The liability of a personal guarantor is co-extensive with that of the principal debtor under Section 128 of the Indian Contract Act, and an insolvency application against a personal guarantor is maintainable if the debt and default are established within the statutory limitation period.

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 Indian Bank (hereinafter referred to as “Financial Creditor”) for initiating Insolvency Resolution Process against Shri. Dinesh S Patel (hereinafter referred to as “Personal Guarantor”) of M/s Prabhat Resources Ltd, formerly known as M/s Shinago Infrastructure & Resource Ltd (hereinafter referred to as “Corporate Debtor”).

2. This Tribunal vide order dated 06.09.2019 in IBA/546/2019 admitted the Corporate Debtor into CIRP on an application filed by PNB under Section 7 of IBC,2016. Also, this Tribunal vide order dated 23.02.2021 in IA/1124(CHE)/2020 admitted the Corporate Debtor into Liquidation on an application filed by Resolution Professional under Section 33 of IBC,2016.

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

4. Part-II of the application shows the details of the Personal Guarantor, Dinesh S Patel. The Personal Guarantor/ Respondent stood as a Personal Guarantor in respect of the loans availed by M/s Prabhat Resources Ltd, formerly known as M/s Shinago Infrastructure & Resource Ltd. The address of the Personal Guarantor / Respondent is at No. 1/180, Kuttralam Road Piranoor Border, Sengottah – 627 809.

5. Part – III of the application shows that the State Bank of India/ Financial Creditor has given the value of total debt as Rs. 50,81,21,264.39 /- (Rupees Fifty Crores Eighty-One Lakhs Twenty-One Thousand Two Hundred and Sixty-Four and Paise Thirty-Nine only) as on 23.09.2020 and the Date of Default is specified as 19.12.2016.

6. Part – IV of the Application gives the details of the Resolution Professional, Mr. Sambasivam Kannan. The address of Resolution Professional is Skyline Castle, 27, First Floor, Abdul Razack Street, Saidapet, Chennai 600 015.

7. Financial Creditors Submissions:

7.1 The Financial Creditor (“FC”) submitted that the Corporate Debtor (“CD”) had availed various credit facilities from Punjab National Bank (PNB) on 21.03.2014, from Oriental Bank of Commerce (OBC) on 10.03.2014, from State Bank of Travancore (SBT) on 06.01.2014, and from Syndicate Bank (Syndicate Bank) on 22.03.2014, aggregating to a total sum of ₹175 crores. In this regard, the CD executed a Common Security Agreement dated 27.03.2014, securing the said facilities as working capital.

7.2 It is further clarified by the FC that Oriental Bank of Commerce has since been amalgamated with Punjab National Bank, State Bank of Travancore with State Bank of India, and Syndicate Bank with Canara Bank.

7.3 The CD has availed the following credit facilities from SBT, which is presently merged with the FC, that is, SBI as follows:

7.4 The FC submitted that Mr. Nathu K. Patel, Mr. Paresh Patel, Mr. Jeethendra Patel, Mr. Deepak G. Patel, Mr. Purushottam R. Patel, M/s Vee Bee Holdings, M/s Prabhat Saw Mill, M/s Maruthi Saw Mill, and M/s Bhavani Saw Mill has created an equitable mortgage under Section 58(f) of the Transfer of Property Act, 1882 on 31.07.20