Judgment Summaries (NCLT) – Union Bank of India v. Dheeraj Wadhawan

  February 15, 2022

CASE SUMMARY

In the matter of Union Bank of India v. Dheeraj Wadhawan

{NCLT, Mumbai; February 01, 2022}

FACTS: The Petition was filed by the Financial Creditor under Section 95 of the Insolvency and Bankruptcy Code, 2016 (“Code”) against Mr. Dheeraj Wadhawan, Personal Guarantor to Dewan Housing Finance Corporation Limited (“DHFL”). By and under an application made by the Reserve Bank of India (“RBI”), Corporate Insolvency Resolution Process (“CIRP”) was initiated against DHFL. The Financial Creditor issued the demand notice at the Residence of Mr. Dheeraj Wadhawan under Form B as per Rule 7 of the Insolvency and Bankruptcy Rules (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Rules, 2019 (“Personal Guarantors Rules”).

It was contended by Mr. Wadhawan that the Financial Creditor failed to serve the demand notice because he was in judicial custody at the time of service and for that reason, the demand notice ought to have been served to him as per Order 5 Rule 24 of the Code of Civil Procedure.

HELD: The Tribunal observed that it is important to differentiate between issuance of demand notice and service of summons on defendants who are in jail. The Tribunal relied on the judgment passed by the Supreme Court in Pepsu Road Transportation Corporation, Patiala v. Amandeep Singh stating that notice need not be sent personally unless provided in the regulations or instructions. The Tribunal held that neither the Code nor the Personal Guarantors Rules of 2019 prescribe for personal service of the demand notice thus, serving demand notice at the residence of Mr. Wadhawan was valid irrespective of him being in judicial custody at the time of service.

The Application to initiate insolvency proceedings against Mr. Wadhawan as a Personal Guarantor to DHFL was allowed.

Full text of the order accessible here.

 

 

 

 

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