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2024 Supreme(Online)(NCLT) 944
NATIONAL COMPANY LAW TRIBUNAL
SH. ASHOK KUMAR BHARDWAJ, SH. SUBRATA KUMAR DASH, JJ
INDIABULLS HOUSING FINANCE LIMITED – Appellant
Versus
DR SUBHASH CHANDRA – Respondent
C.P. (IB) - 97/2022
For the Petitioner:Ravi Tyagi
The court affirmed the enforceability of a personal guarantee despite claims of coercion, initiating insolvency proceedings under Section 95 of the IBC due to non-repayment of debt.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 95 - Personal Guarantee - The Creditor, India Bulls Housing Finance Limited, entered into loan agreements with Vivek Infracon Private Limited for Rs.726 crores, secured by personal guarantees. The Respondent, Dr. Subhash Chandra, executed a guarantee for Rs.726 crores. The application under Section 95 was filed after the Respondent failed to repay the debt. The Resolution Professional recommended acceptance of the application, stating the Respondent did not provide evidence of repayment. The court found the invocation of the guarantee valid and initiated the insolvency resolution process. (Paras 12, 46, 55, 56)
(B) Personal Guarantee - Conditions for invocation - The court ruled that the personal guarantee remains enforceable despite the Respondent's claims of coercion and misrepresentation, as the guarantee was executed in accordance with the loan agreements and undertakings. (Paras 13, 14, 15, 25)
(C) Moratorium - The court ordered a moratorium under Section 101, halting all legal actions against the Respondent during the insolvency process. (Paras 56, 57)
As can be derived from the petition, the Creditor i.e. India Bulls Housing Finance Limited viz. a housing finance company regulated by the RBI, primarily, engaged in, “the lending business” entered into four loan agreements with Vivek Infracon Private Limited and other entities seeking financial facilities for an amount of Rs.726 crores. The financial facility was secured by Personal Guarantees as well as securities. The details of the financial facilities, as mentioned in the written synopsis, furnished by the Creditor with the application filed under Section 95 of IBC, 2016, reads thus:-
2. One of the Agreements entered into between the Creditor and the Principal Borrower is dated 13.12.2016, in terms of which the Creditor extended the financial facilities of an amount of Rs. 170,00,00,000/- (Rupees One Hundred and Seventy Crores Only) through Loan Account No. S000239650. In terms of the Loan Documents the Principal Borrowers was to furnish/maintain a minimum Security/Cover-Securities. As the Principal Borrower.
3. As can be gathered from the IA-2892/2022 filed by the RP, in pursuance of the Loan Agreement(s), Applicant/Financial Creditor disbursed Rs. 170,00,00,000/- (Rupees One Hundred and Seventy crores only) in three tranches viz. (i) on 17.12.2016 an amount of Rs. 110,00,00,000/- (Rupees One Hundred and Ten Crore Only); (ii) on 26.12.2016 an amount of Rs. 35,00,00,000/- (Rupees Thirty-Five Crore Only); and (iii) on 24.08.2017 an amount of Rs. 25,00,00,000/- (Rupees Twenty-Five Crore Only).
4. The Applicant/Creditor sent a notice on 14.11.2018 to the borrowers informing them about non-maintenance of minimum Security Cover- Securities (as stipulated in the Loan Documents). Further, the Financial Creditor called upon the Corporate Debtor and Other Borrowers, to either pay a sum of INR 287,85,49,976/- (Rupees Two Hundred and Eighty-Seven Crores Eighty- Five Lakh Forty-Nine Thousand Nine Hundred and Seventy- Six only) or pledge additional shares to the sum of INR 341,82,78,097/- (Rupees Three Hundred and Forty-One Crores Eighty Lakh Seventy-Eight Thousand and Ninety-Seven only). As per the averments made in the application, the Applicant also sent reminder dated 15.11.2018 to the Corporate Debtor and Other Borrowers, to return the debt amount or provide additional security to maintain the Security Cover. The reminder is placed on record Annexure A-8 to the application.
5. The Principal Borrower, Co-Borrower and Other Borrowers, gave an Additional Undertaking dated 29.11.2018 committing thereby:- (i) to make prepayment of Rs. 100 crores, to be appropriated towards the principal amount of the loan, by 31.12.2018, (ii) cause Dr. Subhash Chandra to execute the deed of guarantee by 05.12.2018 to secure all obligations of the obligor(s) including payment of the borrowers' dues to the Applicant, and (iii) to execute first-ranking mortgage over the properties as described in Schedule II of the Additional Undertaking, by 31.12.2018. The undertaking is available on record at Annexure A-10 the application.
6. Deed of Guarantee executed on 05.12.2018 by Dr. Subhash Chandra (Respondent) in favour of the Applicant/ Financial Creditor, committing inter alia, to pay the Lender Rs. 726 crores upon failure of the Principal Borrower, Co- Borrower and other Borrowers, to perform their obligations has been enclosed by the Applicant as Annexure A-3 to the application.
7. The Applicant / Financial Creditor sent a notice dated 04.02.2019 to the Principal Borrower, Co-Borrower, Personal Guarantor / Respondent (Dr.
Subhash Chandra) and the Other Borrowers asking for refund of the entire outstanding loan amount, disbursed in terms of the four Loan Agreements, thus recalled the loan facility and invoked the personal guarantee given by the Respondent to Applicant and in respect of the Principal Borrowers. The Guarantee is on record at Annexure A-4 to the application.
8. A Demand Notice in FORM – B prescribed under Rule 7(1) of the Inso
