Puneet Resutra Vs Jammu & Kashmir Bank Ltd (NCLAT Delhi)
In Puneet Resutra v. Jammu & Kashmir Bank Ltd., the National Company Law Appellate Tribunal (NCLAT), Delhi, dismissed the appeal filed by a shareholder of M/s Ace Engineering (India) Pvt. Ltd., thereby upholding the initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) against the company. The key issues before the Tribunal included the legal enforceability of financial debt post a One-Time Settlement (OTS) with guarantors, limitation of the application, and the proper exercise of discretion by the Adjudicating Authority in admitting the case.
Legally Enforceable Debt Despite OTS with Guarantors
The Tribunal first examined whether a legally enforceable financial debt was due from the Corporate Debtor on 7 January 2019, the date of filing the Section 7 application. The company had availed of two credit facilities worth ₹13 crore, which became Non-Performing Assets (NPA) on 31 March 2016. These facilities were guaranteed by two directors who had mortgaged personal property.
An OTS dated 14 June 2017 was executed between the Bank and the guarantors, whereby the Bank accepted ₹10 crore in full and final settlement. By January 2018, the guarantors had paid ₹11.3 crore, leading the Bank to release their mortgaged properties. The appellant argued that this discharged the Corporate Debtor’s liability.
However, NCLAT noted that:
