The Adjudicating Authority must appoint a Resolution Professional before adjudicating a Section 95 application, as established by the Supreme Court in Dilip B. Jiwrajka v. Union of India.

J U D G M E N T

ASHOK BHUSHAN, J.

This Appeal by the Financial Creditor has been filed challenging order dated 21.02.2024 passed by National Company Law Tribunal, Court No1, Mumbai Bench in IA 5501 of 2023 in CP(IB)/420(MB)2022, by which order the Adjudicating Authority allowed IA No.5501 of 2023 filed by Personal Guarantor (Respondent herein) and dismissed Section 95 application filed by the Appellant – Central Bank of India.

2. Brief facts of the case necessary to be noticed for deciding the Appeal are:

(i) Central Bank of India sanctioned Cash Credit Facility of Rs.75 crores to the Corporate Debtor - M/s. Parekh Aluminex Ltd. A restructuring package to the Corporate Debtor was approved by the Corporate Debts Restructure (“CDR”) Empowered Group on 24.06.2013 and 25.07.2013 and consequently the Appellant sanctioned Working Capital Facilities to the Corporate Debtor. A Master Restructuring Agreement dated 23.09.2013 was executed. On 30.09.2013, the Appellant approved the CDR package for credit facilities of the Corporate Debtor of Rs.134.74 crores. The Respondent – Personal Guarantor executed a Deed of Guarantee dated 10.04.2014 and guaranteed the repayment of the credit facility availed by the Corporate Debtor from the Appellant as well as the other lenders.

(ii) Corporate Debtor committed default in repayment, hence, the Appellant classified loan account of the Corporate Debtor as NPA on 31.12.2015. The Respondent claimed to have resigned as a Director of the Corporate Debtor on 28.04.2016.

(iii) On 23.11.2017, the Adjudicating Authority admitted a Section

7 Application against the Corporate Debtor. An order of liquidation was passed on 07.10.2023 against the Corporate Debtor. Notice under Section 13(2) under the SARFAESI Act, 2002 was issued on 18.05.2016, calling upon the Corporate Debtor and its Guarantors. A Demand Notice in Form-B was issued to the Respondent on 18.12.2020 and called up on him to pay a sum of Rs.354,09,04,055/-.

(iv) An application under Section 95 was filed by the Appellant on

14.12.2021 against the Personal Guarantor for financial debt of Rs.354,09,05,055/- as on 18.12.2020. The Adjudicating Authority on 25.09.2023, directed the Appellant to serve a copy of the application to Respondent. On 30.10.2023, the Respondent appeared before the Adjudicating Authority and submitted that they intend to contest the petition under Section 95 on the ground of limitation. The Adjudicating Authority adjourned the petition on 04.12.2023 for hearing.

(v) On 27.11.2023, the Personal Guarantor filed IA No.5501 of

2023 praying for dismissal of Section 95 application raising various grounds, including that Respondent was not the debtor or guarantor.

(vi) On 04.12.2023, Adjudicating Authority passed an order directing the Appellant to file an affidavit of service, showing proof of service of Demand Notice on the Respondent. In the order dated 04.12.2023, the Adjudicating Authority noticed IA No.5501 of 2023 and the grounds raised therein. The matter was adjourned to 02.01.2024 for further consideration and hearing. On 04.12.2023, no one appeared on behalf of the Appellant. On 02.01.2024, the Appellant prayed for time to file rejoinder affidavit. Parties were directed to exchange pleadings and 24.01.2024 was fixed for hearing. The matter was heard thereafter and by the impugned order dated 21.02.2024, the Adjudicating Authority dismissed the Company Petition (IB)/420(MB)2022 and allowed IA No.5501 of 2023. This Appeal by Central Bank of India has been filed challenging the said order.

3. We have heard Shri Ravi Raghunath, learned Counsel appearing for the Appellant and Shri Krishnendu Datta, learned Senior Counsel appearing for the Respondent – Personal Guarantor.

4. Shri Ravi Raghunath, learned Counsel for the Appellant challenging the order submits that Adjudicating Authority erred in adjudicating various issued raised by the Personal Guarantor in IA No.5501 of 2023 on the merits of the application, which was not the stage of adjudicat