The court ruled that bankruptcy proceedings against the Personal Guarantor were warranted due to substantial unpaid debts and the failure to propose a repayment plan.

ORDER

1. This present application is filed by the Applicant/Financial Creditor under Section 123 r/w 60(2) of the Insolvency and Bankruptcy Code, 2016 (hereafter referred as IBC,2016) r/w Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Rules, 2019 inter alia, seeking the initiation of the Bankruptcy Process against Mr. Tikkavarapu Venkatarami Reddy, (herein after referred as the Respondent No. 1,/the Personal Guarantor), to the M/s Deccan Chronicle Holdings Limited, (herein after referred as Respondent No. 2/Corporate Debtor), for an outstanding sum of Rs.75,60,58,802.57/- as on 01.12.2023, till the date of realization.

2. The brief averments of the Applicant:

2.1 It is averred that the Petitioner is a Financial Creditor of the Corporate Debtor and the outstanding debt arises from a term loan granted to Deccan Chronicle Holdings Ltd. The Corporate Debtor/Respondent No. 2 was the principal borrower and had availed term loan of Rs.25 Crores, vide sanction letter dated 10.05.2013, from the Financial Creditor.

2.2 Pursuant thereto, on 13.05.2011, the Petitioner and the Corporate Debtor had executed a Facility Agreement along with a Demand Promissory Note in favour of Petitioner herein. To secure the said loan, a simple mortgage deed dated 20.05.2011, and a Personal Guarantee dated 13.05.2011 was executed by the Respondent. Accordingly, the liability of the Personal Guarantor towards the Petitioner arises from the personal guarantee furnished to secure the said debt.

2.3 Subsequently, since no payment has been made by the Personal Guarantor, and his continued default under the Facility Agreement and the Deed of Personal Guarantee constitutes a financial debt under the IBC. Consequently, Mr. P. Venkatram Reddy, as the Personal Guarantor, is a debtor and the debt has become due and payable to the Financial Creditor.

2.4 Owing to the default of the Corporate Debtor, an arbitral award dated 15.03.2013, directed the Corporate Debtor and the Personal Guarantor to jointly and severally pay Rs.25,02,61,350/- along with an interest at 15% per Annum from 21.07.2012, along with costs of Rs.1,50,000/- to the Applicant. The execution proceedings vide Execution Application No.2286 of 2015, was also filed and pending before the Hon’ble High Court of Bombay for recovery of money awarded.

2.5 Subsequently, the Petitioner had filed a Company Petition CP.(IB).No.41/07/HDB/2017, under Section 7 of IBC against the Principle Borrower, Deccan Chronicle Holdings Limited. The said Petition was admitted by this Tribunal on 19.07.2027 and Mr.Koteswara Roa was appointed as an IRP. Subsequently, Mr.Mamta Binani was appointed as the Resolution Professional on 08.02.2018.

2.6 That this Tribunal vide order dated 03.06.2019 in IA.No.66 of 2019, approved the Resolution Plan submitted by SREI Multiple Assets Investments Trust- Vision India Fund in respect of the principal borrower-Deccan Chronicle Holdings Limited.

2.7 However, as the Applicants debt was not fully resolved under CIRP, pursuant to the Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor Rules, 2019, the Applicant had issued a Demand Notice dated 20.01.2020, to the Personal Guarantor demanding the payment of the default amount.

2.8Since no repayment was made, the Applicant filed a Petition CP (IB) No. 88/95/HDB/2021, under Section 95 of the IBC, for initiation of the Individual Insolvency Resolution Process against the Personal Guarantor. This Tribunal passed an interim moratorium and appointed an Interim Resolution Professional on 23.07.2021, under Secti