TMI Blog2020 (4) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... n be given on this aspect. The respondent/non-applicant shall release the amounts in Item Nos.2, 5, 6, 7, 8 and 9, of the table mentioned above, alongwith interest accrued, if any, to the account of the corporate debtor to enable it to utilize in accordance with the Code and the Regulations made thereunder - applicant/Resolution Professional is directed to file a detailed affidavit before this Tribunal with regard to utilization of the amounts, within two weeks from the date of reopening of National Company Law Tribunal, Chandigarh Bench, after the lockdown is removed. Application disposed off. - CA No.95/2019 In CP (IB) No.80/Chd/Hry/2018 - - - Dated:- 29-4-2020 - HON BLE MR. AJAY KUMAR VATSAVAYI, MEMBER (JUDICIAL) Mr. Atul V. Sood and Mr. Sumer Singh Brar, Advocates, for the Applicant/Resolution Professional Mr. Arvind Kumar, Resolution Professional Mr. Rakesh Gupta, Advocate, for the Non-Applicant/Respondent ORDER This application was fixed for hearing through video conferencing at 10:30 AM today. 2. The instant application has been filed on 14.02.2019 by the Resolution Professional of M/s Richa Industries Limited under Section 60 (5) read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 67,200.00 3. 7,08,200.00 4. 50,000.00 5. 27.12.2018 A/c No. 019202000004913 51,27,591.00 6. 31.12.2018 2,16,000.00 7. 31.12.2018 A/c No. 221702000000113 6,73,438.35 8. 2,18,961.65 9. 1,005.00 Total 1,70,62,427.00 6. When the instant application was taken up for hearing, Mr. Atul V. Sood, learned counsel appearing for the applicant submitted that he is giving up his claim in respect of Item Nos.3 and 4 and that he is not pressing the same in the instant CA. 7. On the other hand, Mr. Rakesh Gupta, learned counsel appearing for the respondent/non-applicant also submits that in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther submits that the corporate debtor is a going concern and in view of the lockdown declared by the Government of India, various units of the corporate debtor could not function and are not able to raise any funds during the months of February to April, hence, there is heavy crunch of finances and that the corporate debtor is not able to pay the salaries to its employees and to meet its other essential expenses. He also submits that the Government of India has issued directions to all the employers to continue to pay the salaries of the employees even during the lockdown period. Accordingly, he prays for issuance of appropriate directions to the respondent/non-applicant. 12. On the other hand, learned counsel for the respondent/non-applicant submits that Item No.1 which was given as a collateral security to the loan cannot be released as it has a lien against the same. In respect of Item No.5 also, he submits that the said amount being margin money for the bank guarantee, cannot be released to the corporate debtor. Learned counsel further submits that Section 14(3)(b) of the Code exempts both the amounts from the purview of moratorium and hence, the action of the respondent/no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll not be terminated, suspended or interrupted during the period of moratorium, except where such corporate debtor has not paid dues arising from such supply during the moratorium period or in such circumstances as may be specified.] [(3) The provisions of sub-section (1) shall not apply to- [(a) such transactions, agreements or other arrangements as may be notified by the Central Government in consultation with any financial sector regulator or any other authority;] (b) a surety in a contract of guarantee to a corporate debtor.] (4) The order of moratorium shall have effect from the date of such order till the completion of the corporate insolvency resolution process: Provided that where at any time during the corporate insolvency resolution process period, if the Adjudicating Authority approves the resolution plan under sub-section (1) of Section 31 or passes an order for liquidation of corporate debtor under Section 33, the moratorium shall cease to have effect from the date of such approval or liquidation order, as the case may be. 14. The Hon ble Supreme Court of India in State Bank of India Versus V. Ramakrishnan and Another (2018) 17 SCC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rationale being that if a CIRP is going on against the corporate debtor, then the debt owed by the corporate debtor is not final till the resolution plan is approved, and thus the liability of the surety would also be unclear. The Court took the view that until debt of the corporate debtor is crystallised, the guarantor's liability may not be triggered. The Committee deliberated and noted that this would mean that surety's liabilities are put on hold if a CIRP is going on against the corporate debtor, and such an interpretation may lead to the contracts of guarantee being infructuous, and not serving the purpose for which they have been entered into. 5.8. In SBI v. V. Ramakrishnan [SBI v. V. Ramakrishnan, 2018 SCC OnLine Nclat 384], NCLAT took a broad interpretation of Section 14 and held that it would bar proceedings or actions against sureties. While doing so, it did not refer to any of the above judgments but instead held that proceedings against guarantors would affect the CIRP and may thus be barred by moratorium. The Committee felt that such a broad interpretation of the moratorium may curtail significant rights of the creditor which are intrinsic to a contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not have been the intention of the Code, as is clear from a plain reading of Section 14. 5.11. Further, since many guarantees for loans of corporates are given by its promoters in the form of personal guarantees, if there is a stay on actions against their assets during a CIRP, such promoters (who are also corporate applicants) may file frivolous applications to merely take advantage of the stay and guard their assets. In the judgments analysed in this relation, many have been filed by the corporate applicant under Section 10 of the Code and this may corroborate the above apprehension of abuse of the moratorium provision. The Committee concluded that Section 14 does not intend to bar actions against assets of guarantors to the debts of the corporate debtor and recommended that an explanation to clarify this may be inserted in Section 14 of the Code. The scope of the moratorium may be restricted to the assets of the corporate debtor only. A careful examination of Section 14(3)(b) of the Code and the decision of the Hon ble Apex Court, indicates that the action of the respondent/nonapplicant is not covered under Section 14(3)(b) of the Code. 15. In respect of Item No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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