Case Note & Summary
The present appeal was filed by Syed Sirajis Salikin Khadri, the personal guarantor of Infra Dredge Services Private Limited, against an order dated 09.12.2024 passed by the National Company Law Tribunal, Mumbai Bench-IV. The Corporate Debtor had obtained a loan of Rs 52.32 Cr from Bank of India, for which the Appellant stood as personal guarantor and mortgaged his residential property. The loan default occurred on 31.03.2011, leading to the account being declared NPA on 30.06.2011. Bank of India initiated SARFAESI proceedings and assigned the loan to Edelweiss Asset Reconstruction Company Ltd. (Respondent No.1). Respondent No.1 filed a Section 7 petition against the Corporate Debtor, which was admitted, initiating CIRP. The Appellant then filed CP No. 05/2023 under Section 94(1) of IBC read with Rule 6(1) of the Insolvency and Bankruptcy (Application for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019, seeking insolvency resolution based on a repayment plan. The Adjudicating Authority, by the impugned order, allowed an intervention application filed by Respondent No.1 and dismissed the CP. Aggrieved, the Appellant appealed under Section 61 of IBC. The NCLAT found that the Adjudicating Authority had not considered the merits of the Section 94 application, including the existence of debt and default, and had dismissed it prematurely. The Tribunal set aside the impugned order and remanded the matter for fresh consideration, directing the Adjudicating Authority to hear all parties and decide the CP on its merits.
Headnote
A) Insolvency Law - Personal Guarantor - Section 94 IBC - Dismissal of Application - The Adjudicating Authority dismissed the CP filed by the personal guarantor under Section 94 without examining the merits of the repayment plan or the existence of debt and default - Held that the dismissal was premature and the matter must be remanded for fresh consideration (Paras 2-13).
Issue of Consideration
Whether the Adjudicating Authority was justified in dismissing the CP No. 05/2023 filed by the personal guarantor under Section 94 of IBC without considering the merits of the application, and whether the intervention application filed by the financial creditor was properly allowed.
Final Decision
The appeal is allowed. The impugned order dated 09.12.2024 is set aside. The matter is remanded to the Adjudicating Authority for fresh consideration of CP No. 05/2023 on its merits, after hearing all parties.
Law Points
- Section 94 IBC
- personal guarantor
- insolvency resolution
- repayment plan
- intervention application
- dismissal without merit consideration
