The personal guarantor's liability is co-extensive with that of the corporate debtor under the Indian Contract Act, and the application for insolvency resolution was timely filed.

ORDER

(Hearing through hybrid mode

1. The present Petition has been filed under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as ‚Code/IBC, 2016") r/w Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 by State Bank of India (hereinafter referred to as ‚Financial Creditor‛) for initiating insolvency resolution process against Mr. Ashok (hereinafter referred to as ‚Personal Guarantor‛) of MPL Cars Private Limited (hereinafter referred to as ‚Corporate Debtor‛).

2. This Tribunal vide order dated 13.08.2019 in CP/855/IB/2018 admitted the Corporate Debtor into CIRP and subsequently vide order dated 12.07.2024 into Dissolution.

3. Part – I of the application shows the details of the SBI/ Financial Creditor. The registered address is located at SBI, Stressed Asset Management Branch, Red Cross Building, Montieh Road, Egmore, Chennai - 600 008.

4. Part-II of the application shows the details of the Personal Guarantor. The Personal Guarantor/ Respondent stood as a personal guarantor in respect of the loans availed by MPL Cars Private Limited. The address of the Personal Guarantor / Respondent is Mr.S.Ashok, S/o Mr. N. Singaravelu, F1 Abul Regency, 1st Floor, No.6, Southmada Street, Srinagar Colony, Saidapet, Chennai– 600 015.

5. Part – III of the application shows that the SBI/ Financial Creditor has given the value of total debt as Rs.36,50,28,970/- (Rupees Thirty six Crore fifty lakh twenty eight thousand and nine seventy only) covering Principal amount together with interest as on 07.10.2020 and the Date of Default is specified as 06.03.2019.

6. Part – IV of the Application gives the details of the Resolution Professional and the SBI/ Financial Creditor has proposed Mr. V Sadhasivam as the Insolvency Resolution Professional in respect of the Personal Guarantor/ Respondent.

7. Financial Creditors Submissions

7.1 SBI/Financial Creditor submitted that it had advanced cash credit loan facilities by means of e-DFS (Electronic Dealer Finance Scheme) to a tune of Rs.35 Crores vide sanction letter dated 25.01.2012 to the Corporate Debtor company namely M/s. MPL Cars Private Limited. On 05.12.2012, the Corporate Debtor was sanctioned with adhoc additional Cash Credit e-DFS to a tune of Rs.7 crores.

7.2 It is submitted that Corporate Debtor has sought for renewal of existing credit facility and the same was renewed at an existing level on 03.12.2013. On 28.04.2015 the Financial Creditor, after taking into the consideration the financial position of the Corporate Debtor, renewed the credit facility and accordingly reduced the limit from Rs.35 Crores to Rs.25 Crores.

7.3 On 30.09.2015 the SBI has again sanctioned a temporary loan facility of Rs.5 Crores for a period of three months for purchasing new vehicle models as per the Corporate Debtor’s request letter dated 22.09.2015. The Corporate Debtor’s concerned credit facility account has become inactive from 26.11.2015 due to non-routing of sale proceeds of Nov 2015 to SBI e-DFS Account. The Corporate Debtor has also failed to repay the Adhoc amount of Rs.5 Crores supposed to be paid before 31.12.2015. On 07.05.2016, vide a sanction letter Financial Creditor has reduced the existing credit facilities by reducing the limit from Rs.30 Crores to Rs.25 Crores subject to specific condition of bringing the collateral security.

7.4 The Corporate Debtor has offered an immovable property belonging to the Personal Guarantor/ Respondent, Mr. S Ashok as collateral security by creating an equitable mortgage by deposit of title deeds which was executed on 19.05.2016 and registered as Doc. No. 1655/2016 with SRO Mylapore.

7.5 It is submitted that, despite several opportunities given, the Corporate Debtor neither revamp the business operations, nor has repaid the sal