NCLT Dismissed Appellant’s Guarantee Claim During CIRP Due to the Moratorium Period: NCLAT

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moratorium u/s 14

Case Details: IDBI Trusteeship Services Ltd. v. Abhinav Mukherji - [2023] 150 taxmann.com 131 (NCLAT-New Delhi)

Judiciary and Counsel Details

    • Justice Ashok Bhushan, Chairperson & Ms Shreesha Merla, Technical Member
    • Dr Abhishek Manu Singhvi, Sr. Adv., Gaurav Mitra, Dev Roy, Himanshi Rajput, Atul Sharma & Aditya Vashisth, Advs. for the Appellant.
    • Abhijeet Sinha, Raghavendra M. Bajaj & Milan Singh Negi, Advs. for the Respondent.

Facts of the Case

In the instant case, a debenture trust deed was executed amongst the bank, the corporate debtor/guarantor and the principal borrower and payments of interests and all other amounts were secured by an irrevocable corporate guarantee of the corporate debtor.

However, the principal borrower started committing defaults in the performance of terms of the debenture trust deed, leading to the initiation of the CIRP against the corporate debtor. Appellant no. 2 i.e. debenture holder submitted its claims before the IRP, which were admitted. He was made a member of the Committee of Creditors (CoC).

The respondent i.e. homebuyer of the corporate debtor filed an application challenging the admission of the claim of appellant no. 2 by the Resolution Professional (RP). The Adjudicating Authority (NCLT) vide impugned order held that there was no direct disbursal of the amount by appellant no. 2 to the corporate debtor. Hence, the amount involved was not a financial debt.

Further, the NCLT held that guarantee was invoked after the initiation of CIRP and, therefore, the amount claimed by the appellants could not be admitted in terms of the moratorium.

Thereafter, an appeal was made to the National Company Law Appellate Tribunal (NCLAT) against the order passed by the NCLT.

The appellant contended that individual homebuyers having only a 4.43% voting share had no locus to challenge the constitution of the CoC.

NCLAT Held

The NCLAT observed that since a guarantee is included in the definition of financial debt u/s 5(8)(i) of the IBC, the amount released to the principal borrower secured by the corporate guarantee of the corporate debtor constituted financial debt.

The NCLAT, further observed that since the corporate guarantee of the corporate debtor i.e. corporate guarantor had never been invoked prior to commencement of CIRP, as on the date of filing of claims, the right to payment had not accrued to appellants and there was no illegality in the order passed by the NCLT.

The NCLAT held that since in view of the sanction letter, facility agreement and trust deed, appellants had positive powers and were in a position to, directly and indirectly control the management and policy decision of the corporate debtor, appellants fell within the ambit of related party and there was no illegality in the order passed by the NCLT to delete the appellants from being part of CoC.

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