INTRODUCTION

The authors of this research paper will, in the coming Chapters, demonstrate how within the Code, the properties of the personal guarantors which have been mortgaged for the purpose of securing loans advanced to the Corporate Debtor can be dealt with under a Resolution Plan for resolution of the Corporate Debtor in its corporate insolvency resolution process without having to separately proceed against the personal guarantor and also the emphasis of the term ‘security interest’ in its application across the various provisions under the Code .

In the first instance, the underlying transaction is important to ascertain and settle so as to approach the law from a uniform perspective for both the reader as well as the authors.

THE TRANSACTION

A typical transaction is a Contract for disbursing of a loan from a Bank / Non-Banking Financial Corporation (hereinafter ‘the NBFC’) to a Borrower for consideration which forms time value for moneycontains the following parties:

1. The Lender
2. The Borrower
3. The Guarantor
4. The Mortgagor

Roles played by each party are typically as follows:

1.The Lender

Per the definition in Black’s Law Dictionary, a Lender is “a person or entity from which something (esp. money) is borrowed.” In terms of the transaction, a ‘Lender’ is a person (natural or artificial) who advances a sum of money (‘Loan’) so as to earn the time value of the sum advanced. More often than not, such Lender requires a surety in terms of either a Guarantee or Mortgage of Property to ensure that the sums advanced will be repaid to the Lender.

For reference, a loan is “money advanced to a borrower, to be repaid at a later date, usually with interest. Legally, a loan is a contract between a buyer (the borrower) and a seller (the lender)…. The terms and conditions for repayment of a loan, including the finance charge or interest rate, are specified in a loan agreement. A loan may be payable on demand, in equal monthly instalments or they may be good until further notice or due at maturity.

In terms of the Insolvency and Bankruptcy Code, 2016 (hereinafter ‘the Code’), a debt in which sums have been advanced for time value of money is a Financial Debt and the person to whom such debt is owed is a Financial Creditor. Therefore, in terms of the present transaction, the Lender is a financial creditor.

Typically, time value means “The price associated with the length of time that an investor must wait until an investment matures or the related income is earned”. In the Code, however, the Hon’ble Supreme Court, while laying down the law, has broadly interpreted the phrase ‘time value for money, if any’ to mean that even in the absence of any interest payable, if there are sums advanced by the Lender to the Borrower, the same would be characterised as a financial debt, and the Lender as a financial creditor.

2.The Borrower

In terms of the Black’s Law Dictionary, a Borrower is “a person or entity to whom money or something else is lent.”Further, per the Dictionary of Banking Terms, a Borrower is a “Person or organization obtaining funds from another called a lender, normally repayable with interest at a future date. An extension of credit by a financial institution, for example a bank loan, is evidenced by a promissory note, a legally enforceable agreement to repay. A credit applicant whose ability to meet the obligation is uncertain may be asked to have a second party sign the note as coborrower or comaker.”

In terms of the Code, a ‘Corporate Debtor’ means a corporate person who owes a debt to any person. Given that a Borrower has been advanced sums from the Lender, the Borrower is obligated to make repayment of such sums advanced in terms of the Loan Contract. Therefore, in the present transaction the Borroweris the Corporate Debtor.

The role of the Borrower is to receive the sums so advanced and utilise them for the purpose for which such loan was disbursed, and periodically or at the time of maturity, make repayment of the entire principal amount and the interest amount, if any.

3.The Guarantor

A Guarantor isa “Person or corporation who guarantees payment by another. Also known as a surety. A guarantor becomes a co-endorser and assumes liability in event of default.…”.Therefore, a Guarantor is a third-party (natural or artificial person) who undertakes to make repayment of the loan advanced by the Lender to the Borrower in the event that the Borrower is unable to make repayment of the loan. Consequently, an agreement of guarantee means a “three party agreement, involving a promise by one party (the guarantor) to fulfil the obligation of a person owing a debt if that person fails to perform. The guaranty (also spelled guarantee) is a contingent liability of the guarantor.”

A guarantee is a form of security made available to the Lender. In terms of the Black’s Law Dictionary, ‘security’ is “1. Collateral given or pledged to guarantee the fulfilment of an obligation: esp. the assurance that a creditor will be repaid any money or credit extended to a debtor. 2. A person who is bound by some guaranty, surety….”.

In terms of the Code, there are two types of guarantors:

1. Corporate Guarantor being a guarantor who is a corporate person; and
2. Personal Guarantor being a guarantor who is a natural person.

4.The Mortgagor

In terms of the Black’s Law Dictionary, a mortgage is “1. A conveyance of title to property that is given as security for the payment of a debt or the performance of a duty and that will become void upon payment or performance according to stipulated terms….”And a Mortgagor is “one who mortgages property…” with the mortgagee being the “lender who arranges mortgage financing, collects loan payments, and takes a security interest in the property financed.”

Therefore, the role of the Mortgagor is to provide the property as security to the Lender. The Mortgagor may either be the Borrower or a Co-borrower or the Guarantor, whether Corporate or Personal. Mortgage forms part of the security available to the Lender.

The following Chapters have been authored keeping in mind the above transaction and the roles that each participant plays in the same.

SCHEME OF THE CODE

Introduction

The Code, as the long title suggests is intended to bring about radical changes in the existing insolvency/ recovery laws by consolidating existing laws, repealing overlapping enactments, addressing shortcomings in the present law and generally providing a fresh approach with the primary objective of resolution of insolvency and revival of businesses for the overall benefit of all stakeholders associated with the corporate debtor by its continued operations. At first blush, the Code appears to be a monotonous and mechanical system in which each part has been given its scope and ambit and must carry out only that function, however, a delve into the jurisprudence of the Code reveals that it is a dynamic and evolving law that is maturing with every passing day.

It is common knowledge that the Code was set to usher in a ‘One Stop Shop’ mechanism for the resolution of the insolvency of various persons, natural and artificial, pertinently with a view to ensure a quick resolution and the resultant benefit to the economy of India. The soul of the Code is resolution of an insolvent person.This statement has been echoed in various judgements passed by the Hon’ble Supreme Court wherein it has been categorically held that a resolution and revival of the Corporate Debtor is the primary purpose of the Code and that liquidation, akin to corporate death, should be avoided. This has been succinctly summarised by the Hon’ble Supreme Court as follows:

“The IBC was enacted to consolidate and amend the laws relating to reorganisation and insolvency resolution of inter alia corporate persons in a time-bound manner, for maximisation of the value of assets of such corporate bodies, to promote entrepreneurship, availability of credit and to balance the interests of all stakeholders.”

Underlying Principles of The Code

The basic underlying principles of the Code, which are to guide the participants during the course of the corporate insolvency resolution process(hereinafter as ‘the CIRP’) have been laid down by the Hon’ble Supreme Court and have, as such, become the bedrock upon which the jurisprudence of the Code is continuously evolving:

1. The process for initiation of the insolvency proceedings under the Code are different for the Financial Creditor and Operational Creditors as the nature of business is different. Therefore, where there may be a dispute as regards the claim of an Operational Creditor, in the case of a Financial Creditor, the Financial Creditor only has to establish default on part of the Corporate Debtor.
2. The difference in classification and treatment of the Financial Creditors vis-à-vis the Operational Creditors is not violative of principle of equality enshrined in Article 14 of the Constitution of India as the nature of the business of both creditors is different; the Financial Creditors, being primarily secured creditors are in a better position to assess the viability of a business plan and ensure that the Corporate Debtor’s insolvency is, in fact, resolved.
3. The rights of an Operational Creditor in a resolution plan are safeguarded, in that, they cannot receive less than the liquidation value of the Corporate Debtor, as due to them. However, the Operational Creditors not having a vote in the Committee of Creditors is not violative of the Constitution of India.
4. The placing of secured creditors higher in the waterfall mechanism, vis-à-vis the unsecured creditors, is not violative of the principle of equality enshrined in Article 14 of the Constitution of India as the secured creditors, being typically financial creditors, are the backbone of the economy as they are responsible for infusing further funds in other businesses.
5. The Resolution Professional is not a judicial authority exercising any judicial or quasi-judicial powers. The Resolution Professional is only an administrative authority whose duty it is to oversee the corporate insolvency resolution process and ensure that the process is complete in the timeline envisaged under the Code. The role of the Resolution Professional is different from that of the Liquidator in terms of the Code.
6. The jurisdiction of the National Company Law Tribunal and the National Company Law Appellate Tribunal would not extend beyond the Code and could not be utilised to apply principles of equity.
7. The Committee of Creditors had the ultimate discretion to approve a resolution plan and thus decide on the amounts payable to each creditor, so long as the interest of each class of creditors was taken care of.
8. That there could be no principles of equity applicable to treatment of various classes of creditors under the resolution plan and that the adjudicating authority had no residual jurisdiction to not approve a resolution plan only on account of the treatment afforded to any one class of creditors being unfair or unjust.
9. The right of subrogation in respect of personal guarantees, and undecided claims, insofar as the same may have been payable by the Corporate Debtor, would automatically stand extinguished on the approval of a resolution plan. That the operation of Section 31 of the Code ensures that the resolution plan is binding on all persons, whether or not they are party to the resolution plan.
10. The timeline in terms of Section 4 of the Code was amended and the word ‘mandatorily’ was struck down as the timeline was dependent on a number of factors, not in the least being the time taken for litigation before the National Company Law Tribunal and the National Company Law Appellate Tribunal. However, the time of 330 days was maintained as the outer time limit within which the insolvency resolution of a corporate person must be completed, unless there are extraordinary reasons for which the time limit could be extended.
11. The Committee of Creditors, although being the primary body taking the decisions concerning the resolution of insolvency of the Corporate Debtor, cannot be considered to be holding a fiduciary office as regards the creditors who were not part of the Committee of Creditors (‘COC’). However, this particular aspect has undergone a slight amendment in interpretation as the COC cannot be seen to benefit from a resolution plan at the expense of the other creditors.

The Code is divided into five Parts: Part I contains preliminary information and a list of definitions applicable to the entire code, Part II is the part which encapsulates the provisions relating to the corporate insolvency resolution process, pre-packed insolvency resolution process, fast track resolution process and liquidation of a Corporate Debtor and Part III contains the provisions relating to insolvency resolution process or bankruptcy of an individual, being a personal guarantor.

Definition of the terms ‘Corporate Person’, ‘Security interest’ and ‘secured creditor’ have been enshrined in Part I of the Code and therefore, the all-encompassing definitions are applicable and available, for interpretation of the entire Code. The appreciation of this understanding lies in the fact that ‘security interest’ is applicable uniformly to the CIRP of a corporate debtor as it is to the insolvency proceedings against a personal guarantor.

Definitions of other key terms in the CIRP, being ‘personal guarantor’, ‘financial creditor’, ‘operational creditor’ and so on form part of Section 5 of the Code, which is situated in Part II, Chapter II and are therefore, only applicable to provisions contained in Part II of the Code.

Therefore, in all Parts of the Code the interpretation of a term, defined in Part I, will be uniformly applicable unless and until such Part expressly provides for a narrower or different interpretation of such term. Therefore, the terms ‘security interest’ or ‘secured creditor’ would carry the same meaning through a CIRP or liquidation of a corporate debtor or the insolvency resolution or bankruptcy of a personal guarantor, as there is no qualification for interpretation of any of these terms in the relevant Parts.

The authors hope that a preliminary understanding of the standing of each term and its definition will aid the reader in understanding the interpretations that will be discussed in the Chapters to come.

Process of CIRP

The process of CIRP, for our paper, begins with the admission of a company petition in terms of Section 7 of the Code before the National Company Law Tribunal (‘NCLT’ or ‘Adjudicating Authority’) having its territorial jurisdiction in the area where the registered office of the Corporate Debtor is situated.

Per the Dictionary of Banking Terms, ‘Insolvency’ is the “inability to pay debts as they mature, or as obligations become due and payable. A person may still have an excess of assets over liabilities but be insolvent if unable to convert assets into cash to meet financial obligations….”. Insolvency has not been defined in the Code, however, the common knowledge of the term used in dictionaries will lead to the simple understanding: debts are owed by a person who is not able to discharge the debts on account of not having readily available liquidity, therefore, the liquidity could be tied up in movable or immovable assets.

The Code and its allied rules and regulations require that in order for CIRP to be instituted against a Borrower, the Lender would have to establish the following parameters:

1. That there is a debt repayable by the Borrower ‘a Financial Debt’.
2. There has been a default on the repayment of the debt by the Borrower. The facts utilised to prove default in discharge of debt would vary from case to case; and
3. The debt amount in default exceeds Rs. 1,00,00,000/- (Rupees One Crores only).

Aside from the above, there are certain parameters such as the aspect of limitation, service of notice, etc. being primarily equitable in nature that the Lender is required to establish. Per the law as it stands today, in terms of the law laid down by the Supreme Court, the NCLT has to consider exigent circumstances as well when deciding whether or not to admit the company petition against the Borrower and institute CIRP against the Borrower.

Once the CIRP has commenced, the Code prescribes a period of 180 (one hundred and eighty) days for completion of the CIRP, with a one-time extension of 90 (ninety) days. If there is no resolution achieved, then upon an application, liquidation is instituted against the Borrower.

Current Situation of CIRPs

Therefore, the paramount objective of the Code is achieving resolution, however, per the Quarterly Newsletter of the Insolvency and Bankruptcy Board of India as on 30th September 2022, out of total 5,884 (five thousand eight hundred and eighty four) CIRPs initiated, only 552 (five hundred and fifty two) have been closed through approval of a resolution plan, while the vast majority, irrespective of the stakeholder who initiated the CIRP, remains liquidation (1,807 out of 5,884). It is additionally important to note herein that the average time taken for CIRPs to close with a resolution plan is 561 (five hundred and sixty one) days, which is a far cry from the envisioned 180 (one hundred and eighty) days.

These numbers depict a systemic problem whereby financial creditors, typically forming the COC, find themselves unable to accept a resolution plan, either on account of there being a lack of resolution applicants, or that the value offered falls far below the expectation of the COC. It is common knowledge today that the mechanism in terms of the Code has evolved to pitch the price of a Corporate Debtor (a price in terms of the resolution plan value) in comparison with the outstanding claim amount and the liquidation value of the Corporate Debtor. It is in very rare situations that a COC would be willing to accept a resolution plan whose value is below the liquidation value of the Corporate Debtor, as the average value of successful resolution plans have offered 177.6% (one hundred and seventy seven point six) of the liquidation value.

Although it is well within the rights of the COC to exercise their commercial wisdom and not accept a resolution plan below the liquidation value, however, most COCs fail to consider the impact of a corporate death on the various stakeholders of a Corporate Debtor, be they employees or other operational creditor. The Code prioritised resolution for the simple reason that all the stakeholders’ interests were protected in terms of a resolution.

The other aspect of a resolution plan and the resolution plan value is that the COC takes the largest share of the cake. Although the COC, in terms of the decision of the Supreme Court is not bound to act as a trustee for all other creditors, the same Supreme Court has held that the COC cannot gain at the expense of all other creditors.

In the considered opinion of the authors, bank loans form the substratum of financial debt owed by corporate persons and is predominantly collateral based. Thus, there appears to be an answer to push the COC to accept resolution plans and, in fact, prefer resolution over liquidation: value maximisation through the inclusion of third party mortgaged properties. It is in this context amongst others, that the definition of the term ‘security interest’ in section 3(31) assumes significance,

SECURITY INTEREST

Introduction of the Term

Security interest holds the key to value maximisation to ensure a higher rate of resolution outcomes for corporate debtors undergoing CIRP, and, therefore, this Chapter will be dedicated to the complete understanding of the term.

Security Interest has been defined in the Black’s Law Dictionary to mean “A property interest created by an agreement or by operation of law to secure performance of an obligation (eps. Repayment of a debt).”

In the Code, ‘security interest’ has been defined in Section3(31) to mean

“right, title or interest or a claim to property, created in favour of, or provided for a secured creditor by a transaction which secures payment or performance of an obligation and includes mortgage, charge, hypothecation, assignment and encumbrance or any other agreement or arrangement securing payment or performance of any obligation of any person:

Provided that security interest shall not include a performance guarantee;”

The term ‘property’ is defined in Section 3(27) of the Code to mean:

“Property includes money, goods, actionable claims, land and every description of property situated in India or outside India and every description of interest including present or future or vested or contingent interest arising out of, or incidental to property;”

A combined reading of the terms ‘security interest’ and ‘property’ as defined under the Code, both inclusive in nature, afford the widest possible interpretation, essential to subserve the objective of the Code in terms of value maximisation. Understood in this context, the security interest of the Financial Creditor, Lender, in an insolvency process shall encompass all right, title or interest or claim to property, whether present or future, vested or contingent, arising out of or incidental thereto which has been provided to secure the payment or performance of the obligation of any person, whether by way of a mortgage, charge, hypothecation, assignment and encumbrance or any other agreement or arrangement.

Besides, the use of the terms ‘property of every description’ and ‘interest of every description’ in the definition covers assets, both movable and immovable, tangible and intangible. The wide import of these terms envisions the inclusion of every conceivable asset, some of which may not generally find recognition in the financial statements of a Corporate Debtor, Borrower, examples being licenses/ vendor registrations/ certifications, in-house systems and processes, trained and skilled manpower, stock exchange listing and the like. Identifying and safeguarding such intangibles is key to unravel the true value of a Corporate Debtor undergoing insolvency. @

The implication of the term ‘securing payment or performance of any obligation of any person” is indicative of the fact that the security interest need not be one created by the Corporate Debtor itself but could be of any third party for the obligation of the Corporate Debtor. This term also includes within its ambit a lien on sold goods for which the Corporate Debtor has not made the payment, while the goods are still in the possession of the creditor, in this situation the creditor is typically an operational creditor, and not a financial creditor and the security interest being a creation of law to protect the interests/rights of an unpaid seller.

Interest of every description, whether present or future, vested or contingent clearly demonstrates the intent of the legislature that the security interest should cover even future interests as those not effectuated in the present but would accrue to the Secured Creditor’s benefit eventually as also the contingent interest which come into play on the occurrence of an event, the most obvious example being a guarantee which can be invoked on the failure of the principal borrower to fulfil its obligation.

Security Interest, for the purpose of this Research Paper, is typically created through a mortgage deed, by the Mortgagor in favour of the Lender. As the reader may recollect, a Mortgagor may either be the principal Borrower, the Corporate Debtor, or a Guarantor (whether a natural or artificial person). Within the ambit of the term ‘security interest’ in the Code, however, all the properties mortgaged with the Lender, Financial Creditor, is included whether such property belongs to the Borrower or Guarantor. Typically, the Guarantor is either related party to the Corporate Debtor, whether as a shareholder who is a Corporate Person or a Key Managerial Personnel, as a Personal Guarantor.

However, the definition of the term in the Code is broad enough to encompass a situation where the security interest is created through a deed of Guarantee, whereby the Guarantor and his obligation to make payment is co-extensive with that of the Borrower and is a separate form of ‘security interest’ more particularly covered in the phrase “or any other agreement or arrangement securing payment or performance of any obligation of any person”.

In fact, the only condition imposed on ‘security interest’ in terms of the Code, is that a performance guarantee is not included.

The wide ambit of the terms ‘security interest’ was appreciated by the Supreme Court in its judgement in Rainbow Papers Ltd v State Tax Officer wherein the Supreme Court even accepted security interest which was created by law to deem the Government of Gujarat a secured operational creditor in terms of the provisions of Section 48 of the Gujarat Value Added Tax Act, 2003.

Security Interest in the Code

In terms of the Code, the security interest of a creditor is necessarily required to be disclosed at every stage of the corporate insolvency resolution process, from filing of a Company Petition under Section 7 of the Code to filing of claim, to be included by the Resolution Professional in the Information Memorandum and the security interest may be modified or dealt with in a Resolution Plan received from prospective resolution applicants as also considered by the Committee of Creditors in terms of priority and value for the purposes of distribution of the Plan amount. It is pertinent to note that nowhere is the mention of security interest qualified in terms of only including the assets of the Corporate Debtor, and, therefore, may include all the assets mortgaged to the creditor by either the Corporate Debtor or a third party, who may be the guarantor.

In every instance of the use of the term ‘security interest’, typically there are two types of security interest that can be assumed: guarantee and mortgage. However, the Part III of the Code specifically deals with one type of security and, therefore, through application of the rule of interpretation that the specific provisions will override the general provisions, the ‘security interest’ as mentioned in any place in Part II of the Code will only necessarily cover mortgage as a security interest so as not to eclipse the scope of applicability of Part III of the Code and also to abide by the rule of harmonious construction in interpreting the Code.

Security Interest in the Regulations

Regulation 4 read with Annexure ‘A’ of the National Company Law Tribunal Rules, 2016 (‘NCLT Rules’) requires a Financial Creditor to include, while filing a Company Petition to initiate CIRP against a Corporate Debtor, all the security interest held by the Financial Creditor in terms of the debt owed to it by the Corporate Debtor.

Regulation 8 of the of the IBBI (Insolvency Resolution of Corporate Persons) Regulations, 2016 (‘CIRP Regulations’), read with Form ‘C’ mandates that a Financial Creditor must include all the security interest held by the Financial Creditor in the claim submitted to the Interim Resolution Professional / Resolution Professional for the debt advanced to the Corporate Debtor.

Regulation36(b) of the CIRP Regulations, requires that a resolution professional include all the security interest of a creditor in the information memorandum, making this information available to a prospective resolution applicant. In Regulation 37 of the CIRP Regulations, 2016, which deals with a resolution plan, clause (a) specifically deals with the assets of the Corporate Debtor, whereas clause (b) and (d) deal more generally with security interest.

Regulation 37(a) of the CIRP Regulations permits a prospective resolution applicant to envisage the transfer of the assets of the corporate debtor under the resolution plan. Regulation 37(b) of the CIRP Regulations state that a prospective resolution applicant can sell any or all parts of the security interest and Regulation 37(d) of the CIRP Regulations permit a prospective resolution applicant to modify the security interest.

There are separate entries in Regulation 37 that deal specifically with the assets of the Corporate Debtor, the Borrower, and other entries that generally deal with the satisfaction or modification of ‘security interest’. Therefore, in terms of a resolution plan, a resolution applicant can satisfy and / or modify the security interest provided to a Financial Creditor, Lender, in the resolution plan.

It is trite law that a rule or regulation formed under the delegated legislative powers , being the power to make rules and / or regulations, of the executive cannot go beyond the law laid down by the legislature in its legislative capacity.Following this, where the Code has established the definition of ‘security interest’, the executive does not have the power to either narrow or broaden the definition of the same term or use it in a manner not envisaged in terms of the Code.

Therefore, it is pertinent to note that the Regulation does not qualify the security interest or, in any manner state or imply that the security interest available to a prospective resolution applicant to modify or sell in their resolution plan is restricted to the assets of the Corporate Debtor, as there is a separate entry in Regulation 37 providing for such sale or modification or transfer of the assets of the Corporate Debtor.

Thus, the scheme of the Code is to understand the term ‘security interest’ per the definition provided in Section 3(31) of the Code and to apply it, without any restriction or qualification, to every place that such term is mentioned, including but not limited to, the NCLT Rules and CIRP Regulations.

EVOLUTION OF THE LAW

The authors of this Paper wish, herein to discuss the decisions of the Hon’ble Supreme Court in State Bank of India v V. Ramakrishnan & Ors. and S.S. Natural Resources Private Limited & Ors. v Ramsarup Industries Limited & Ors.and the decisions of the National Company Law Appellate Tribunal (‘NCLAT’) in Nitin Naik v The Yashwant Cooperative Bank Limited in a normative and unbiased manner. The decisions in this case are key to the central premise in this Research Paper and, therefore, it is imperative that the reader be apprised of the same.

1.State Bank of India v V. Ramakrishnan & Ors (2018)

The brief facts of the case are that the Corporate Debtor, Borrower, had instituted CIRP proceedings in terms of Section 10 of the Code. The CIRP was admitted, however the question as to whether the personal properties of the guarantors were covered in terms of the moratorium under Section 14 of the Code and whether the guarantors could be made to pay under a resolution plan were the two questions posed before the Hon’ble Supreme Court. The Hon’ble Supreme Court weighed the previous decisions of the Supreme Court along with the provisions of the Code, in light of the object of the Code.

The Hon’ble Supreme Court laid down the law as follows:

1. The moratorium would apply only to the properties of the Corporate Debtor and not to the properties of a personal guarantor. Therefore, the properties of a personal guarantor may be separately proceeded against during the CIRP of a Corporate Debtor.
2. A guarantor cannot escape payment in terms of the Resolution Plan and can, in fact, be made to make payment under the resolution plan. This is the reason that the details of personal guarantee are required to be furnished in terms of the Information Memorandum.

2.Vijay Kumar Jain v Standard Chartered Bank & Ors.

The aspect of the judgement of the Supreme Court pertinent to the present Research Paper, is that the Personal Guarantor of a Corporate Debtor is bound by the Resolution Plan. Therefore, the personal guarantors, largely being part of the Board of Directors, are required to be persons admitted in the meetings of the COC and are permitted to deliberate on the CIRP process, especially in the process of approval of a Resolution Plan.

The aspect that is important to understand in this context is that given that the liability of a personal guarantor is co-extensive with that of the Corporate Debtor and not as an alternate to that of the Corporate Debtor, the resolution plan addressing the cause of default and, further the debts of the Corporate Debtor, would necessarily have an impact on the extent of liability of the personal guarantor.

3.S. S. Natural Resources Private Limited & Ors v Ramsarup Industries Limited & Ors. (2021)

The brief facts of the case are that the resolution plan submitted by the Successful Resolution Applicant, included within it, the transfer of properties belonging to the Corporate Guarantor of the Corporate Debtor. The property of the Corporate Guarantor formed part of the business of the Corporate Debtor as the Corporate Guarantor had provided the Corporate Debtor the right to use the land, on which the Corporate Debtor had constructed a plant and factory and was running its wire business from the land. This land was mortgaged for loans advanced to the Corporate Debtor and was, therefore, made available to the Corporate Debtor to repay the sums due to the Financial Creditors of the Corporate Debtor.

The Supreme Court in its Order upheld the decision of the NCLAT wherein the NCLAT had pronounced its decision on 14/03/2021 as follows:

1. The property of the Corporate Guarantor formed an essential part of the business of the Corporate Debtor and, therefore, was an essential part of the resolution process of the Corporate Debtor.
2. The property was provided by the Corporate Guarantor to the Financial Creditors to extend loans to the Corporate Debtor and was, therefore, available for the Corporate Debtor to make repayment of the outstanding of the Financial Creditor and
3. Thus, there was no reason to exclude the property of the Corporate Guarantor in the resolution plan.

4.Nitin Chandrakant Naik & Ors v The Yashwant Bank Cooperative Limited & Ors.

This judgement forms the bedrock of this research paper, as it appears that in this present the judgement the NCLAT has taken a step back from its previous stand.

The facts of this judgement are as follows:

1. The Corporate Debtor and the four promoters had submitted a loan proposal for business purposes only, and the nature of the loan has been stated to be “On mortgage of immovable property”. They stated that the loan was to be provided to the Corporate Debtor with the promoters being considered as “co-borrowers”.
2. The Loan was provided by two Financial Creditors, through three separate sanction letters, read with the Inter Se Agreement and Consortium Loan Agreement, both executed by both the banks and all the borrowers including the corporate debtor
3. Given the cap on the amount of loan that Cooperative Banks are allowed to disburse to a single entity, and the requirement of the Corporate Debtor being higher than such capped limit, the banks gave the loan to 5 (five) persons, being the Corporate Debtor and 4 promoters – Mr. Nitin Naik, Mr. Sahil Naik, Mrs. Megha Naik and Mr. Nayan Kardekar.
4. The amounts disbursed to the four promoters was mostly and immediately remitted to the account of the Corporate Debtor.
5. For securing the business loan, a Joint Mortgage Deed, being the registered Deed of Charge dated 20th October 2014, was executed as between the banks and the Corporate Debtor and the four promoters.
6. This loan was disbursed for the purposes of promoting and expanding the business of Corporate Debtor, i.e., for the promotion and expansion of the Hospitality Business.
7. The Corporate Debtor and the four promoters have each acted as guarantors for the other borrowers for the entire loan amount; as is present in the documents concerning the guarantee.

Thus, the Promoters and the Corporate Debtor acted as a single unit for availing of the credit facility by the Corporate Debtor and not as distinct entities, This is evidenced by:

1. Common proposal submitted for the purposes of availing a loan.
2. Common sanction letter for the disbursement of the loan amount by the banks.
3. The joint deed of charge entered by and between the parties mortgaging their personal properties including inter alia the subject premises under the resolution plan.
4. Transfer of the loan disbursed to the promoters to the account of the Corporate Debtor for its use as per the proposal submitted to the banks and
5. Repayment on behalf of all the borrowers was undertaken by the Corporate Debtor as a single point of repayment of the loan amount.

The Corporate Debtor, along with two of the promoters had also entered into a Lease Agreement with the successful Resolution Applicant, wherein the subject property was given on lease, by the Promoters (owners of the property) and the Corporate Debtor jointly named as the ‘Lessors’.

Therefore, the property of the promoters was essential to the business of the Corporate Debtor and, the property, being mortgaged to the Financial Creditors, was available to the Corporate Debtor to utilise in repayment of the sums outstanding towards the Financial Creditor. The NCLAT, however after its Order in S. S. Naturals, passed an adverse Order stating that the properties of the Promoter / Guarantors / Mortgagors could not be made part of the resolution plan and that the properties of the promoters would necessarily have to be separately proceeded against.

The NCLAT relied on the judgement in V Ramakrishnan to distinguish between the assets of the Corporate Debtor and those of the personal guarantor and stated that the assets of the personal guarantor had to be proceeded against in terms of Part III of the Code otherwise the provisions in Part III of the Code would be rendered otiose.

The NCLAT’s decision in this judgement has veered away from its own judgement in S. S. Natural Resources. The NCLAT, thus, has distinguished between the mortgaged assets of a Corporate Guarantor from those belonging to a Personal Guarantor, only for the reason that inclusion of the properties of the Personal Guarantor would render otiose the provisions of Part III of the Code, which have been brought into effect in order for the personal guarantor to be proceeded against by a creditor.

In the following chapter, the authors analyse the judgements and why this judgement of the NCLAT Nitin Naikis not only inconsistent with the decision of the Hon’ble Supreme Court to uphold the judgement of the NCLAT in S. S. Natural Resources but is also inconsistent with the rules of interpretation of the law.

OUR INTERPRETATION

Present View

The present view is that for enforcing the security interest in terms of a loan financed to a Corporate Debtor which consist of the properties of the personal guarantors during the corporate insolvency resolution process, the personal guarantors are to be separately proceeded against in terms of Chapter III of the Insolvency and Bankruptcy Code, 2016 (the ‘Code’). This is per the decision laid down by the NCLAT in Nitin Naik.

Our Interpretation

The interpretation offered is on the following points:

1.Justification for inclusion of the personal property of the Guarantors in the Resolution Plan:

The Scheme of the Code envisages as its core objective the value maximisation and balancing the interest of all stake holders. It is for this reason, it provides for the widest possible definition of the term ‘security interest’ and ‘property’ thus affording every possibility to the Resolution Applicant to submit a plan which will keep the corporate debtor as a ‘going concern’. The Resolution Applicant can offer to the Creditors a value in terms of the Plan amount that is consistent with the value of the entire security interest available to him as per the information memorandum, thus optimising the fresh investment required to revive the Corporate Debtor.

Given the afore-stated objective, the Code in Section 31 has mandated that on the approval of the Plan by the Adjudicating Authority, it shall be binding on all the stakeholders including mortgagors/ Guarantors. The binding nature of the approval by the Adjudicating Authority of the Plan was brought out explicitly by the Hon’ble Supreme Court in its decision in Ramakrishna V vs SBI wherein it observed that the guarantor could be made to pay under the Plan. It is this binding effect of the approval that applies equally, where the Guarantor has, instead of assuring payment in the event of default of the principal borrower, offered his property as a mortgage to secure the loan granted to the principal borrower. The emphasis here is that a Guarantor is bound in a manner he has chosen to be bound. To take away this right of the Resolution Applicant would render otiose the binding effect of the approval of the Plan by the Adjudicating Authority on the Guarantor and relegating the Resolution Applicant and / or the Creditor to a separate process of personal insolvency, that is neither sound in logic nor in terms of the provisions of the law as envisaged by the legislature.

The above argument is further supported by Section 30(1) of the Code which provides for submission of the Resolution Plan on the basis of the Information Memorandum. One of the mandatory types of information which the Information Memorandum is required to contain is the claims of the secured creditors as admitted by the Resolution Professional along with the ‘security interest’. It is on this basis, amongst others, that the Resolution Applicant submits his Plan assessing the security interest he would be entitled to, on discharging the liability of the Corporate Debtor. To restrict the meaning of security interest by excluding the mortgaged properties of the personal guarantors will negate the very basis on which the Resolution Plan is to be submitted, thus creating an impediment to the resolution process itself.

The creation of a mortgage is in itself a specific security that the Creditor has taken into consideration while granting a credit facility, the value whereof being the basis amongst others, deciding the quantum of loan. Personal guarantees of the Promoters and /or Directors, on the other hand, are more in the nature of a deterrent, in order to bind the said guarantors to ensure that the principal borrower does not commit a default. It is thus obvious that the mortgages and their realisability are inextricably linked to the quantum of credit facility and thus cannot be treated at par with the other assets owned by the Guarantors which are neither specifically offered nor are subject to any restrictions in terms of transfer by the Guarantors. In essence, therefore, ignoring mortgages of personal property in the resolution plan, renders the very purpose of entering into a mortgage deed, an exercise in futility. This could not have been the intent of the legislature, which permits under the SARFAESI Act, 2002, the secured creditors to enforce their security interest in terms of mortgages, without the intervention of the courts, to exclude such a possibility under the later law like the Insolvency and Bankruptcy Code, 2016 meant to consolidate the various laws on the subject.

The Committee of Creditors is also afforded the discretion under Section 30(4) of the Code, to consider the priority and value of the security interest of the financial creditors while determining the distribution of the Plan amount, again emphasising the significance of the securities held by the Creditors.

The Legislature, in its wisdom, has particularly excluded the assets, other than that of the Corporate Debtor in the liquidation process under Section 36(4) of the Code, while determining the liquidation estate. However, it has provided no such exclusion under the resolution process, thereby enabling the security interest, as available to the Secured Creditors to be brought in, in totality, for achieving a successful resolution.

1.The regulations cannot go beyond the scope of the law

The jurisprudence that stands today is that a rule or regulations made by the Executive Wing of the Government cannot go beyond the purview of the law or legislation laid down by the Legislative Wing of the Government. The Legislature is the law making body and the Executive is merely afforded the power of delegated legislation, which power is only afforded in order to aid the Executive to carry out the main law as enacted by the Legislature.

In the present case, the definition, meaning and intention of the term ‘security interest’ mentioned in the CIRP Regulations cannot go beyond the purview of the Code, 2016. For this reason, the CIRP Regulations cannot, of their own accord, add or qualify the term security interest thereby taking away from it the width and breadth of the assets encompassed within in in terms of Section 3(31) of the Code, 2016.

Therefore, Regulation 37 of the CIRP Regulations permits a Resolution Applicant to satisfy or modify the ‘security interest’ of a Financial Creditor, being the Lender, which may include the property of a guarantor which is provided to the Corporate Debtor for repayment of the sums owed to the Financial Creditor.

In Nitin Naik, the NCLAT had by disallowing the successful resolution applicant to satisfy and transfer the security interest, being the property belonging to the Personal Guarantor, has, in fact added a qualification to the term ‘security interest’ as it is used in Regulation 37(d) of the CIRP Regulations. If the judgements in S.S. Natural Resourcesand Nitin Naikare read together, the qualification reads as though the properties of a Corporate Guarantor are included within the term ‘security interest’ in Regulation 37(d) of the CIRP Regulations and are thus available to a Resolution Applicant to satisfy and modify, however, the properties belonging to a Personal Guarantor are not available to a Resolution Applicant to modify or transfer in terms of the Resolution Plan.

Where the law itself does not provide for any qualifications, the NCLAT has attempted, by itself, to carve out an exception and qualify the law. Thus, the decision of the NCLAT in Nitin Naikhas gone beyond the scope of the law and has, while making such a distinction, critically lowered the value of the Corporate Debtor. It is important herein to note that the NCLAT does not have the power to legislate, which power has only been afforded to the Legislature and the power of declaration of the law to the Hon’ble Supreme Court of India.

2.This interpretation does not render otiose the provisions relating to the Personal Guarantors

The provisions relating to the Personal Guarantors are enshrined in Chapter III of the Code, 2016 and these provisions deal with all the properties of a personal guarantor of a corporate debtor. It is important to note here that the provisions of Chapter III of the Code, 2016, are not limited to only the properties of the personal guarantor mortgaged for the purposes of securing a loan to a corporate debtor but extend beyond these properties.

Therefore, a proceeding against a personal guarantor of the corporate debtor would include properties besides the properties mortgaged to financial creditors for the purpose of securing a loan for the corporate debtor.

The authors of this proposed paper bring to note here that a mortgage, a deemed guarantee to the extent of the value of the asset mortgaged and a comprehensive personal guarantee, without a specific mortgage of any asset are two separate securities provided to a financial creditor to secure a loan advanced to a corporate debtor.

It is trite law that a guarantor can only be bound in the manner in which the guarantor has chosen to bind themselves; being, that if a guarantor has chosen to be bound by personal guarantee, then the security interest available to a financial creditor to enforce is a guarantee, and in case of a mortgage of personal property, the same is available to a financial creditor to enforce the terms of the mortgage.

In the case of Nitin Naik, the NCLAT had adjudged that the properties of the personal guarantor, from which the Corporate Debtor was running its business, and which was provided as mortgage to the Financial Creditor, and, therefore, available to the Corporate Debtor for making repayment of the debt due to the Financial Creditor, was not part of the security interest available to the Resolution Applicant. The main reasoning afforded by the NCLAT was that inclusion of such properties would render the provisions of the Part III of the Code would be rendered otiose.

However, on a reading of the interpretation provided hereinabove, and upon application of the Rule of Harmonious Construction, it is apparent that the term ‘security interest’ would be curtailed and, in fact, the wide ambit provided of the definition of ‘security interest’ as legislated by the Parliament, would be unduly rendered otiose. On the contrary, by reading into the term ‘security interest’ the properties of third parties, being the personal guarantors who have offered their property to the Corporate Debtor to make the repayment of the dues outstanding to the Financial Creditors, would not render the provisions of Part III of the Code otiose but would ensure that Part III only deal with those properties other than properties that have been offered as collateral to the Financial Creditor.

If, for arguments’ sake, the ratio of Nitin Naik were to be applied to the facts of the case in S.S. Natural Resources,the NCLAT may have rendered its judgement that if the property of the Corporate Debtor were to be included within the ambit of the term ‘security interest’, then the separate entry in Section (8)(i) of the Code, specifically including within the definition of ‘financial debt’ the ‘guarantee’ aspect of it, and, therefore, permitting a Financial Creditor to pursue CIRP against a Corporate Guarantor separately from the Corporate Debtor, would be rendered otiose. Given that the NCLAT permitted the inclusion of the property of the Corporate Guarantor within the ambit of ‘security interest’, and therefore, available to a Resolution Applicant to modify in its Resolution Plan during the CIRP of the Corporate Debtor, specifically deems that the separate entry for guarantees in the term ‘financial debt’ is not rendered otiose.

Similarly, if the properties of the personal guarantor were to be included within the term ‘security interest’, the same would not automatically render the provisions in Part III of the Code otiose.

In effect, Part III provides for insolvency and bankruptcy of individuals and partnerships and matters related thereto and does not in any way prohibit a secured creditor from enforcing his security interest in the form of a specific mortgage as part of the resolution process. It is inconceivable that the secured creditor has to prosecute an insolvency proceeding against the Guarantor in order to enforce its rights under a mortgage deed under the Insolvency and Bankruptcy Code, 2016. Part III of the Code is not asset specific but a comprehensive process to declare the Guarantor, insolvent and thereafter bankrupt, as the case may be.

3.The Resolution Applicant has the Right to Subrogation

There has been countless analysis of the Code and the law laid down by the Hon’ble Supreme Court in Lalit Kumar Jain v Union of India, explaining that a personal guarantor does not have the right to Subrogation in terms of Section 140 of the Indian Contract Act, 1882 (‘the Contract Act’). The Hon’ble Supreme Court has declared the law stating that a successful resolution plan does not per se discharge a personal guarantor of their liability towards the Financial Creditor to whom they have furnished a personal guarantee.

In this paper, the authors propose that it is the Resolution Applicant who acquires the right of Subrogation in terms of Section 140 of the Contract Act. It is the Resolution Applicant, through a successful resolution plan, who addresses the debt of the Corporate Debtor, and, therefore, steps into the shoes of the Financial Creditor and is eligible to recover the dues from the security interest in terms of the mortgage of properties furnished by the Personal Guarantor of the Corporate Debtor.

This interpretation is not far from the object of the Code and value maximisation as the Hon’ble Supreme Courtin V. Ramakrishnan and in Vijay Kumar Jain has categorically stipulated that the personal guarantor may be asked to make payment within the Resolution Plan submitted by the Resolution Applicant.

Therefore, it is well within the rights of the Resolution Applicant to address the security interest of the Financial Creditors and include it in the Resolution Plan submitted.

The judgement of the NCLAT in Nitin Naikhas not taken into consideration this right of Subrogation afforded to the Resolution Applicant, who is, discharging the dues of the Corporate Debtor and thereby, greatly reducing the liability of the Personal Guarantors of the Corporate Debtor. In this, the Resolution Applicant must be permitted to satisfy or modify the security interest.

It is important to mention that the Resolution Applicant is not the Corporate Debtor, and is, by all means a separate entity from the Corporate Debtor. Given that the Resolution Applicant steps into the shoes of the Corporate Debtor and has to make repayment of the dues to the creditors of the Corporate Debtor, the Resolution Applicant is more likely to furnish a higher sum in the resolution plan for taking over of the Corporate Debtor, if all the essential elements of the business of the Corporate Debtor is present with the Corporate Debtor and that the properties offered as mortgage for repayment of debt of the Corporate Debtor is available to the Resolution Applicant for their appropriation.

This is the aspect that leads to value maximisation of the business of the Corporate Debtor, which goes beyond the particulars covered in the Balance Sheet of the Corporate Debtor.

Once this aspect of the business of the Corporate Debtor is included within the value of the Corporate Debtor, it may push the Resolution Applicants to offer a higher value in their resolution plan which includes the properties of the Personal Guarantors, being the third parties to the CIRP of the Corporate Debtor.

IMPACT ON THE RESOLUTION V LIQUIDATION DEBATE

The current milieu of the Code shows that the COC prefer liquidation over resolution. As stated in previous chapters, this has been succinctly captured in the Quarterly Newsletter of the Insolvency and Bankruptcy Board of India as on 30th September 2022, out of total 5,884 (five thousand eight hundred and eighty four) CIRPs initiated, only 552 (five hundred and fifty two) have been closed through approval of a resolution plan, while the vast majority, irrespective of the stakeholder who initiated the CIRP, have been pushed to liquidation (1,807 out of 5,884).

The decision in the COC today pertaining to approval of a Resolution Plan is based on the concept of ‘fair value’ and ‘liquidation value’, which values are provided to the COC prior their exercising their power to either approve or reject the resolution plans put before them. In most cases, the touchstone for the decision making is whether the value offered in a resolution plan is greater than the liquidation value, however, the Hon’ble Supreme Court has declared that an approved resolution plan may offer a value lower than the liquidation value.

It is important to include within the fair value and the liquidation value of the Corporate Debtor those assets which have been provided for the use of the Corporate Debtor to make repayment to the loans advanced by the Financial Creditors. Therefore, assets which form an essential part of the business of the Corporate Debtor, and which have been provided as mortgage to the Financial Creditors, and, therefore, are available to the Corporate Debtor, and any person who steps into the shoes of the Corporate Debtor, should be included within the valuation of ‘fair value’. As the ‘fair value’ should ideally reflect the value of the Corporate Debtor ‘as a going concern’. This would include not only the properties mortgaged by personal guarantors but also would include all those aspects not covered in the Balance Sheet of the Corporate Debtor such as trademark, licenses, and other intangible assets.

Further, the touchstone for decision making of the COC in weighing the options between resolution and liquidation should ideally be a fair value which reflects the inclusion of the properties of the guarantors which have been mortgaged towards advance of loans to the Corporate Debtor. This would drive up the fair value, in turn the Resolution Applicants, knowing that the properties mortgaged were available to them, would propose a higher amount in their resolution plan, which is key to bringing about a behavioural change in the outlook of the COC towards resolution.

The essence, therefore, is the value maximisation of the business of the Corporate Debtor. It is imperative that to steer the trend of the CIRP from ending in liquidation towards resolution.

As the law stands today, the properties mortgaged by Corporate Guarantors, are included within the ambit of the term ‘security interest’ and are therefore, available for the resolution applicants to include in their resolution plan to satisfy and transfer to themselves. This same ratio ought to be applied to the properties mortgaged by Personal Guarantors, as there is no basis for any discrimination between the two types of guarantors.

Should the interpretation offered in this Paper be adopted, the same would increase the value of the Corporate Debtor, the same may force a behavioural change in the COC pushing a higher percentage of culmination of the CIRP in approval resolution plans.

This would also translate in greater benefit to other creditors, being the employees and operational and other creditors, who do not typically have a say in the approval of the Resolution Plan. The key stakeholders in a resolution process of the Corporate Debtor, being the employees, operational creditors and the Government would benefit from an operational Corporate Debtor in terms of continued employment, business and taxes, respectively.

Today, given the propensity of liquidation being the primary outcome of the CIRP, the Code is evolving to become yet another tedious legislation, forcing creditors to choose alternate routes to recover their sums. Those routes, whether in terms of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2022, or the Arbitration and Conciliation Act, 1996, or any other law, do not focus on the survival of the Corporate Debtor but only on the recovery of the dues of the creditors.

This interpretation offered in this Paper, through value maximisation, will bring the focus of the COC back to resolution, and may move away from liquidation, thus reviving the Code as the best case scenario for continuation of the business of the Corporate Debtor as well as for recovery of dues of the creditors, even though the latter is not the primary focus of the Code.

The interpretation established in this paper may aid in streamlining the process of CIRP in terms of IBC and may push changes in not only the Ease of Doing Business in India but also in the behaviour of the Financial Creditors equipped with the knowledge that the value of security interest may reflect their share of the Resolution Plan amount.

CONCLUSION

In summation, the authors hope that through the inclusion of the properties mortgaged by Personal Guarantors to the Financial Creditors for securing the advance of loans to the Corporate Debtor, within the term ‘security interest’ and to permit such inclusion to be made available to a prospective Resolution Applicant in the Resolution Plan, the COC going forward may prefer resolution over liquidation of the Corporate Debtor.

This would likely have a snowball effect where Financial Creditors, knowing that their security interest would reflect the properties mortgaged by personal guarantors, would angle for a higher percentage of the resolution plan amount, would be partial towards the resolution of the Corporate Debtor, which in turn would ensure employment for the employees, business for the operational creditors and tax dues to the Government.

The preference of resolution over liquidation would also translate to the ease of doing business in India, as the outcome of a failed business would not be a termination in the business but in the continuation of the business with, typically, a change in management. This would crystallise the expectations of investors who may have a clear timeline to expect returns on their investment and energise the return of funds into the hands of Financial Creditors and enable them to advance further loans increasing the circulation of money in the market.

Therefore, with value maximisation of the Corporate Debtor including more than only the assets of the Corporate Debtor, there will be ripples of a change in the market behaviour of not only lenders but also investors, and creditors in general opting for CIRP and favouring resolution.

BIBLIOGRAPHY

Acts and Regulations

1. The Constitution of India
2. Insolvency and Bankruptcy Code, 2016
3. Indian Contract Act, 1882
4. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002
5. Arbitration and Conciliation Act, 1996
6. Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016
7. National Company Law Tribunal Rules, 2016

Books and Articles

1. Vidhi Legal: Concept Note on Indian Insolvency Law accessed at https://vidhilegalpolicy.in/wp-content/uploads/2014/03/Concept-Note-on-Corporate-Insolvency-010814.pdf
2. Insolvency and Bankruptcy Code: A Catalyst to Business and Investment in India accessed at https://www.arenesslaw.com/public/fileattachment/20210630_045628-IBC%20AS%20A%20CATALYST.pdf
3. IBBI Research Initiative: Assessment of CIRP Timeline accessed at https://ibbi.gov.in/uploads/publication/2021-02-12-154823-p3xwo-8b78d9548a60a756e4c71d49368def03.pdf
4. Dictionary of Banking Terms (5th Edition) by Thomas P Fitch
5. Black’s Law Dictionary, 9th Edition, by Bryan A Garner
6. Resolution of the Soul of IBC, written by Dr M. S. Sahoo, Chairperson of the Insolvency and Bankruptcy Board of India and published in the Insolvency and Bankruptcy News, August 2017
7. Summary of the judgement of the Supreme Court in Essar Steel India Limited v Satish Kumar Gupta written by Pallavi Saluja and published on 16th November 2019 is available at https://www.barandbench.com/columns/essar-steel-judgment-key-highlights (last accessed on 7th September 2022)
8. Quarterly News Letter of the Insolvency and Bankruptcy Board of India, published on 30th September 2022, July – September 2022, Vol. 24 accessed on https://ibbi.gov.in/uploads/publication/f3ddc90d7391bcae84ef2f87f793eb3c.pdf (last accessed on 15th December 2022)
9. A Code for Conduct for the Committee of Creditors, written by B. Shriram, available at https://ibbi.gov.in/uploads/resources/6736e357f5c139e6402b038f4492e10b.pdf (last accessed on 29th December 2022).

Cases

1. Anuj Jain v Axis Bank Limited & Ors. [(2020) 8 SCC 401]
2. Orator Marketing Pvt Ltd v Samtex Designz Pvt Ltd [AIR 2021 SC 4040]
3. State Bank of India v Ramakrishnan& Ors [Civil Appeal No 3595 and 4553 of 2018 decided on 14/08/2018]
4. Swiss Ribbons Pvt Ltd & Anr v Union of India & Ors. [Writ Petition (Civil) No 99/208 decided on 25th January 2019]
5. Committee of Creditors of Essar Steel India Limited v Satish Kumar Gupta & Ors [Civil Appeal No 6766-67/2019 decided on 15th November 2019]
6. Sesh Nath Singh and Ors. vs. Baidyabati Sheoraphuli Co-operative Bank Ltd. and Ors. [(2021) 7 SCC 313].
7. State Tax Officer v Rainbow Papers Limited [Civil Appeal No1661 of 2020 decided on 06/09/2022]
8. Vidarbha Industries Power Limited v Axis Bank Limited [(2022) 8 SCC 352]
9. In Re Delhi Laws Act, 1912 [AIR 1951 SC 332]
10. Vijay Kumar Jain v Standard Chartered Bank & Ors. [AIR 2019 SC 2477]
11. S. S. Natural Resources Private Limited & Ors. v Ramsarup Industries Limited & Ors. [Civil Appeal No 1142 of 2021 decided on 04/05/2021]
12. Nitin Chandrakant Naik & Ors. v The Yashwant Bank Cooperative Limited & Ors. [Company Appeal (AT) (Insolvency) No 257 of 2020 and Company Appeal (AT) (Insolvency) No 239 of 2021 both decided on 26/08/2021]
13. Lalit Kumar Jain v Union of India [(2021) 9 SCC 321]
14. Maharashtra Seamless Steel Ltd v Padmanabhan Venkatesh & Ors. [AIR 2020 SC 3779]