NCLAT Upholds Insolvency Against Takshashila Heights Guarantors, Finds No Error In PoA Holder Competence

The National Company Law Appellate Tribunal (NCLAT) at New Delhi has upheld insolvency proceedings against personal guarantors of Takshashila Heights India Private Limited, rejecting their challenge to the debenture trustee's authority to initiate the case.

The appeals were filed against orders admitting applications under Section 95 of the Insolvency and Bankruptcy Code by IDBI Trusteeship Services Ltd.

The bench of Justice Ashok Bhushan and Technical Member Indevar Pandey heard the matter.

The dispute arises from funds raised by the corporate debtor through non-convertible debentures subscribed by Axis RERA Opportunities Fund – I, backed by personal guarantees from the appellants.

A Resolution Professional had been appointed prior to admission and had submitted a report. The guarantors did not file any reply or objection before the Adjudicating Authority and only made written submissions.

Their challenge was that the trustee lacked proper authorisation to initiate proceedings and that the power of attorney relied upon did not permit the officer to file the application. They also objected to the direction requiring a deposit of Rs. 2 lakh with the Resolution Professional.

The tribunal noted that a board resolution authorising action was on record and that the power of attorney had been executed pursuant to it. Referring to the Supreme Court's ruling in Rajendra Narottamdas Sheth v. Chandra Prakash Jain, it held that there was no error in the competence of the authorised representative to file the application.

“We, thus, do not find any error in competence in filing of application by power of attorney holder," it held.

It also noted that no objection had been filed before the Adjudicating Authority, and that the guarantee framework permitted the trustee to act for debenture holders, with nothing on record to show any objection from them.

On this basis, the tribunal declined to interfere with the admission of the proceedings.

However, it set aside the direction requiring the guarantors to deposit Rs. 2 lakh and directed that the amount be paid by the financial creditor instead.

The appeals were disposed of with this modification.