Recovery certificate from DRT creates fresh cause of action for financial creditor against corporate guarantors under IBC S.7, limitation runs from certificate date.

JUDGMENT

(Hybrid Mode)

Per: Justice Sharad Kumar Sharma, Member (Judicial)

These two Company Appeals dwell upon almost identical facts and circumstances, including the subjects concerning question of law, that, have to be determined for the purpose of deciding the controversy as against the rejection of the applications preferred by the Appellant under Section 7 of the I & B Code, 2016, praying for commencement of CIRP against the Respondents in respective Appeals. Hence, they are being taken up together.

2. In Comp App (AT) (CH) (Ins) No.270/2021 the Appellant, M/s. Asset Reconstruction Company (India) Limited (ARCIL) is a financial company, having been incorporated as a financial company under the provisions of the Companies Act, 1956 and registered as a securitization and asset reconstruction company pursuant to section 3 of the SARFAESI Act. It claims to be the “Financial Creditor” as per the provisions contemplated under Section 5(7) of the I & B Code, by virtue of the assignment, done in its favour, of loans given to M/s Anandram Developers Pvt. Ltd., the Principal Borrower, by Indian Overseas Bank (IOB) and Oriental Bank of Commerce (OBC). M/s. Manoharamma Hotel Investments Pvt. Ltd., the Respondent herein, is the Corporate Debtor, which is falling within the definition of the Corporate Debtor as contained under Section 3(8) of the I & B Code, being a Corporate Guarantor to the Principal Borrower who failed to repay the loans taken from the aforesaid Banks.

3. In the connected Company Appeal, Comp App (AT) (CH) (Ins) No.271/2021, the Appellant remains the same, that is, ARCIL. However, the Respondent in this Company Appeal is M/s. Bharani Properties and Developers Pvt. Ltd. who is also the Corporate Guarantor for the loans that have been taken by the Principal Borrower, M/s. Anandram Developers Pvt. Ltd. (ADPL).

4. The facts of the case are that Principal Borrower had availed loan of Rs.30 Crore from IOB on 28.11.2005. For the said loan, both the Respondents herein stood as the guarantors by executing the Guarantee Agreement on 30.06.2006 for repayment of loan. Due to non-repayment of the loan thus disbursed, IOB had filed the application OA no. 430/2024 (old OA no. 106/2012) section 19(1) of RDDBFI Act, 1993 on 04.06.2012 against 6 defendants, that is, Anandram Developers (Principal Borrower), Manoharamma Hotel Investments & Bharani Properties and Developers (corporate guarantors) and 3 other individuals (personal guarantors) for recovery of a sum of Rs. 22.78 crore together with interest @ 12% per annum from 04.06.2012 till the date of realization. During the pendency of the said proceedings, IOB assigned its debt to the Appellant (ARCIL) by virtue of a Registered Assignment Deed No. 2914/2015 dated 10.02.2015. The Appellant, upon the execution of the said Assignment Deed, substituted itself in the proceedings of OA no. 430/2014 being carried before Ld. DRT-II, Chennai and pursued the proceedings. The said proceedings before DRT-II attained finality, with passing of the order dated 31.10.2016 allowing the application & permitting the Appellant to recover Rs.22.78 crore with interest @12% per annum from the date of institution of the OA till realization along with the costs of the OA from the defendants 1 to 6 jointly and severally and in case of default, by sale of the properties mentioned in the schedule to the OA, and with issue of the Recovery Certificate being DRC No.684/2016 dated 03.12