Personal guarantor's co-extensive liability under IBC S.95 allows IRP initiation despite corporate debtor liquidation, within limitation.

JUDGEMENT

1. The present application has been filed on 19.07.2021 under Section 95 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “Code”) read with 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”/“Applicant”) for the purpose of initiating insolvency resolution process against Neeta Rajpal (hereinafter referred to as “Respondent/Personal Guarantor”), Personal Guarantor of the M/s Rajpal Autolink Private Limited (hereinafter referred to as “Corporate Debtor”) having Corporate Identification Number (CIN): U50100MP2011PTC026888) for default of an amount of Rs. 10,19,27,157/- (Rupees Ten Crores Nineteen Lakhs Twenty-Seven Thousand One Hundred Fifty-Seven Only).

Submissions by the Applicant/Financial Creditor

2. The averments made by the Financial Creditor in its Application and argued by the learned counsel for the Applicant are summarized hereunder:

I. The Financial Creditor submitted that the Corporate debtor in its meeting of board of directors on 13.02.2018, resolved to avail the cash credit limit of Rs. 10,00,00,000/- (Rupees Ten Crores Only) and Line of Credit of Rs. 2,00,00,000/- (Rupees Two Crores Only) aggregating to Rs. 12,00,00,000/- (Rupees Twelve Crores Only). The Financial Creditor agreed to sanction the aggregate credit facilities for which requisite documents were executed by the Corporate Debtor through its Directors and other individual as guarantors in order to secure the repayment of credit facilities on 17.02.2018. The Applicant Bank agreed to enhance credit facilities to Rs. 14,00,00,000/- (Rupees Fourteen Crores Only) after receiving Letter of arrangement for which requisite documents were executed by the Corporate Debtor through its Directors as guarantors in order to secure the repayment of credit facilities on 15.02.2019. On account of financial indiscipline, the account of the Corporate Debtor was classified as Non-Performing Asset (hereinafter referred to as “NPA”) on 25.02.2020

II. Subsequently, the Financial Creditor initiated recovery proceedings by filing an Original Application (O.A. no. 1063/2020) under Section 19(1) of the RDDBFI Act, 1993, before the Debts Recovery Tribunal (DRT), Jabalpur, which remains pending for adjudication. Furthermore, the Financial Creditor also issued a statutory Demand Notice in Form B on 06.08.2020 to the Respondent and other individual guarantors, demanding the credit facilities. It is also recorded that the Liquidation Process for the Corporate Debtor was subsequently initiated vide order dated 23.04.2021 passed by this Adjudicating Authority in IA No. 7(IND) of 2021 in CP(IB) No. 43/10/NCLT/AHM/2020, and the Applicant has accordingly submitted its claim in Form D to the Liquidator on 17.05.2021. However, the Corporate Debtor took no steps for the settlement of the amount due to the Financial Creditor and also the present Respondent being personal guarantor have not taken any steps for the repayment.

3. The Respondent/Personal Guarantor has not filed any substantive Reply or written objections to the present Application filed under Section 95 of the Code. One of the applications filed by the Respondent was IA No. 194 of 2021 under Section 98 of the Code seeking replacement of the Resolution Professional Ms. Teena Saraswat Pandey with any other Resolution Professional. In the sai