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2021 (6) TMI 722 - HC - Insolvency and BankruptcyInfringement of the rights of petitioner or not - utilization of credit facilities by the defaulter company - wilful defaulter or not - HELD THAT:- It is obvious that the writ court cannot go into a factual consideration of the merits of the allegations made in the notices at the show cause stage, particularly, since there is no flaw in the notices and the petitioner was given adequate opportunity to make written submissions in response thereof, thus adhering strictly to the letter and spirit of Clause 2.6 of the RBI Master Circular. The first impugned notice dated February 26, 2021 cannot be held to be vitiated merely by absence of specific mention of prior refusal by the petitioner, as guarantor, to honour his liability in such capacity. That apart, the legal fiction of dual capacity of the petitioner, that is, as a guarantor on the one hand and as a promoter/whole-time director on the other, ought to be pierced in view of the petitioner being in charge of the management of the defaulting company at the relevant period. A person at the helm of affairs during the period when the alleged default was committed is squarely an officer who is in default, as provided in Section 2(60) of the Companies Act, 2013 - The language of Section 14 of the IBC is very clear as to its object and purpose, which is to attract resolution applicants to make offers to facilitate corporate resolution of the insolvency. Initiation or continuation of recovery proceeding against the corporate debtor itself during such resolution would prove counter-productive to such purpose. A wilful defaulter proceeding does not come within the contemplation of Section 14 of the IBC, which primarily pertains to legal actions to foreclose, recover or enforce security interest, or recovery of any property or the debt-in-question - An act of wilful default, if committed by a promoter/whole-time director/guarantor of the corporate debtor who was in charge at the relevant period, is not obliterated automatically by the filing of an application under Section 7 of the IBC. Section 32A had not been inserted by amendment in the IBC on the date when hearing was concluded in the matter of Gaurav Dalmia (supra). Section 32A, which has been held to be intra vires by the Supreme Court, clearly stipulates that the Corporate Debtor shall not be prosecuted for an offence committed prior to commencement of CIRP once a Resolution Plan has been approved by the Adjudicating Authority - an OTS for settlement of the debt, ipso facto, cannot erase the wilful default of a promoter/director or guarantor, if committed. Moreover, in the present case, the OTS had not reached culmination in view of the instalments pursuant thereto having not been cleared by the petitioner, for whatever reason. As such, there was no concluded OTS in the present case at all. No fault can be found with the issuance of the impugned show-cause notices to justify judicial interference therewith - Petition dismissed.
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