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The National Company Law Tribunal (NCLT), Bengaluru Bench, has declared Naseer Ahmed, Member of the Karnataka Legislative Council from the Congress, arsenic “bankrupt” nether the Insolvency and Bankruptcy Code (IBC) for failing to repay ₹1,454 crore outstanding indebtedness magnitude of his erstwhile institution M/s Scotts Garments Limited, Bengaluru, present liquidated.
The declaration of Mr. Naseer arsenic a ‘bankrupt’ present leads to his disqualification from the station of MLC nether some Section 140 of the IBC and Article 191(1)(c) of the Constitution of India, which disqualifies a MLA oregon MLC if helium is an “undischarged insolvent”.
Incidentally, Mr. Naseer was removed from the station of governmental caput (to the past Chief Minister Siddaramaiah) amid allegations of anti-party enactment during the Davangere South Assembly bypoll.
Wife and lad too
Meanwhile, the NCLT has besides declared his wife, Nuzhat Aisha Naseer, and lad Awaiz Ahmed arsenic “bankrupt” arsenic they were besides idiosyncratic guarantors for the indebtedness arsenic erstwhile directors of the institution of which Mr. Naseer was the Managing Director earlier it was liquidated pursuing a liquidation proceedings initiated successful 2019.
A Bengaluru Bench of the NCLT comprising comprising Sunil Kumar Aggarwal (Judicial Member) and Radhakrishna Sreepada (Technical Member) passed the bid connected June 8 connected an exertion filed by State Bank of India, Canara Bank, and IDBI Bank nether the IBC-2016.
The NCLT has appointed Insolvency Professional, Ravindra Beleyur, arsenic Bankruptcy Trustee (BT) nether Section 125 of the IBC to instrumentality custody of each the assets/estates of Mr. Naseer, his woman and lad for recovering the dues to the creditors.
Disqualification
From the bankruptcy commencement date, Section 140 of the IBC states, the bankrupts, too disqualification nether existing laws, are disqualified from being appointed oregon acting arsenic a nationalist servant; being appointed oregon acting arsenic a trustee oregon typical of immoderate trust, property oregon settlement, being elected to immoderate nationalist office, oregon beryllium elected, sit, oregon ballot arsenic a section authorization member.
Bankruptcy declaration imposes restrictions connected Mr. Naseer and others similar preventing them from acting arsenic immoderate institution manager oregon enactment successful promotion, formation, oregon management. They cannot, without BT’s sanction, make charges oregon incur debt. They indispensable pass partners, indispensable disclose bankruptcy earlier specified transactions, cannot prosecute ineligible enactment connected debts without adjudicating authority’s approval, and cannot question overseas without permission.
Background of case
The banks had extended assorted recognition facilities to the company, for which Mr. Naseer, his woman and son, stood arsenic idiosyncratic guarantors. After the company’s indebtedness relationship was classified arsenic a Non-Performing Asset (NPA) successful 2018, the creditors initiated betterment proceedings. The insolvency solution process against the idiosyncratic guarantor was primitively admitted by the NCLT successful June 2022.
Though the NCLT had fixed capable opportunities for Mr. Naseer and others to taxable resolution/repayment plan, they failed to taxable immoderate program pursuing which the consortium of banks resolved to dainty the lack of a repayment program arsenic a “deemed repayment plan” with ‘nil’ worth and moved to question bankruptcy.
Meanwhile, the guarantors contested the bankruptcy proceedings earlier the NCLT, by arguing that determination beryllium nary privity of declaration betwixt them and the banks arsenic they had not executed immoderate deed of warrant successful favour of the banks. The trio had besides contended that the warrant deed was executed successful favour of a information trustee, SBICAP Trustee Company, and not straight to the banks.
However, NCLT rejected these contention by pointing retired that the creditor-guarantor narration betwixt the slope and them was already established earlier it successful 2022 itself and specified a presumption had attained finality. The NCLT besides clarified that pendency of betterment proceedings earlier the Debts Recovery Tribunal does not barroom proceedings nether the IBC, arsenic remedies are autarkic and concurrent.
