Pawan Gupta Vs Charm Investments Pvt. Ltd. (NCLAT Delhi)
Conclusion: NCLAT held that the order appointing the Resolution Professional under Section 97 was obtained on the basis of misrepresented and non-existent jurisdictional facts relating to the alleged personal guarantee. Accordingly, the impugned order was set aside as void ab initio. However, liberty was granted to the Financial Creditor to initiate fresh proceedings under Section 95 by filing a proper application supported by all relevant documents.
Held: Financial Creditor initiated insolvency resolution proceedings under Section 95 of the Insolvency and Bankruptcy Code, 2016 against assessee, alleging that he was a personal guarantor to the corporate debtor. Adjudicating Authority had appointed a Resolution Professional under Section 97 on the premise that a Deed of Guarantee and Letter of Invocation had been placed on record. Appellant challenged the order, contending that he was merely a co-borrower, the loan documents expressly recorded “Guarantors: Nil”, and no deed of guarantee or invocation notice existed. Subsequently, the Financial Creditor itself admitted before the Adjudicating Authority that no such guarantee documents had been filed, whereupon the Adjudicating Authority recorded its dissatisfaction regarding the incorrect facts presented before it. Appellant submitted that proceedings under Part III of the Code are maintainable only against personal guarantors and not co-borrowers. Since no deed of guarantee or invocation notice existed, initiation of proceedings under Section 95 was without jurisdiction. Financial Creditor contended that the appeal was premature, as questions regarding the existence of guarantee and maintainability were matters to be examined after submission of the Resolution Professional’s report under Section 99 and at the stage of adjudication under Section 100. It was held that neither the original loan documents nor the subsequent assignment agreements disclosed any guarantor. Further, the demand notice issued under Section 95 and the insolvency application itself did not rely upon or annex any deed of guarantee or invocation notice. The Financial Creditor subsequently admitted that no such documents had been placed on record, and the Adjudicating Authority itself recorded that incorrect facts had been represented before it. Since the impugned order appointing the Resolution Professional was passed on the erroneous assumption that a deed of guarantee and invocation letter existed, the foundational jurisdictional facts necessary for proceedings under Section 95 were absent. Consequently, the order stood vitiated by misrepresentation and was void ab initio.
