NCLT Dismissed Appellant’s Guarantee Claim During CIRP Due to the Moratorium Period: NCLAT
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- Last Updated on 26 May, 2023
Case Details: IDBI Trusteeship Services Ltd. v. Abhinav Mukherji -  150 taxmann.com 131 (NCLAT-New Delhi)
Judiciary and Counsel Details
- Justice Ashok Bhushan, Chairperson & Ms Shreesha Merla, Technical Member
- Dr Abhishek Manu Singhvi, Sr. Adv., Gaurav Mitra, Dev Roy, Himanshi Rajput, Atul Sharma & Aditya Vashisth, Advs. for the Appellant.
- Abhijeet Sinha, Raghavendra M. Bajaj & Milan Singh Negi, Advs. for the Respondent.
Facts of the Case
In the instant case, a debenture trust deed was executed amongst the bank, the corporate debtor/guarantor and the principal borrower and payments of interests and all other amounts were secured by an irrevocable corporate guarantee of the corporate debtor.
However, the principal borrower started committing defaults in the performance of terms of the debenture trust deed, leading to the initiation of the CIRP against the corporate debtor. Appellant no. 2 i.e. debenture holder submitted its claims before the IRP, which were admitted. He was made a member of the Committee of Creditors (CoC).
The respondent i.e. homebuyer of the corporate debtor filed an application challenging the admission of the claim of appellant no. 2 by the Resolution Professional (RP). The Adjudicating Authority (NCLT) vide impugned order held that there was no direct disbursal of the amount by appellant no. 2 to the corporate debtor. Hence, the amount involved was not a financial debt.
Further, the NCLT held that guarantee was invoked after the initiation of CIRP and, therefore, the amount claimed by the appellants could not be admitted in terms of the moratorium.
Thereafter, an appeal was made to the National Company Law Appellate Tribunal (NCLAT) against the order passed by the NCLT.
The appellant contended that individual homebuyers having only a 4.43% voting share had no locus to challenge the constitution of the CoC.
The NCLAT observed that since a guarantee is included in the definition of financial debt u/s 5(8)(i) of the IBC, the amount released to the principal borrower secured by the corporate guarantee of the corporate debtor constituted financial debt.
The NCLAT, further observed that since the corporate guarantee of the corporate debtor i.e. corporate guarantor had never been invoked prior to commencement of CIRP, as on the date of filing of claims, the right to payment had not accrued to appellants and there was no illegality in the order passed by the NCLT.
The NCLAT held that since in view of the sanction letter, facility agreement and trust deed, appellants had positive powers and were in a position to, directly and indirectly control the management and policy decision of the corporate debtor, appellants fell within the ambit of related party and there was no illegality in the order passed by the NCLT to delete the appellants from being part of CoC.
List of Cases Reviewed
- Abhinav Mukherji v. Manoj Kumar Singh  150 taxmann.com 130 (NCLT – New Delhi) (para 62) Partly affirmed [See Annex].
- Ghanashyam Mishra and Sons (P.) Ltd. v. Edelweiss Asset Reconstruction Company Ltd.  9 SCC 657 (para 30)
- Arcelormittal India (P.) Ltd. v. Satish Kumar Gupta  98 taxmann.com 99/150 SCL 354 (SC) (para 62)
- Phoenix ARC (P.) Ltd. v. Spade Financial Services Ltd.  124 taxamnn.com 24/165 SCL 21 (SC) (para 15) followed.
- Anuj Jain v. Axis Bank Ltd.  115 taxmann.com 1 (SC) (para 63)
- Aashray Social Welfare Societies v. Saha Infratech (P.) Ltd.  140 taxmann.com 503 (NCLAT – New Delhi)
- Export Import Bank of India and Axis Bank Ltd. v. Resolution Professional JEKPL (P.) Ltd. and EDU Smart Services (P.) Ltd.  97 taxmann.com 194 (NCLAT – New Delhi) (para 26) distinguished.
List of Cases Referred to
- Anuj Jain v. Axis Bank Ltd.  115 taxmann.com 1 (SC) (para 7)
- Ascot Realty (P.) Ltd. v. Ajay Kumar Agarwal 2020 SCC Online NCLAT 732 (para 7)
- Arcelormittal India (P.) Ltd. v. Satish Kumar Gupta  98 taxmann.com 99/150 SCL 354 (SC) (para 7)
- Laxmi Pat Surana v. Union Bank of India  125 taxmann.com 394/166 SCL 318 (SC) (para 7)
- Export Import Bank of India and Axis Bank Ltd. v. Resolution Professional JEKPL (P.) Ltd. EDU Smart Services (P.) Ltd.  97 taxmann.com 194 (NCLAT – New Delhi) (para 7)
- Andhra Bank v. F.M. Hammerle Textiles Ltd. [Company Appeal (AT) (Insolvency) No. 61 of 2018, dated 13-7-2018] (para 7)
- Aashray Social Welfare Societies v. Assets Care & Reconstruction Enterprise Ltd. [IA No. 2366 of 2021, dated 21-10-2021] (para 7)
- Ebix Singapore (P.) Ltd. v. Committee of Creditors of Educomp Solutions Ltd.  130 taxmann.com 208 (SC) (para 7)
- State Bank of India v. Animesh Mukhopadhyay 2021 SCC Online NCLAT 30 (para 7)
- State Bank of India v. Athena Energy Ventures (P.) Ltd.  123 taxmann.com 82/164 SCL 293 (NCLAT – New Delhi) (para 7)
- Edelweiss Asset Reconstruction Company Ltd. v. Gwalior Bypass Projects [Company Appeal (AT) (Ins.) No. 1186 of 2019, dated 8-3-2021] (para 7)
- Phoenix ARC (P.) Ltd. v. Spade Financial Services Ltd.  124 taxmann.com 24/165 SCL 21 (SC) (para 7)
- Sai Peace and Prosperity Apartment Buyers Association v. ASK Investment Managers (P.) Ltd. [Company Appeal (AT) (Ins.) No. 252 of 2020, dated 20-9-2021] (para 7)
- Ghanashyam Mishra and Sons (P.) Ltd. v. Edelweiss Asset Reconstruction Company Ltd.  9 SCC 657 (para 8)
- P. Mohanraj v. Shah Brothers Ispat (P.) Ltd.  125 taxmann.com 39/167 SCL 327 (SC) (para 8)
- Rajendra K. Bhutta v. Maharashtra Housing & Area Development Authority  114 taxmann.com 655/160 SCL 95 (SC) (para 8)
- Aashray Social Welfare Society v. Saha Infratech (P.) Ltd.  140 taxmann.com 503 (NCLAT – New Delhi) (para 14)
- Edelweiss Asset Reconstruction Company Ltd. v. Orissa Manganese and Minerals Ltd.  106 taxmann.com 18/154 SCL 18 (NCLAT – New Delhi) (para 26)
- Swiss Ribbons (P.) Ltd. v. Union of India  101 taxmann.com 389/152 SCL 365 (SC) (para 28)
- State Bank of India v. Orissa Manganese & Minerals Ltd.  96 taxmann.com 188 (NCLAT – Kol.) (para 30).
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