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2019 (3) TMI 124 - AT - Insolvency and BankruptcyInitiation of the ‘Corporate Insolvency Resolution Process’ - invoking Corporate Guarantee - HELD THAT:- The ‘principal borrower’ has already made representations to the Appellant for reconciliation of account but the Appellant has not come forward to reconcile till date. Only upon this reconciliation, the Appellant is entitled to demand the recalculated interest component from the ‘principal borrower’, if any or adjust any surplus amount which have been received by the Appellant. If in the event, the ‘principal borrower’ fails to pay the interest component, if any, as per the fresh demand made on reconciliation, only then the Appellant will be entitled to invoke the ‘corporate guarantee’ of the Respondent in terms of specific and contingent contract between the Appellant and the Respondent. Significantly, the ‘Corporate Guarantees’ given by the Respondent can be invoked only “In the event of a default on the part of the borrower”. The said ‘Corporate Guarantee’ cannot be invoked as on date, since there is no fresh demand made by the Appellant to the ‘principal borrower’ for the recalculated interest and consequently there is no debt that is due and/or payable hence there is no default by the ‘principal borrower’ with respect to interest. Which disentitles the Appellant to proceed in the present appeal. The process under the ‘I&B Code’, once set in motion, is irreversible and leads to exceptional and serious consequences. If the appeal is allowed that would mean suspension of the Board of Directors of the ‘Corporate Guarantor’, appointment of ‘Interim Resolution Professional’, so on and so forth. A running business, which has made no default, would be put under resolution process. On the other hand, if the ‘principal borrower’ pays the amount, if any, found payable upon reconciliation of accounts, it would confirm that there never existed any debt which is due and payable or defaulted by the ‘Corporate Guarantor’. The actions that would follow on allowing of this appeal cannot be reversed and the ‘Corporate Guarantor’ cannot be compensated in any manner.
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