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TMI Blog2022 (3) TMI 599X X X X Extracts X X X X X X X X Extracts X X X X ..... inst Ms. Sangita Arora (hereinafter, "Applicant" or "Personal Guarantor") on 02.06.2021. ii. The applicant submitted that the section 95 application was listed before the Tribunal on 10.08.2021 for the first time and an advance copy of the said company petition was served upon the Personal Guarantor on 02.06.2021, however an advance notice of the hearing to be held on 10.08.2021 was not given to the Personal Guarantor. iii. The applicant submits that upon listing of the said company petition for the first time on 10.08.2021, no proper notice to the Personal Guarantor was issued by this Hon'ble Tribunal in terms of Rule 37 of the NCLT Rules, 2016. Further, the applicant submitted that without issuance of notice upon the Personal Guarantor, the Tribunal heard the matter in absence of appropriate representation on behalf of the Personal Guarantor and reserved the matter for the orders. iv. The applicant submitted that the Rule 49(2) of NCLT Rules, enables a party to apply for setting aside ex-parte order upon being satisfied that the notice was not duly served or that such respondent was prevented by any sufficient cause from appearing. v. The applicant further relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 95, 96 read with Rule 10) the Adjudicating Authority has to act on it, and following principles of natural justice, give limited notice to Personal Guarantor to appear referring to the Interim Moratorium that has commenced as per terms of Section 96. Then the next stage is of appointing Resolution Professional as per Section 97 read with Rules and Regulations. 46. The observations have been made by the Adjudicating Authority that the Corporate Guarantor (should have been only Guarantor) has not filed any submission and on date of hearing there was no representation. It appears that the Adjudicating Authority was of the view that service of "Form C" on 20 August, 2020 and "Amended Form C" on 28th January, 2021 was the notice. Having gone through the Form and Rules and Regulations, we do not find that anywhere it is provided that when the Form is submitted it would also contain notice of date as to when the matter is coming up before the Adjudicating Authority. In the absence of any such requirement, we find, as above, that there has to be limited notice for presence conveying the "filing" of application and commencing of Interim Moratorium under Section 96 from date of filing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inquisitorial and not adjudicatory in nature. iii. The Respondent submitted that once the report is filed by the Resolution Professional, the personal guarantor is given an opportunity of hearing by the Tribunal, before a final decision is made on the application. It is at this stage that an adjudication of the application is made by the Tribunal after affording an opportunity of hearing to the personal guarantor. Before the stage of appointment of a Resolution Professional, the provisions of the Code do not contemplate any hearing to the debtor/personal guarantor. Hence, the present application of the personal guarantor seeking to, inter alia, place its objections to the captioned application under Section 95 of the Code is premature. iv. The Respondent further submitted that an advance copy of the application under Section 95 of the Code was served by the financial creditor on the personal guarantor and the last service was made on 28.07.2021 just a few days before listing of the matter before this Tribunal on 10.08.2021. Further, the grant of a personal guarantee by the personal guarantor to the financial creditor is also not in dispute. Further, the loan has been recalled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 97(5) also is to bind Adjudicating Authority to appoint Resolution Professional as nominated by the Board Thus, once application under Section 95 is "filed" the next step for Adjudicating Authority is to appoint the Resolution Professional. 42. However, considering the judgment of the Hon'ble Supreme Court in the matter of Swiss Ribbons, it appears to us that keeping principles of natural justice in view, limited notice of the application should be given to the Personal Guarantors of the Corporate Debtors. The limited notice has to be only to secure presence of the Personal Guarantor referring to the Interim Moratorium which has commenced. Before appointment of the Resolution Professional no hearing as such is contemplated and before appointment of the Resolution Professional the Debtor cannot be allowed to raise disputes for which the stage would be Section 100. Under NCLT Rule 11, Adjudicating Authority is duty bound to pass orders to prevent abuse of process. As such limited notice to appear may be given to the Personal Guarantors so that when Resolution Professional is appointed, he may provide material as per Section 99(2) of IBC. Till the stage of Section 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gone through the Form and Rules and Regulations, we do not find that anywhere it is provided that when the Form is submitted it would also contain notice of date as to when the matter is coining up before the Adjudicating Authority. In the absence of any such requirement, we find, as above, that there has to be limited notice for presence conveying the "filing" of application and commencing of Interim Moratorium under Section 96 from date of filing (to be mentioned). 5. From the aforesaid judgment the Hon'ble NCLAT has made it amply clear that when the section 95 application is filed in Form C the same would be served to the personal Guarantor and this acts as a notice to the Personal Guarantor who would be given opportunity by the Resolution Professional while examining the application in terms of section 99 of IBC. The Judgment also clarifies that the "Limited Notice" has to be only to secure presence of the Personal Guarantor referring to the Interim Moratorium which has commenced. Before appointment of the Resolution Professional no hearing as such is contemplated and before appointment of the Resolution Professional the debtor cannot be allowed to raise dispute for raisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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