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SUPREME COURT OF INDIA
INDIRA BANERJEE, J.K. MAHESHWARI, JJ.
Maitreya Doshi – Appellant
Versus
Anand Rathi Global Finance Ltd. and Another – Respondents
Civil Appeal No. 6613 of 2021
Decided On : 22-09-2022
Insolvency and Bankruptcy Code, 2016 – Section 7 – Corporate Insolvency Resolution Process (CIRP) – Initiation of – A Pledgor per se may not be a Financial Debtor – Approval of a resolution in respect of one borrower cannot discharge a co-borrower – If there are two borrowers or if two corporate bodies fall within ambit of corporate debtors, there is no reason why proceedings under Section 7 of IBC cannot be initiated against both Corporate Debtors – However, same amount cannot be realised from both Corporate Debtors – If dues are realised in part from one Corporate Debtor, balance may be realised from other Corporate Debtor being co-borrower – However, once claim of Financial Creditor is discharged, there can be no question of recovery of claim twice over – No grounds to interfere with impugned judgment and order of Appellate Authority – Appeal dismissed. (Paras 36, 37 and 38)
Facts of the case:
Present appeal under Section 62 of the Insolvency and Bankruptcy Code, 2016, is against a Judgement and Order dated 25th August 2021, passed by the National Company Law Appellate Tribunal (NCLAT), dismissing the Company Appeal (AT) (Insolvency) No. 191 of
2021 filed by the Appellant, against an order dated 19th February 2021, passed by Adjudicating Authority (National Company Law Tribunal), NCLT, Mumbai Bench admitting a Company Petition C.P. (IB) No. 1220/MB/2020 filed by Respondent No. 1 - Financial Creditor, for initiation of the Corporate Insolvency Resolution Process (CIRP) of M/s Doshi Holdings Pvt. Ltd., under Section 7 of IBC. The Appellant is a suspended Director of Doshi Holdings.
Findings of Court:
In a contract of indemnity, a promisee acting within the scope of his authority is entitled to recover from the promisor all damages and all costs which he may incur. A contract of guarantee, on the other hand, is a promise whereby the promisor promises to discharge the liability of a third person in case of his default. The person who gives the guarantee is called surety. The person in respect of whose default, the guarantee is given is the principal debtor and the person to whom the guarantee is given is the creditor. Anything done or any promise made for the benefit of the principal debtor may be a sufficient consideration to the surety for giving the guarantee. On the other hand, the bailment of goods as security for payment of a debt or performance of a promise is a pledge.
Result : Appeal dismissed.
JUDGMENT :
INDIRA BANERJEE, J.
1. This appeal under Section 62 of the Insolvency and Bankruptcy Code 2016, hereinafter referred to as the ‘IBC’ is against a Judgment and Order dated 25th August 2021, passed by the National Company Law Appellate Tribunal (NCLAT), dismissing the Company Appeal (AT) (Insolvency) No. 191 of 2021 filed by the Appellant, against an order dated 19th February 2021, passed by the Adjudicating Authority (National Company Law Tribunal), NCLT, Mumbai Bench admitting a Company Petition C.P. (IB) No. 1220/MB/2020 filed by the Respondent No. 1-Anand Rathi Global Finance Limited as Financial Creditor, for initiation of the Corporate Insolvency Resolution Process (CIRP) of M/s Doshi Holdings Pvt. Ltd., hereinafter referred to as “Doshi Holdings” under Section 7 of the IBC. The Appellant is a suspended Director of Doshi Holdings.
2. The Respondent No 1, a Non-banking Financial Company, hereinafter referred to as the “Financial Creditor” disbursed loan to the tune of Rs. 6 Crores to M/s Premier Limited, hereinafter referred to as “Premier” under three separate Loan-cum-Pledge Agreements, dated 29th June 2015, 4th May 2016 and 5th October 2016, respectively. According to the Appellant, Doshi Holdings pledged shares held by it in Premier, in favour of the Financial Creditor, by way of security for the loan.
3. According to the Appellant, the Loan-cum-Pledge Agreements contemplated two distinct transactions under one document, that is, grant of loan to Premier and creation of pledge by Doshi Holdings of securities held by the Doshi Holdings in Premier.
4. Premier failed to make repayments in terms of the Loan-cum-Pledge Agreements. The Financial Creditor, therefore, called upon Premier to repay its outstanding dues of Rs. 7,64,60,360/- on diverse dates between 28th June 2019 and 10th February 2020.
5. By a communication dated 14th February 2020, the Financial Creditor called upon Premier and Doshi Holdings, also described as the borrower under the Loan-cum-Pledge Agreements, to pay the entire outstanding loan amount.
6. By a letter dated 19th February 2020, Premier admitted and acknowledged its liability to pay its outstanding dues to the Financial Creditor under the Loan-cum-Pledge Agreements, but stated that it could not pay the same on account of genuine difficulty.
7. On 21st September 2020, the Financial Creditor filed a petition under Section 7 of the IBC being C.P.(IB) No. 1224/MB/2020 for initiation of CIRP against Premier for default in repayment of Rs. 8,35,25,398/-.
8. On the same day, the Financial Creditor also filed a petition against Doshi Holdings, under Section 7 of the IBC, for initiation of CIRP in respect of the same claim of Rs. 8,35,25,398/- based on the same loan documents.
9. Both the petitions filed by the Financial Creditor were heard together by the Adjudicating Authority (NCLT). By an order dated 29th January 2021, the Adjudicating Authority (NCLT) admitted the petition for initiation of CIRP against Premier. By another Order passed on 19th February 2021, the Adjudicating Authority (NCLT) admitted the petition for initiation of CIRP against Doshi Holdings for the same set of loans arising out of the same loan documents, in respect of which the Financial Creditor had initiated CIRP against Premier.
10. The Appellant filed an appeal in the National Company Law Appellate Authority (NCLAT) under Section 61 of the IBC. By the impugned judgment and order dated 25th August 2021, the Appellate Authority (NCLAT) dismissed the appeal and upheld the order of admission of the petition under Section 7 of the IBC.
11. Mr. K.V. Vishwanathan, learned Senior Counsel appearing on behalf of the Appellant submitted that no amount under the Loan-cum-Pledge Agreements was disbursed by the Financial Creditor to Doshi Holdings. The Financial Creditor granted loans to Premier. The loans were disbursed to Premier. Doshi Holdings did not utilize any part of the money disbursed by the Financial Creditor under the Loan-cum-Pled
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