the undisclosed assets of the personal guarantor. Consequently, the RP engaged NIS Facility Management Services Pvt. Ltd which submitted its report on 24 September 2024. The report disclosed that the personal guarantor had sold several properties and had acquired a property in Jalpaiguri through a registered deed on 30 November 2012.

The Tribunal observed that surprisingly, there was no discussion on the detective agency's observations at the 3rd meeting of the creditors nor was its report placed before the creditors. Additionally, under the final revised repayment plan the personal guarantor proposed to settle for Rs. 25,00,000/- as full and final payment against the admitted debt of Rs. 10,84,69,853/-.

It further added that the entire mechanism of resolution of the debt and default in respect personal guarantor in most of the case become fruitless and the objective of the Code is left unachieved. We are pained to note that at the time of executing personal guarantee, the bank does not see whether the recovery of the loan from such guarantee would be feasible and viable.

The Tribunal noted that is evident from the report of the detective agency which discloses the deed numbers of all the properties which had been sold by the personal guarantor that they were executed between 2020 to 2023.

The Tribunal held that in the interest of justice and objectives of the code, the following question arises: why was the detective agency's report not presented at the 3rd creditors' meeting during deliberations on the repayment plan and how has the committee of Creditors addressed the sale of properties mentioned in the report dated 24 September 2024.

The Tribunal observed that as per section 114(1) of the code, the Adjudicating Authority must approve or reject the repayment plan based on the report of the creditors submitted by under section 112 of the code. Furthermore, under section 114(2) of the code, the approval order may include directions for implementing the repayment plan.

The Tribunal concluded that in the interest of all stakeholders, the repayment plan was remitted to the CoC as the Tribunal was empowered to do so under section 114(3) of the Code and the CoC was directed to reconvene the meeting and provide proper justifications for the queries raised.

Case Title: UCO BANK Versus SHANKAR PODDAR

Case Number: I.A. (IB) No. 86/KB/2025 In Company Petition (IB) No. 158/KB/2021

Judgment Date:19/02/2025

For Resolution Professional: Mr. Dripto Majumdar, Adv. Ms. Ankita Upadhyay, Adv. Ms. Rachna Agarwal (RP in Person)

Click Here To Read/Download The Order