NCLT Chennai Bench appoints Resolution Professional to examine application under IBC, 2016; dismisses objections regarding incomplete disclosures and parallel recovery proceedings.
In a significant development, the National Company Law Tribunal (NCLT) Chennai Division Bench, comprising Mr. Jyoti Kumar Tripathi and Mr. Ravichandran Ramasamy, has allowed the initiation of the insolvency resolution process against D. Manuel Anand, a personal guarantor for Servo Craft HR Solutions Private Limited. The tribunal's decision came amidst objections raised by Deutsche Bank concerning incomplete disclosure of liabilities and ongoing recovery proceedings under the SARFAESI Act, 2002.
The application, filed under Section 94(1) of the Insolvency and Bankruptcy Code, 2016, sought to initiate an insolvency resolution process for the petitioner, who, along with his wife, managed the corporate entities of Servo Craft HR Solutions and Job Biz Private Limited. The petitioner had provided personal guarantees for loans taken by these companies, which subsequently defaulted, leading to the invocation of these guarantees.
Despite the Respondent Bank's objections that the application lacked bona fides and constituted an abuse of process due to previously withdrawn identical petitions, the tribunal found no statutory bar against filing a fresh application under Section 94. The tribunal noted that unresolved liabilities justified the continued pursuit of insolvency proceedings.
The tribunal also dismissed the bank's argument that the application should be rejected due to the ongoing recovery proceedings under the SARFAESI Act, 2002. The tribunal emphasized that the Insolvency and Bankruptcy Code offers an independent statutory framework, and parallel recovery proceedings do not preclude the initiation of insolvency resolution processes.
The NCLT has appointed Sowmya Parasuraman as the Resolution Professional to examine the application and submit a report within ten days, as outlined in Section 99 of the IBC. The tribunal reinforced the role of the Resolution Professional in facilitating the collation of facts and providing a recommendatory report without engaging in judicial adjudication at this stage.
This decision reinforces the NCLT's stance on maintaining a separate and independent mechanism for resolving insolvency matters under the IBC, 2016, irrespective of other recovery actions.
Bottom line:-
Insolvency and Bankruptcy Code, 2016 - Initiation of insolvency resolution process against a personal guarantor - Application under Section 94(1) of IBC, 2016 cannot be rejected based on objections of incomplete disclosure of liabilities or pendency of recovery proceedings under SARFAESI Act, 2002.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 94(1), 95, 96, 97, 99, 100, SARFAESI Act, 2002.
