New Delhi, March 1 The appellate tribunal, NCLAT, has dismissed petitions filed by two Dhoot brothers – Rajkumar Nandlal Dhoot and Pradeep Nandlal Dhoot – challenging the initiation of personal insolvency against them over a default committed by debt-ridden Videocon Industries.
Personal insolvency against the Dhoot brothers was initiated after SBI had issued a demand notice of Rs 5,353.78 crore over defaults by Videocon Industries, the principal borrower, for which they were the personal guarantors.
A two-member bench of the National Company Law Appellate Tribunal (NCLAT) has upheld the two orders passed by the Mumbai bench of NCLT in June last year, in which it had directed the initiation of insolvency against the duo, the brothers of Videocon founder Venugopal Dhoot.
The appellate tribunal also rejected their plea that petitions filed by leading public sector SBI, on which the National Company Law Tribunal has directed to initiate insolvency proceedings in their personal capacity, were barred under limitations.
The NCLT had admitted the application under Section 95, in which insolvency proceedings are initiated against a person, after being "satisfied that Corporate Debtor (Videocon) has committed default in repayment of loan amount granted by the Financial Creditor and Personal Guarantors have committed default in repayment of the loan facility".
"We, thus, do not find any good ground to interfere with the impugned order dated June 4, 2024, and June 14, 2024, which are the subject of these appeals. Both the appeals are dismissed," said the NCLAT bench, comprising Chairperson Justice Ashok Bhushan and Member (Technical) Barun Mitra.
The two brothers against whom insolvency proceedings have been initiated in personal capacity were the personal guarantors of Videocon Industries, which had defaulted on the loan given by SBI.
The brothers had challenged the order passed by the National Company Law Tribunal in June 2024, which had allowed the plea filed by SBI under section 95 of the Insolvency & Bankruptcy Code, which permits a financial creditor to initiate insolvency proceedings against a personal guarantor.
Videocon Industries had availed Rupee Term Loan facilities from the State Bank of India (SBI) on May 31, 2010. It has also entered into a Working Capital Facility Agreement.
For this, Rajkumar Nandlal Dhoot and Pradeep Nandlal Dhoot executed a Personal Guarantee Deed on August 8, 2012.
Later, SBI issued a notice on March 5, demanding that the principal borrower, Videocon Industries, pay the amount due under the RTL agreement and Working Capital Facility Agreement.
SBI moved an application under section 7 against Videocon Industries, and the Corporate Insolvency Resolution Process (CIRP) commenced against the principal borrower on June 6, 2018.
Later, SBI issued demand certificates on February 2, 2018, against the Dhoot brothers for payment of dues.
In the demand notice, an amount of Rs 3,171.37 crores was demanded with respect to the obligation made as per the Rupee Term Loan Agreement.
By another demand notice dated February 20, 2018, a demand was made with regard to the Working Capital Consortium Agreement. An amount of Rs 795.57 crore was claimed to be in default.
As payment was not made, SBI moved a section 95 plea before the NCLT, which appointed a resolution professional and directed to submit a report.
The resolution professional submitted its report under Section 99(1), recommending initiation of the personal insolvency resolution process with respect to both brothers.
On the report, the NCLT heard the parties and, by orders dated June 4, 2024, and June 14, 2024, respectively, admitted the Section 95 application filed by the State Bank of India. Aggrieved by the order, they had approached the NCLAT, which dismissed their plea.
