Bhavesh Gandhi vs Central Bank Of India
Company Appeal (AT) no. 922 of 2022
Facts:
1.Application under Section 95 of the I&B Code was filed by Central Bank of India – Respondent dated 12.10.2021 against the Appellant – the Personal Guarantor of the Corporate Debtor namely Reliance Naval Engineering Ltd. which application came for consideration before the Adjudicating Authority on 18.04.2022.
2.Appellant brought into notice of the Adjudicating Authority that insolvency resolution process has already been initiated against the Appellant – Personal Guarantor by order dated 21.06.2021 in C.P. (IB) 50/AHM/2021 in Court No.2. On the said statement, the Adjudicating Authority posted the matter on 13.06.2022 on which date the Adjudicating Authority passed an order directing the Resolution Professional to file a report within two weeks.
3.Resolution professional was appointed in the Central Bank application by the AA vide order dated 13.06.2022. Appellant is challenging the order of appointment of RP.
Issue: Whether when an application is filed against the Personal Guarantor whether another Lender of same transaction can proceed against the Personal Guarantor by filing another application under Section 95 of the I&B Code?
Arguments:
For appellants:
1.Counsel for the Appellant contended that when Resolution Professional was already appointed in application by the State Bank of India, there can be no second Resolution Professional appointed, as has been done by the impugned order dated 13.06.2022. It further contended that by virtue of order dated 21.06.2021 interim moratorium has commenced, hence, application could not have been filed by the Central Bank of India under Section 95 on 12.10.2021. The proceedings initiated by the Central Bank of India under Section 95 was required to be stayed by virtue of the interim moratorium.
For respondent:
1.Counsel for respondent contended that by the impugned order the Adjudicating Authority has not appointed any new Resolution Professional rather same Resolution Professional i.e. Mr. Sunil Kumar Agrawal was directed to submit the Report. He submitted that after the impugned order, the Bank has already written to Mr. Sunil Kumar Agrawal to file the Report.
2.It is further submitted that the fact that order was passed on application filed by the State Bank of India against the Appellant – Personal Guarantor on 21.06.2021 does not prohibit the Central Bank of India to file another application. The analogy with respect of Section 7 of I&B Code is not applicable in proceedings under Section 95.
3.The analogy with respect of Section 7 of I&B Code is not applicable in proceedings under Section 95. It is submitted that there is no pleading or ground regarding non maintainability of application due to interim moratorium.
Decision: When an application is filed against the Personal Guarantor another Lender of same transaction cannot proceed against the Personal Guarantor by filing another application under Section 95 of the I&B Code
Rationale:
1.NCLAT noted that by order dated 21.06.2021, interim moratorium was commenced from the date of application. Section 96(1)(a) provides that an interim-moratorium shall commence on the date of the application in relation to all the debts. Use of expression ‘creditors of the debtor’ obviously refers to other creditors of the debtor apart from the creditor on whose application interim moratorium has commenced.
2.The use of expression ‘any debt’ also clearly indicate that debt on basis of which moratorium has commenced is not contemplated by the expression ‘any debt’. With regard to all debts of debtor i.e. Personal Guarantor in the present case, no proceeding can be initiated by virtue of Section 96(1)(b). The application filed by the Central Bank of India on 12.10.2021, thus, was clearly hit by Section 96(1)(b)(ii) and the Adjudicating Authority could not have proceeded with the said application and appointed the Resolution Professional.
3.Multiplicity of applications against same Personal Guarantor is not contemplated under Chapter III. When the insolvency resolution process commences against a Personal Guarantor, claims of all creditors are taken care of under the scheme of the Code.
4.Creditors of the Personal Guarantors who are unable to file an application due to enforcement of moratorium under Section 96 can very well avail the benefit of period during which moratorium continues, hence, due to interim moratorium enforced by Section 96, the creditors like Central Bank of India and other creditors are in no manner prejudiced.
Order:
