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NCLAT Fortnightly: Important orders on IBC (April 1 – April 15, 2024)

5. In Tulip Hotelv.JC Flowers Asset Reconstructions(CA(AT) (Ins) No. 1146 of 2023), the NCLAT, relying on Sameer Bansalv.Canara Bank(CA(AT)(Ins) No. 1188 of 2022), held that a person authorized by a general power of attorney which is referable to a board resolution is a duly authorized person and can file a Section 7 application for the initiation of CIRP in terms of Rule 4(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

In the same case, applying the ‘Doctrine of Indoor Management’, the NCLAT held that the financial creditor cannot be prejudiced due to any irregularities in the internal procedure of the appellant-corporate guarantor (“Appellant-CG”). The NCLAT held that the financial creditor was right in inferring that the board resolution authorizing the signing of the deeds of guarantee was legitimately passed even if the internal requirements and procedures had not been complied with by the Appellant-CG, especially when the Appellant-CG had not sufficiently challenged the deeds of guarantee before the appropriate fora.

The NCLAT further noted that under Section 127 of the Contract Act, past consideration is sufficient consideration for the contract of guarantee and the grant of loan to the principal borrowers by the creditor need not necessarily be contemporaneous with the execution of guarantees.

In the instant case, the NCLAT also considered the impact of not obtaining prior NOC from the existing charge holder before the creation of a fresh security in favour of the financial creditor and rejected the challenge by observing that when such security has been duly registered with the RoC without being challenged, such failure to obtain prior NOC does not impact the claim of a financial creditor.

Finally, the NCLAT observed that the issue of whether the guarantee deed executed is a forged and fabricated one can only be raised in a civil suit and not before the Adjudicating Authority exercising a summary jurisdiction.

Source: Barandbench

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