The Supreme Court held that the Persons whose guarantees stands invoked by the creditors of corporate debtor Barred From Giving Resolution Plan.
The respondent, M/s. MBL Infrastructures Limited was set up by one, Mr. Anjanee Kumar Lakhotiya in the early 1990s. Loans/ credit facilities were obtained by the Respondent from the consortium of banks (State Bank of Mysore now State Bank of India as lead bank), some of who are also arrayed as respondents apart from the appellant. On the failure of the Respondent to act in tune with the terms of repayment, some of the respondents were forced to invoke the personal guarantees extended by the Respondent for the credit facilities availed by the Respondent.
M/s. RBL Bank issued a notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), after duly invoking the personal guarantee of the Respondent. This was followed by a similar action at the hands of Respondent (M/s Allahabad Bank) and M/s. State Bank of Bikaner and Jaipur. M/s. State Bank of Bikaner and Jaipur got merged with State Bank of India. The aforesaid two proceedings invoking Section 13(2) of the SARFAESI Act were initiated in the month of February and March, 2013, respectively.
The division bench of Justice Sanjay Kishan Kaul and Justice M.M.Sundresh noted the interest of over 23,000 shareholders and thousands of employees of the Respondent. Now, about Rs. 300 crores has also been approved by the shareholders to be raised by the Respondent. It is stated that about Rs. 63 crores has been infused into the Respondent to make it functional. There are many on-going projects of public importance undertaken by the Respondent in the nature of construction activities which are at different stages.
“We remind ourselves of the ultimate object of the Code, which is to put the corporate debtor back on the rails. Incidentally, we also note that no prejudice would be caused to the dissenting creditors as their interests would otherwise be secured by the resolution plan itself, which permits them to get back the liquidation value of their respective credit limits. Thus, on the peculiar facts of the present case, we do not wish to disturb the resolution plan leading to the on-going operation of the Respondent,” the court noted.
BANK OF BARODA & ANR. 104 vs MBL INFRASTRUCTURES LIMITED & ORS.
CITATION: 2022 TAXSCAN (SC) 105
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