The initiation of insolvency proceedings against a personal guarantor is valid when statutory requirements are fulfilled and guarantor's liability is co-extensive with that of the principal borrower.

ORDER

(Hearing through hybrid mode)

The present Petition has been filed under Section 95 (1) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as Code IBC, 2016) read as rule 7(2) of IBC by the” The Assistant General Manager, State Bank of India ”, represented by its Authorized Signatory (hereinafter referred to as Financial Creditor) seeking initiation of the Insolvency Resolution Process against” Ajay Kumar Bishnoi ” Respondent/ Personal Guarantor who has executed personal guarantees in respect of the credit facilities extended to the Corporate Debtor,GET Power Limited

2. Part I of the Application shows the details of The Assistant General Manager, State Bank of India (Financial Creditor). The registered address is located at SBI, SAMB, Red Cross Buildings, Egmore, Chennai — 600 008 and business address at State Bank of India, Stressed Assets Banking Branch, Red Cross Buildings, Egmore, Chennai — 600 008.

3. Part II of the Application shows the details of the Personal Guarantor/ Respondent, in respect of the credit facilities availed by the Corporate Debtor, GET Power Limited. The address of the PG / Respondent is No.77, Gulmohar Avenue, Velachery Main Road, Guindy, Chennai – 600 032 and business address at Tecpro Towers, 11-A17,5th Cross Road, SIPCOT I.T.Park, Siruseri, Chennai – 603 103.

4. Part III of the Application shows that Financial Creditor including interest has given the value of total debt Rs.976,26,00,000/- as on 30.06.2020 plus uninvoked BG liability of Rs 15.94 crs (Rs 617.32 crs as on 16.04.2018 as per DRC No 365/2018 which excludes interest from 17.04.2018 to till date and Rs 148.58 crs as on 22.02.2018 DRC No 182/2018 which excludes interest from 23.02.2018 to till date) and applicable till date of realization. The nature of debt is Working capital facility both fund based and non-based availed by GET Power Ltd, the Corporate Debtor. The date on which the debt fell due is when the Corporate Debtor was declared as NPA, that is on 27.04.2014.

5. Part – IV of the Application gives the details of the Resolution Professional and the Financial Creditor has proposed the name of IRP, Mr. Tharuvai Ramachandran Ravichandran as the Insolvency Resolution Professional in respect of Personal Guarantor/ Respondent.

6. SUBMISSIONS OF THE APPLICANT

6.1. It is submitted that the Corporate Debtor was engaged in EPC works relating to power transmission and distribution and had availed various working capital and non-fund-based credit facilities from the Applicant Bank from time to time, beginning from 2007, which were repeatedly enhanced based on requests of the Corporate Debtor and execution of requisite loan and security documents.

6.2. It is submitted that The Respondent, along with another promoter, executed multiple deeds of personal guarantee, including supplemental guarantees, guaranteeing repayment of all dues arising out of the said credit facilities, thereby making himself jointly and severally liable under Section 128 of the Indian Contract Act, 1872 .

6.3. It is submitted that despite initial satisfactory operations, the Corporate Debtor committed persistent defaults in servicing the loan, resulting in the account being classified as Non-Performing Asset (NPA) on 27.04.2014, and the outstanding dues remained unpaid despite repeated demands.

6.4. It is further submitted that it initiated recovery proceedings before DRT-II, Chennai by filing O.A. Nos. 797/2015 and 772/2015, which were allowed, and Recovery Certificates were issued for amounts aggregating to several hundred crores, establishing adjudicated debt and default against the Corporate Debtor and the guarantors.

6.5. It is submitted that substantial amounts also became payable upon invocation of bank guarantees, and additional uninvoked bank guarantees continue to subsist, further increasing the liability of t