Monica Jajoo vs PHL Fininvest Pvt. Ltd
Company Appeal (AT) (Ins) 1344 and 1345 of 2022
Facts:
1.Facility Agreement dated 20.7.2017 was entered into by Piramal Finance Limited(“PFL”) with the corporate debtor Hema Engineering Industries Ltd (“HEIL”). Later in pursuance to order of NCLT, Mumbai Bench dated 6.4.2019 and under the scheme of amalgamation, PFL (original lender) and Piramal Capital Ltd. (“PCL”) were amalgamated with Piramal Housing Finance Limited (“PHFL’), whose name was later changed to Piramal Capital & Housing Finance Limited (“PCHFL”).
2.By an Assignment Agreement dated 22.3.2019, the loan on account of Facility Agreement dated 20.7.2017 entered into between PFL and HEIL was assigned in favour of PHL Fininvest Private Limited.
3.Respondent issued a demand notice in Form B under Rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process of Personal Guarantors to Corporate Debtors) Rules, 2019 seeking repayment of alleged outstanding of Rs. 443,36,21,727.
4.An application under section 95(1) of the IBC seeking initiation of personal insolvency against the Appellant Monica Jajoo who is the Personal Guarantor of the loan on 21.6.2021. The Appellant has further stated that the application under section 95 (1) of the IBC was heard by Court-IV of NCLT, New Delhi and vide order dated 29.8.2022 (Impugned Order-I) personal insolvency against the Appellant was initiated and Mr. Jayesh Natvarlal Sanghrajka was appointed as Resolution Professional.
5.An information regarding a show cause notice having been issued to Mr. Sanghrajka was received by R-1, and consequently application bearing IA No. 4447/ND/2022 was filed by R-1 under section 98(1) of the IBC for replacement of the Resolution Professional, which was decided by the Adjudicating Authority (NCLT, Mumbai, CourtIV) vide order dated 16.9.2022 (Impugned Order-II) replacing the erstwhile Resolution Professional with Mr. Jayant Prakash as Resolution Professional.
6.Appellant is challenging the above order.
Issue: Whether the order passed was correct in law ?
Arguments:
For Appellants:
1.Counsel for Appellant has argued that the appointment/replacement of the Resolution Professional was done without following the due procedure provided under section 98 of the IBC. He argued that stipulation is ‘mandatory’ and not ‘directory’ in nature and could not have been overlooked by the Adjudicating Authority. He has clarified that the use of the word ‘shall’ in section 98(2) of the IBC makes the provision ‘mandatory’ and the Adjudicating Authority could not have deviated from the said procedure stipulated under the IBC.
2.Counsel argued that the address of the Resolution Professional Mr. Jayant Prakash, who has been appointed after the replacement, is of District Ghaziabad, Uttar Pradesh, whereas the personal guarantor’s address is of Delhi, which falls in a different zone.
3.Counsel claimed that Bench-IV of NCLT, New Delhi had no jurisdiction to pass both Impugned Order-I and Impugned Order-II, since liquidation proceedings of the Corporate Debtor HEIL were pending before the Bench-III of NCLT, New Delhi, and therefore, as per sub-sections (2) and (3) section 60, an application relating to insolvency resolution or liquidation or bankruptcy of the corporate debtor’s personal guarantor should have been considered and heard by the same bench which was considering the application of insolvency resolution or liquidation of the corporate debtor.
For Respondent:
1.Counsel cited the judgment of this Tribunal in the matter of L. Ramalakshmamma vs. State Bank of India Through Resolution Professional, 20221 SCC OnLine NCLAT 619, wherein it is observed that the word “shall” under Section 97 (1) of the IBC is only ‘directory’ and not ‘mandatory’ and in the light of Rule 8(1) of the Appointment of RP Rules, 2019, the Adjudicating Authority could pick up any name from the overall panel for appointment as RIP/RP and Bankruptcy Trustee.
Decision: Hon’ble NCLAT allowed the appeal and remanded the matter back for fresh consideration before the bench which is
Rationale:
1.Hon’ble NCLAT noted that Appellant had raised the issue of the liquidation proceedings pending before the Bench-IV of NCLT, New Delhi, and his contention that Bench-IV could not have passed the Impugned Orders. We also note claim of the Appellant that in the hearings on 28.9.2022 and 11.9.2022, the Learned Adjudicating Authority (Bench-IV) was informed about the filing and listing of transfer petition filed by the Appellant before the Adjudicating Authority even though the impugned orders do not explicitly mention so.
2.It held that Bench-IV of NCLT, New Delhi could not have heard and adjudicated upon the application under section 95 and thereafter application for replacement of the RP under section 98 and it should have transferred these applications to Bench-III which was already considering the liquidation proceedings of the corporate debtor under the IBC.
Order Copy:
