CL-07 Applicant

1
19thSurana & Surana National Corporate Law Moot Court Competition 2021
CL-07
19th Surana & Surana National Corporate Law

Moot Court Competition 2021
BEFORE THE NATIONAL COMPANY LAW TRIBUNAL

AT BENGALURU
Application No. 5/ 2021

in
IBC Application No. 100/ 2021
IN THE MATTER OF
Fugistar Diamond Singapore General Partnership
Rep by its Interim Receiver
Singapore … Applicant
vs.
Fugistar Diamond India Private Limited

Rep by its Interim Resolution Professional
Bengaluru … Respondent
APPLICATION FILED UNDER CLAUSE 12 OF INSOLVENCY AND

BANKRUPTY CODE CROSS BORDER INSOLVENCY
DRAFT MODEL LAW, 2018
WRITTEN SUBMISSIONS ON
BEHALF OF THE APPLICANT
WRITTEN SUBMISSIONS ON BEHALF OF THE APPLICANT

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TABLE OF CONTENTS
LIST OF ABBREVIATIONS……………………….…………………….…………. .….. 4-5
LIST OF AUTHORTIES…………………………….………….……………………..........6-9
STATEMENT OF JURISDICTION……………………………………………….….….... 10
STATEMENT OF FACTS……….………………………………………….….…...............11
STATEMENT OF ISSUES…………………………………………………………............ 12
SUMMARY OF ARGUMENTS…………………….………………………..…….…... …13
ARGUMENTS ADVANCED………………….………………….…………………......14-28
1. WHETHER THE PROCEEDINGS BEFORE HON’BLE NCLT ARE
SUSTAINABLE?..............................................................................................................14-16
[1.1] THAT THE SUIT QUALIFIES AS A FOREIGN PROCEEDING…………………...14
[1.2] THAT THE SUIT QUALIFIES AS A FOREIGN MAIN PROCEEDING……………15
[1.3] THAT THE SUIT IS OPPOSED TO PUBLIC POLICY……………………...………16
2. WHETHER CENTRE OF MAIN INTREST LIES IN SINGAPORE?
………………………………………………………………...……….17-21
[2.1] THAT THE DIRCTOR CONTROL THE INDIAN OFFICE FROM
SINGAPORE……………………………………………………………………………….18
[2.2] THAT THE DATE OF RECOGNITION OF APPLICATION OF INSOLVENCY WAS
EARLIER IN SINGAPORE THAN INDIA………………………………………………20
[2.2] THATSINGAPOREIS ACERTAINBLE BY CREDITOR…………………………21
3. WHETHER THE INSOLVENCY PROCEEDINGS CAN BE INITIATED AGAINST
THE GUARANTOR OF THE CORPORATE DEBTOR FOR THEIR
LIABILITY?..………………………………………………………………………….22-28

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[3.1] THAT A CORPORATE GUARANTOR TO A DEBTOR FACING INSOLVENCY
CAN BE SUBJECTED TO INSOLVENCY PROCEEDINGS…………………………22-24
[3.2] THAT THE LIABILITY OF THE GUARANTOR IS CO-EXTENSIVE, JOINT AND
SEVERAL WITH THE PRINCIPAL BORROWER………………………………………25
[3.3] THAT THE ENTIRE INSOLVENCY PROCEEDINGS AGAINSTTHE INDIAN
COMPANY BE LEFT TO THE HIGH COURT OF SINGAPORE IN GOOD FAITH AS
PER CLAUSE 6 OF THE DRAFT MODEL LAW…………………………………….26-28
PRAYER…………………………………………………………………………………..29

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LIST OF ABBREVIATIONS
& And
Sec. Section
AIR All India Reporter
Anr. Another
Art. Article
Co. Company
COMI Centre of Main Interest
Cl. Clause
Corpn. Corporation
Cr. Crore
edn. Edition
eds. Editor
Id. IBID
In re. In the matter of
IBC Insolvency and Bankruptcy Code
INR Indian Rupees
IP Insolvency Professional
IR Insolvency Resolution
IRDA Insolvency, Restructuring and Dissolution Act
IRP Insolvency Resolution Professional
GP General Partnership
Ltd. Limited
L. Rev. Law Review

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M/s Messer’s
Mag. Magazine
Manu. Manupatra
NCLT National Company Law Tribunal
NCLAT National Company Law Appellate Tribunal
NPA Non-Performing Asset
SBI State Bank of India
SCA Singapore Companies Act
SCC Supreme Court Cases
SCR Supreme Court Record
U.S. United States
Trib. Tribunal
U.K . United Kingdom
u/s Under Section
w.e.f. With effect from
UNCITRL United Nations Commission on International
Trade Law

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LIST OF AUTHORITIES
Table of Cases
1. Australian Equity Investors FCA 1002 [2012]
2. Bank of Bihar Ltd. v Dr. Damodar Prasad &Anr., AIR 1969 (1) SCR 620
3. Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, 2019
SCCOnLine SC 1478
4. Embassy Property Development Pvt. Ltd. v. State of Karnataka 24(2020)13 SCC 308
5. Gauri Shankar Jain v. Punjab National Bank 2019 SC Online Cal 7288
6. Industrial Investment Bank of India v. Biswanath Jhunjhunwala, (2009) 9 SCC 478
7. Industrial Finance Corpn. of India Ltd. v. CannanoreSpg. &Wvg. Mills Ltd., 2002 5 SCC
54;
8. In re British American Ins. Co. Ltd., 425 B.R. 884, 908-09 (Bankr. S.D. Fla. 2010)
9. In re Eurofood IFSC Ltd. 397 BCC (ECJ) (2006)
10. In Re Kaupthing Singer and Friedlander Ltd., (1) All ER 883 (2012)
11. In re Millennium Global Emerging Credit Master Fund Limited, 458 B.R. 63, 77
(S.D.N.Y. 2011).
12. In re Ran 607 F 3d 1017 (5th Cir, 2010
13. In Re Kaupthing Singer and Friedlander Ltd., (1) All ER 883(2012)
14. In re Ti-ContinentalExchange Ltd., 349 B.R. 627, 629 (Bankr. E.D. Cal. 2006
15. In re Stanford Int'l Bank Ltd. 137 EWCA [Gr. Brit.:2010].
16. Lalit Kumar Jain v. Union of India, Transferred Case Civil No. 245 of 2020
17. Lalit Narayan Mishra Institute of Economic Development v. State of Bihar, 25(2008) 10
SCC 368

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18. Macquarie Bank Vs Shilpi Cable Technology 916 Latest Caselaw SC 2017
19. Maharashtra State Electricity Board v. Official Liquidator, HC Ernakulam &Anr 1882
(3) SCC 358
20. PAFCO 2916 INC. C/o Pegasus Aviation Finance Company vs. Kingfisher Airlines
Ltd 2016 SCCOnLine Kar 599
21. Punjab National Bank v. State of U.P., 2002 5 SCC 80.
22. Re Rooftop Group International Pte Ltd and another (Triumphant Gold Ltd and another,
non-parties) [2019] SGHC 280).
23. Re Qimonda AG, 462 B.R. 165 (Bankr. E.D. Va. 2011)
24. Re Toft, 453 B.R. 186, 201 (Bankr. SDNY 2011)
25. State Bank of India v. Indexport Registered 27(2003)8 SCC 369
26. State Bank of India v. V Ramakrishnan &Ors, 2018 (17) SCC 394
Articles, Journal and Reports
1. Ran Chakrabarti, Key Issues in Cross Border Insolvency,30 NLSIR 119 (2018)
2. Priya Misra, Cross-border Corporate Insolvency Law in India: Dealing with Insolvency in
Multinational Group Companies Determining Jurisdiction for Group Insolvencies, 45(2)
VIKALPA 93 (2020)
3. Bryan Rochelle, Cross Border Insolvency in U.S. and U.K: Conflicting Approaches to define
the Locus of a Debtor’s “Centre of Main Interest”, 50(2) IL 391, 2017
4. Report of Insolvency Law Committee on Cross Border Insolvency, Ministry of Corporate
Affairs, Government OfIndia, 16th Oct 2018

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5. Vasanth Rajasekaran and Harshvardhan Korada, Personal Guarantors To Corporate Debtors
Liable Under The Insolvency And Bankruptcy Code, 2016: Supreme Court Of India,
MONDAQ, 26 May 2021, https://www.mondaq.com/
6. OUTLOOK, Individual guarantors to face insolvency proceedings along with firms under IBC,
21 May 2021 8:16 pm, https://www.outlookindia.com/
7. Dhananjay Mahapatra, Guarantors for loans liable under IBC proceedings: SC, May 22, 2021,
08:22 IST,https://timesofindia.indiatimes.com/
8. Herman Jeremiah and Kia Jeng Koh, Timing Is Everything: Different Approaches To The
Relevant Date For Determining COMI In Cross-Border Recognition Proceedings, 15 August
2019, https://www.mondaq.com/
9. Mayer Brown, Overview of the English legal framework for cross border insolvency, Mayer
Brown International LLP, March 2012, https://www.mayerbrown.com/
Statutes
1. UNCITRAL Model Law on Cross-Border Insolvency (1997)
2. British Cross Border Insolvency Regulations, 2006(Actno. 1030 of 2006)
3. Insolvency & Bankruptcy Code, 2016 (Act No. 31 of 2016)
4. Insolvency, Restructuring and Dissolution Act 2018 (Act no. 40 of 2018)
Books
1. ISBN: 978-81-947537-0-4Insolvency and Bankruptcy Board of India, Insolvency and
Bankruptcy Regime in India: A Narrative; Insolvency and Bankruptcy Board of India 2020
2. Taxman’s Company Law: A comprehensive text book, Dr. G. K. Kapoor &Dr. Sanjay
Dhamija, 22nd Edition, 2019

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Database
1. https://manupatra.com/
2. https://www.thehindubusinessline.com/
3. www.investopedia.com
4. https://www.jstor.org/
5. www.scconline.com

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STATEMENT OF JURISDICTION
The Hon’ble National Company Law Tribunal of Bengaluru, India has the jurisdiction under
Clause 12 of Report of Insolvency Law Committee on Cross Border Insolvency,2018 or
Insolvency and Bankruptcy Code Cross Border Draft Model Law of India based on the United
Nations Commission on International Trade Law (UNCITRAL) of Cross Border insolvency,
1997 which read as follows:
12. Application for recognition of foreign Proceedings
“Application for recognition of a foreign proceeding (1) Subject to clause 7, a foreign
representative may apply to the Adjudicating Authority for recognition of the foreign
proceeding in which the foreign representative has been appointed.
(2) An application for recognition under sub-clause (1) shall be accompanied by-(a) a certified
copy of the decision commencing the foreign proceeding and appointing the foreign
representative; (b) a certificate from the foreign court affirming the existence of the foreign
proceeding and of the appointment of the foreign representative; or(c) in the absence of
evidence referred to in sub-clause (a) and (b), any other evidence as may be prescribed,
affirming the existence of the foreign proceeding and of the appointment of the foreign
representative; and(d) a statement identifying all foreign proceedings and proceedings under
this Code in respect of the corporate debtor that are known to the foreign representative;
and(e) a translation of documents in support of the application for recognition in English, if
applicable.
(3) An application for recognition under sub-clause (1) shall be made in such form and manner
and be accompanied with such fees as may be prescribed.”
The applicant humbly submits to the jurisdiction of this Tribunal.

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STATEMENT OF FACTS
1. Fugistar Diamond India Private Limited was incorporated in Bengaluru in April 2005
by Vallabh Das born in Antwerp. He was the Managing Director and held 99% shares and
remaining was held by his two Indian friends. In 2010, the founder approached the Great Bank
of India for INR 1,000 crores loan, granting which bank created charge over his properties
worth INR 500 crores.
2. Founder; setup Fugistar Diamond Singapore General Partnership in January 2013 in
Singapore. The Indian company owned 99% stake, Vallabh and his Singapore resident friend
owned 1%. In January 2014, he approached the Singapore Central Bank for a loan of INR 500
crores. The GP had assets worth INR 250 crores in Singapore by the end of 2013. The Indian
company stood as a guarantor to disburse the loan amount of INR 500.
3. Both company and the GP acted well until end of 2016. Founder then started to
mismanage the firms and siphoned off money. The company did not pay interests for the whole
of 2017. In January 2019, he fled to Singapore and was awarded PRC in Singapore in January
2020. He started to manage the Indian company from Singapore and took complete charge of
the GP. Indian bank started to declare the loans of the Indian company as NPA and attached
all its movable and immovable assets in India. Amount due stood at INR 1,500 crores by the
end 2020. In April 2021, the Great Bank of India filed an application under section 7 of the
IBC before the NCLT at Bengaluru as IBC Application No. 100 of 2021. The application was
admitted on 20.10.2021 due to administrative delays. The moratorium period commenced from
21.10.2021.Further on, the Singapore bank also initiated insolvency proceeding, and impleaded
the Indian company. IR as per IRDA was appointed by the High Court of Singapore and
moratorium-like cooling off period was initiated.
4. The GP filed Application No. 5 in IBC Application No. 100/2021 before the NCLT
Bengaluru. The application was filed under Clause 12 of the Model Draft Law.

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STATEMENT OF ISSUES
ISSUE -1
WHETHER THE PROCEEDINGS BEFORE HON’BLE NCLT ARE
SUSTAINABLE?
ISSUE -2
WHETHER CENTRE OF MAIN INTREST LIES IN SINGAPORE?
ISSUE -3
WHETHER THE INSOLVENCY PROCEEDINGS CAN BE INITIATED AGAINST
THE GUARANTOR OF THE CORPORATE DEBTOR FOR THEIR LIABILITY?

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SUMMARY OF ARGUMENTS
1.WHETHER THE PROCEEDINGS BEFORE HON’BLE NATIONAL COMPANY
LAW TRIBUNAL ARE SUSTAINABLE?
It is most humbly submitted before this Hon’ble Tribunal that the proceedings that have been
started before this bench is maintainable and sustainable. The suit brought forward qualifies as
a foreign proceeding as in the present case a suit was filed by the Singapore Bank before the
Hon’ble High Court of Singapore under Insolvency, Restructuring and Dissolution Act, 2018
and thus it was a proceeding under the judicial body filed under an insolvency law. It is also a
foreign main proceeding as Singapore is the COMI in this particular case and is not opposed
to public policy in any way.
2. WHETHER THE CENTRE OF MAIN INTREST LIES IN SINGAPORE?
The Counsel humbly advocates that Centre of Main Interest for filing the insolvency process
lies in Singapore as the test for proving the Centre of Main Interesti.e nerves centre test and
ascertainment of creditors would be fulfilled by the Singapore GP.
3.WHETHER THE INSOLVENCY PROCEEDINGS CAN BE INITIATED AGAINST
THE GUARANTOR OF THE CORPORATE DEBTOR FOR THEIR LIABILITY?
The counsel hereby submits that the insolvency proceedings can be initiated against the
corporate guarantor of the corporate debtors. The liability of the guarantor is co-extensive, joint
and several with the principal borrower. The entire insolvency proceedings against the Indian
company be left to the High Court of Singapore in Good Faith as per Clause 6 of the Draft
Model Law.

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ARGUMENTS ADVANCED
[1] WHETHER THE PROCEEDINGS BEFORE HON’BLE NCLT ARE
SUSTAINABLE AND MAINTAINABLE?
[¶1] It is most humbly submitted before this Hon’ble Tribunal that the proceedings that have
been started before this bench is maintainable and sustainable. The suit brought forward
qualifies as a foreign proceeding [1.1], is a foreign main proceeding [1.2] and is not opposed
to public policy [1.3] in any way.
[1.1] That the suit qualifies as a Foreign Proceeding.
[¶2] It is humbly submitted that the original suit qualifies as a foreign proceeding under the
definitions and explanations as accepted by the international community, the UNICITRAL and
even the Indian Draft law.
[¶3] “Foreign proceeding means a collective judicial or administrative proceeding in a
foreign State, including an interim proceeding, pursuant to a law relating to insolvency in
which proceeding the assets and affairs of the debtor are subject to control or supervision by a
foreign court, for the purpose of reorganization or liquidation”1
[¶4] Under the Indian Draft law foreign proceedings is a collective judicial or administrative
proceeding in a foreign country, including an interim proceeding pursuant to a law relating to
insolvency in which proceeding the assets and affairs of the corporate debtor are subject to
control or supervision by a foreign court, for the purpose of reorganization or liquidation2.
[¶5] Thus, from these definitions it can be understood that for a proceeding to qualify as a
foreign proceeding three criteria’s must be fulfilled i.e.:
1
Article 2(a), UNICITRAL Model Law
2
Section 2(g), Indian Draft Law

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1. Collective Judicial or administrative proceeding
2. A proceeding in a Foreign State
3. Pursuant to a law relating to insolvency
[¶6] In the present case a suit was filed by the Singapore Bank before the Hon’ble High Court
of Singapore under Insolvency, Restructuring and Dissolution Act, 2018 in September
2021.This is thus a judicial proceeding which was filed before the Hon’ble High Court of
Singapore and thus was a Judicial Proceeding. The proceeding took place in Singapore i.e. in
Foreign State. Also, the suit was filed under the Insolvency, Restructuring and Dissolution Act,
in relation to Insolvency law of the state of Singapore and thus can be recognised as a foreign
proceeding under the Act.
[1.2] That the suit qualifies as a Foreign Main Proceeding.
[¶7] It is humbly submitted that the proceeding is a foreign main proceeding and thus the
Singapore Interim Receiver be given access to the Indian assets and relief be granted under the
Draft Law.
[¶8] Foreign main proceeding means a foreign proceeding taking place in the state or country
where the debtor has the centre of its main interests3.“Foreign proceedings will be recognised
as main proceedings if the domestic courts determine that the debtor has its COMI in a foreign
country. This recognition will result in certain automatic relief, such as allowing foreign
representatives greater powers in handling the debtor’s estate.”4
[¶9] In the present case the Fugistar Diamond Singapore GP had loaned INR 500 crores from
Singapore Central Bank in 2014 and the and Singapore GP currently owes a total of INR 1000
3
Article 2 (b), UNICITRAL Model Law; also Section 2 (e), Indian Draft Law
4
ISBN: 978-81-947537-0-4 Insolvency and Bankruptcy Board of India, Insolvency and Bankruptcy Regime in
India: A Narrative; Pg. No. 350 Insolvency and Bankruptcy Board of India 2020

16
crores which includes the principal amount, the interest and punitive interest as well. The
Indian firm i.e., Fugistar Diamond India Private Limited is a partner as well as the guarantor in
the transaction loan agreement. The COMI is also in Singapore as will be proven shortly and
thus the proceeding in Singapore qualifies as a foreign main proceeding.
[1.3] That the suit is not opposed to Public Policy.
[¶10] It is humbly contended that the current suit is not opposed to public policy and is in line
with the established principles that the public policy exception in the model law were framed
with.
[¶11] “Public policy exception - Nothing in this Law prevents the court from refusing to take
an action governed by this Law if the action would be manifestly contrary to the public policy
of this State.”5 The same has been established under Section 4 of the Draft Law. Further it has
been implied that the “public policy exceptions should be interpreted restrictively and that
article 6 is only intended to be invoked under exceptional circumstances concerning matters of
fundamental importance for the enacting State.”6
[¶12] In re Toft7, The Court held that the requested relief would be manifestly contrary to public
policy because disclosure of Toft’s emails would violate the Electronic Communications
Privacy Act and a bankruptcy trustee would not be entitled to such relief8.
[¶13] In re Qimonda AG9, the court explained that the public policy exception to granting
comity to applicable foreign law must be limited to the most fundamental policies of the US,
5
Article 6, UNICITRAL Model Law
6
UNICITRAL, UNCITRAL Model Law on Cross-Border Insolvency with Guide to Enactment and
Interpretation; pg. 52
7
Re Toft, 453 B.R. 186, 201 (Bankr. SDNY 2011)
8
Ibid
9
Re Qimonda AG, 462 B.R. 165 (Bankr. E.D. Va. 2011)

17
and the fact that application of foreign law results in a different outcome than applying US law
is insufficient to deny comity.
[¶14] The Supreme Court in Macquarie Bank v. Shilpi Cable10 stipulated that the foreign
creditors shall have the same rights as a domestic creditor to initiate and participate in corporate
insolvency resolution process under the Code. The Apex Court expanded the definition of
‘person’ to include persons residing outside India. The Court remarked that discriminatory
interpretation would violate the right to equality enshrined in the Constitution of India, which
applies to all persons, including foreigners.
[¶15] In the current case no public policy has been violated. The suit brought against the GP
has the Indian firm as both the guarantor and partner. Further the suit is in line with established
international principles and a much wider interpretation of the section should not be done. The
cases where the breach of law has been established were cases where an express provision of
law had been violated or some constitutional mandate was violated but in present case no such
instance takes place instead it is as according to Indian law that foreign creditors must be treated
on an equal foothold to domestic creditors.
[2] WHETHER THE CENTRE OF MAIN INTREST LIES IN SINGAPORE?
[¶16] It is humbly contended that the main question here is about the Centre of Main Interest
(COMI). The Counsel humbly advocates that Centre of Main Interest for filing the insolvency
process lies in Singapore.
[¶17] As per the principle of Centre of Main Interest it is helpful in deciding where the main
proceeding should be commenced. It broadly implies that it is seat of a corporate entity’s major
stakes, whether that is in terms of control or the location of its assets and its significant
10
Macquarie Bank v. Shilpi Cable Technology 916 Latest Caselaw SC 2017

18
operation.11COMI is a notion related to the corporate debtor’s linkage, that is, to find out the
corporate debtor’s locus of prime interests in terms of operations, assets and
Management12.Courts in the U.S. and U.K have taken different approaches to defining COMI:
(1)the "nerve center" (or "principal place of business") test- and (2) the "objective third party"
analysis.13 The UNCITRAL Guide to Enactment provides the following two principal factors
which may indicate COMI in most cases14:
(a) where the central administration of the debtor takes place; and
(b) which is readily ascertainable by creditors.
If these tests are implemented then it would be clear that the Centre of Main Interest lies in
Singapore.
[2.1] That the director controlled the Indian office from Singapore
[¶18] It is humbly submitted that according to the fact the director Mr. Vallabh was the resident
of the Singapore at time of insolvency proceeding in India. He was holding his meeting in
Singapore itself. In the U.S., one COMI definition stems from the familiar notion of “principal
place of business"-a term that some courts have equated to “center of main interests."15 A
modified interpretation of COMI that is now in vogue is the headquarters criterion that is the
determination of the corporate group’s headquarters in real sense.16 The headquarters and the
11
Ran Chakrabarti, Key Issues in Cross Border Insolvency,30 NLSIR 119, 124 (2018)
12
Priya Misra, Cross-border Corporate Insolvency Law in India: Dealing with Insolvency in Multinational Group
Companies Determining Jurisdiction for Group Insolvencies, 45(2) VIKALPA 93, 97 (2020)
13
In re Stanford Int'l Bank Ltd.137 EWCA [Gr. Brit.:2010].
14
Report of Insolvency Law Committee on Cross Border Insolvency, Ministry of Corporate Affairs ,
Government Of India , 16th Oct 2018
15
In re British American Ins. Co. Ltd., 425 B.R. 884, 908-09 (Bankr. S.D. Fla. 2010)
16

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directors are the brain of the company. The meeting place of the directors of the company can
be the other office of the company from where the financial decision of the company is taken.
[¶19]In re Ti-Continental Exchange Ltd.17, the court used the "principal place of business" test
to determine that the COMI of certain debtor insurance companies. The court reached this
conclusion even though the debtors had engaged in the vast majority of their fraudulent
activities in the U.S. and Canada. More important for the court were other factors, including
the debtors' organization as international business companies in St. Vincent and the
Grenadines, where they conducted regular business operations at their registered offices in
Kingstown, St. Vincent. These facts, the court found, suggested that the debtor-insurer's
"principal place of business" was one and the same as its COMI.
[¶20] In the case of Eurofood C Ltd18, which was a subsidiary company of Parmalat Group,
the European Court of Justice held that since the subsidiary (Eurofood) was founded in Ireland,
Ireland will have jurisdiction over the matter through the parent company and the operational
headquarters of the group were located in Italy. Here, the court looked at the subsidiary and its
location, ignoring the location of the group, which could have depicted the real economic
situation of the company as well of the group.
[2.2] That the date of recognition of application of Insolvency was earlier in Singapore
than India
[¶21] The counsel humbly submitted that the application for insolvency was first filed by the
Singapore bank in Singapore and the application under the Singapore Insolvency laws19was
filed by the Singapore bank in September 2021 and the application was readily admitted on
17
In re Ti-Continental Exchange Ltd., 349 B.R. 627, 629 (Bankr. E.D. Cal. 2006).
18
In re Eurofood IFSC Ltd. 397 BCC (ECJ) (2006)
19
The Insolvency, Restructuring and Dissolution Act, 2018 (IRDA)

20
30.09.2021 by the High Court of Singapore. Which itself makes the Singapore proceeding as
the First and Main Proceeding.
[¶22] The US Court of Appeal for the Fifth Circuit decided in re Ran20 that the relevant date
for determining COMI is as at the filing of the recognition application. The court was also of
the view that undertaking the COMI inquiry at the time of the filing of the recognition petition
favored consistency in recognition outcomes across jurisdictions. If COMI were construed
through a look back period with reference to the debtor's operational history, it would increase
the likelihood of conflicting COMI determinations by different courts.
[¶23] As per Australian law, the relevant point to determine COMI is at the time of the court's
decision on the recognition application. This principle was firstly expressed in case
of Australian Equity Investors21but not accompanied by detailed reasoning on the issue of
timing.
[¶24] This approach was also confirmed in a paper recently presented by the Honorable Justice
Julie Ward of the New South Wales Supreme Court in September 2018, where the judge
confirmed that 'the relevant time for weighing up the relevant factors as to COMI is the time
of the court's determination.
[2.3] That the creditors are ascertainable in Singapore
[¶25] It is humbly argued by the counsel from applicant that the assets of the Singapore GP is
located in India and Singapore both and exclusively be used only towards the dues of the
Singapore bank as the same was held only through a general partnership firm which does not
have independent legal status and is a flow through entity for all purposes.
20
In re Ran 607 F 3d 1017 (5th Cir, 2010)
21
Australian Equity Investors FCA 1002[2012]

21
[¶26] In case of, In Re Millenium Global Emerging Credit Master Fund Limited22, the court
recognized a foreign main proceeding, holding that the debtor's COMI was Bermuda-although
some factors pointed toward other locales. The court noted that two of the debtors three
directors were located in Bermuda.23 These directors had the right to replace all of the debtors'
other agents, and to determine whether to place the funds into an insolvency proceeding.
Moreover, the funds' bank, and auditors also resided there. Thus, without management,
investors, creditors, or property in Bermuda, the court found that the debtors' COMI was
Bermuda.24
[¶27] The European Court of Justice's decision In Re Eurofood IFSC Ltd25serves as the
principal authority through which U.K. courts have subsequently applied the third party test to
cases invoking the CBIR26.The European Court of Justice held that COMI "must be identified
by reference to criteria that are both objective and ascertainable by third parties," and that
"objectivity and that possibility of ascertainment by third parties are necessary in order to
ensure legal certainty and foreseeability concerning the determination of the court with
jurisdiction to open main insolvency proceedings."
[¶28] As Mr. Vallabh is resident of Singapore and all the corporate affairs are held from
Singapore. Also, its creditors are available in Singapore. SO, the Centre of Main Interest should
be lying in Singapore.
22
In re Millennium Global Emerging Credit Master Fund Limited, 458 B.R. 63, 77 (S.D.N.Y. 2011).
23
Millennium, 458 B.R. at 77.
24
. Id.
25
26
British Cross Border Insolvency Regulations, 2006.

22
[3]. WHETHER THE INSOLVENCY PROCEEDINGS CAN BE INITIATED
AGAINST THE GUARANTOR OF THE CORPORATE DEBTOR FOR THEIR
LIABILITY?
[¶29] The counsel hereby submits that the insolvency proceedings can be initiated against the
corporate guarantor of the corporate debtors. It is contended that a corporate guarantor to a
debtor facing insolvency can be subjected to insolvency proceedings [3.1]. The liability of the
guarantor is co-extensive, joint and several with the principal borrower [3.2]. The entire
insolvency proceedings against the Indian company be left to the High Court of Singapore in
Good Faith as per Clause 6 of the Draft Model Law [3.3].
[3.1] That a corporate guarantor to a debtor facing insolvency can be subjected to
Insolvency proceedings.
[¶30] The counsel from petitioner submits before Hon’ble NCLT that a corporate guarantor
can be liable for insolvency proceeding. In this case the debtors and guarantor are the same
entity i.e., Indian company in which Vallabh is the director. So, the procedure of insolvency
can be initiated against the debtor as well as guarantor. This will enable the adjudicating
authority to have clear vision to the extent of debt of the corporate debtor, its available assets
and resources of the debtors as well as corporate guarantor27. The Singapore GP that provided
the assets which have been charged the amount advanced to Singapore GP not sufficient to be
driven to insolvency proceedings and would therefore, be likely to arrange the payment monies
due to obtain a discharge by the payment of the amount outstanding to the bank or other
financial creditors.
[¶31] As per the Clause 241 of cross border insolvency laws as mentioned below:
27
Lalit Kumar Jain v. Union of India, Transferred Case Civil No. 245 of 2020

23
‘The words “secured claims” are used to refer generally to claims guaranteed by particular
assets, while the words “rights in rem” are intended to indicate rights relating to a particular
property that are enforceable also against third parties. A given right may fall within the ambit
of both expressions, depending on the classification and terminology of the applicable law. The
enacting State may use another term or terms for expressing those concept28’
[¶32] As per above provision of the Model draft laws the right relating to particular property
that are enforceable against the third party or guarantor. The claim or right can initiate as per
applicable laws of that state29.
[¶33] The applicable laws to initiate insolvency against the corporate debtor or guarantors is
IBC, 2016 of India. The intent of the provision of the code is manifestly to allow for the creditor
to initiate and maintain proceedings against both the corporate debtor and the guarantor falling
within the ambit of Sec. 60(2) and 60(3) of the code. It is submitted that firstly, corporate
guarantor is defined in Part II of the Code which provides for the insolvency resolution and
liquidation for the corporate persons, Sec. 5(22) of the IBC defines ‘personal and corporate
guarantor to mean a person that is the surety in the contract of guarantee to a corporate debtor.
Secondly as per sec. 60(1), the adjudicating authority in relation to insolvency resolution and
liquidation of the corporate person shall be NCLT30.
[¶34] It is argued that Sec. 30 which enacts that approved resolution plan binds all the
stakeholders31. However, at the same time in event of the resolution plan permits the creditors
28
Clause 241 of the Draft Model Law
29
OUTLOOK, Individual guarantors to face insolvency proceedings along with firms under IBC, 21 May
2021 8:16 pm , https://www.outlookindia.com/newsscroll/individual-guarantors-to-face-insolvency-
proceedings-along-with-firms-under-ibc/2087532
30
Ibid
31
Vasanth Rajasekaran and Harshvardhan Korada, Personal Guarantors To Corporate Debtors Liable Under
The Insolvency And Bankruptcy Code, 2016: Supreme Court Of India, MONDAQ, 26 May 2021,
https://www.mondaq.com/india/insolvencybankruptcy/1072832/personal-guarantors-to-corporate-debtors-
liable-under-the-insolvency-and-bankruptcy-code-2016-supreme-court-of-india

24
to continue proceedings against the personal or corporate guarantor to be liable to discharge
the debt owned by the Singapore GP, which would be limited of course to the extent of the
debt that not get repaid under resolution plan. We relied on Embassy Property Development
Pvt. Ltd. v. State of Karnataka32 where the court had examined and dealt with the interplay
between Sec. 5(22), 60 and 179 of IBC, 2016.
[¶35] By virtue of Sec. 3(8)33, the business entity that owes a debt to any person. Likewise, the
corporate guarantor is the corporate person who has stood guarantee to corporate debtor.
Corporate guarantee form part that they furnished guarantee to secure loans. The insolvency
mechanism involved in regard to insolvency resolution functionally and operationally designed
for corporate bodies. The entire machinery of the code relating to corporate debtor would work
itself out to exclusion of the guarantors34. This is the peculiar problem, in that the resolution
applicant wishing to bid for takeover the corporate debtor and operate it would face hug
liability, and the guarantors in most case would be liable to insolvency of the business entity.
If the debt is not repaid then corporate guarantor would be not stand discharged 35. Therefore,
insolvency resolution process of corporate debtor would have to deal with separately and
independently of its corporate guarantor to secure debts of debtors.
[3.2] That the liability of the guarantor is co-extensive, joint and several with the
principal borrower
32
Embassy Property Development Pvt. Ltd. v. State of Karnataka 24(2020)13 SCC 308
33
Insolvency & Bankruptcy Code, 2016
34
Dhananjay Mahapatra, Guarantors for loans liable under IBC proceedings: SC, May 22, 2021, 08:22
ISThttps://timesofindia.indiatimes.com/india/guarantors-for-loans-liable-under-ibc-proceedings-
sc/articleshow/82843512.cms
35
Lalit Narayan Mishra Institute of Economic Development v. State of Bihar, 25(2008) 10 SCC 368

25
[¶36] It is further submitted that the liability of guarantor is co-extensive and several with that
of the principal borrower unless the contrary is provided by the contract. Sec. 128 of the
Contract Act, 1872 provides that the liability of principal debtor and surety is co-extensive is
an objective for the word extent and it can relate only to quantum of the principal debt36. In
case of State Bank of India v. Index port Registered37, Counsel also submitted that a surety
cannot alter or defer such a right of the creditor. Hence, Until the debt is paid off to the creditor
in entirely, the guarantor is not absolved of its joint and several liability to make payment of
the amounts outstanding in favour of the creditor.
[¶37] It is argued before Hon’ble NCLT that the right of the creditor against guarantor continue
in event of the insolvency or bankruptcy, we relied on Maharashtra State Electricity Board v.
Official Liquidator, HC Ernakulam & Anr.38, where this court considered the interplay of sec.
128 and 134 of the Contract Act in this case. In that case, a company whose advances were
secured by a guarantee went into liquidation. The court held that the fact the principal debtor
went into liquidation had no effect on the liability of the guarantor, because the discharge
secured of the principal borrower was by the operation of law and involuntary in nature39.
[¶38] The judgement of the Calcutta HC in Gauri Shankar Jain v. Punjab National Bank40, it
was held that none of the obligation of the surety under contract of guarantee are discharged
on the account of the admission of a sec 7 application of IBC. It is argued that in term of the
Sec.31 of the code, a resolution plan approved by the adjudicating authority is binding on all
36
Bank of Bihar Ltd. v Dr. Damodar Prasad &Anr., AIR 1969 (1) SCR 620,
37
State Bank of India v. Index Port Pvt. Ltd, 27(2003)8 SCC 369,
Industrial Investment Bank of India v. Biswanath Jhunjhunwala, (2009) 9 SCC 478
38
Maharashtra State Electricity Board v. Official Liquidator, HC Ernakulam &Anr 1882 (3) SCC 358
39
Industrial Finance Corpn. of India Ltd. v. Cannanore Spg. &Wvg. Mills Ltd., 2002 5 SCC 54;
Punjab National Bank v. State of U.P., 2002 5 SCC 80.
40
Gauri Shankar Jain v. Punjab National Bank 2019 SC Online Cal 7288

26
stakeholders including the guarantors and hence the release discharge and composition or
variation of contract with the principal borrower in terms of resolution plan is statutorily
presumed to be consented by the guarantors41. Therefore, by approval of resolution plan, any
composition cannot release or discharge the guarantor in any manner what so ever42. The right
of double dip of a creditor was spoken of, in recent judgement PAFCO 2916 INC. C/o Pegasus
Aviation Finance Company vs. Kingfisher Airlines Ltd43,where the decree holders initiated
simultaneous execution proceedings against both the principal debtor and the guarantor on the
basis of same decree, and the executing court Suo moto raised the issue of maintainability. The
High court held that the decree holders cannot be directed to amend their claims in each of the
execution petitions to only half of the decretal amount44.
[¶39] In the instant case, the Singapore GP is a general partnership where partners must be
personally liable for their debt. As the Indian company is the partner in GP with 99% share
along with it is a guarantor of the borrowing principal amounts. Hence, the Indian company is
liable to dispose their corporate guarantee.
[3.3] That the entire insolvency proceedings against the Indian company be left to the
Hon’ble High court of Singapore in good faith as per Clause 6 of the Draft Model law.
[¶40] It is humbly submitted before Hon’ble Tribunal that Insolvency proceedings of
Singapore GP is recognised as a foreign main proceeding because the foreign proceeding takes
41
Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, 2019 SCCOnLine SC 1478.
42
State Bank of India v. V Ramakrishnan &Ors, 2018 (17) SCC 394
43
PAFCO 2916 INC. C/o Pegasus Aviation Finance Company vs. Kingfisher Airlines Ltd 2016 SCCOnLine
Kar 599
44
In Re Kaupthing Singer and Friedlander Ltd., 2012 (1) All ER 883 Paras. 11, 12, 53-54

27
place at the debtor’s centre of main interest (COMI), i.e., Singapore. In determining the COMI,
the court will focus on factors which are objectively ascertainable by third parties45
[¶41] Further, as per clause 6 of the Draft Model Law as following:
‘Fraud by insolvent debtors, in particular by concealing assets or transferring them to foreign
them to foreign jurisdiction, is an increasing problem, in terms of both its frequency and its
magnitude. The modern, interconnected world makes such fraud easier to conceive and carry
out. The cross -border cooperation mechanism established by the Model Law are designed to
confront such international fraud46’
[¶42] As the above -mentioned clause that it will automatically be granted certain reliefs under
Article 20 of the Singapore Model Law, including the stay of actions/proceedings and
executions against the debtor’s assets and the suspension of any rights to transfer, encumber or
otherwise dispose of any assets of the debtor. Further, as per Art. 25 of Draft Model Law, the
Indian court shall cooperate to the maximum extent possible with the foreign court or foreign
representatives47.
[¶43] The Counsel submits that the test of operational headquarters ensures reflection of the
economic reality of the group and shows the actual connection among the group constituents.
Once identified, it can avoid multiplicity of proceedings and will discourage forum shopping
for bankruptcy havens by facilitating the initiation of main proceedings at the brain site of the
Group48. the ‘operational headquarters test’ is primarily based on situs of decision-making. The
courts need to adopt a holistic approach to the issue, instead of racing to uphold their
45
Re Rooftop Group International Pte Ltd and another (Triumphant Gold Ltd and another, non-parties, [2019]
SGHC 280).
46
Clause 6 of Draft Model laws of Cross Border Insolvency
47
https://uk.practicallaw.thomsonreuters.com/w-01
48

28
jurisdiction as the prime one. In the case of Eurofood C Ltd49, which was a subsidiary company
of Parmalat Group, the European Court of Justice held that since the subsidiary (Eurofood) was
founded in Ireland, Ireland will have jurisdiction over the matter through the parent company
and the operational headquarters of the group were located in Italy. Here, the court looked at
the subsidiary and its location, ignoring the location of the group, which could have depicted
the real economic situation of the company as well of the group. Similarly, in the case of BenQ,
the Dutch court had to determine the jurisdiction of the group. The court went ahead with the
place of incorporation of the parent company (Netherlands) as the criteria for determination
despite the knowledge that the entire activities were managed from Munich.50
[¶44] It is argued that the centre main interest of the debtor and the all control and management
of the Singapore GP in Singapore. So, the sole jurisdiction of the Singapore HC to initiate the
proceeding against the corporate debtor as well as the guarantor of the creditor. Hence, the
entire insolvency proceedings against the Indian company be left to the High Court of
Singapore in Good Faith.
49
50
Ben Q Mobile GmbH & Co OHG and Ben Q Mobile Holding BV, Docket No 1503 IE 4371/05 Munich, 5
February 2007.

29
PRAYER
Wherefore in the light of the issues raised, arguments advanced and authorities cited, it is
humbly prayed that this Hon’ble Court may be pleased to adjudge and declare that:
1. The proceedings initiated in Singapore against the Singapore GP and the Indian
company be treated as the ‘Foreign Main Proceeding’
2. The Indian company is also a debtor in Singapore as per Singapore IRDA to have stood
as a guarantor with unlimited liability for the loans borrowed by the Singapore GP
3. The Centre of Main Interest (COMI) of the Indian company is at Singapore
4. The proceedings initiated by the Indian bank against the Corporate Debtor i.e. the
Indian company be stayed and direct it not to proceed further in managing the assets
located in India
5. The entire control and management of the assets of the Indian company be granted to
the Interim Receiver as appointed by the High Court of Singapore
6. The Indian bank not be permitted to have any claims over the assets located in
Singapore owned by the Singapore GP under the guise of indirect ownership
7. The entire insolvency proceedings against the Indian company be left to the High Court
of Singapore in Good Faith as per Clause 6 of the Draft Model Law
8. If any assets are left after settling the dues to the Singapore bank, then it may be dealt
with in accordance with the Indian IBC provisions for the Indian bank’s claims.
AND PASS ANY OTHER ORDER OR DIRECTION THAT THIS HON’BLE COURT
MAY DEEM FIT IN THE INTERESTS OF JUSTICE, EQUITY AND GOOD
CONSCIENCE.
ALL OF WHICH IS HUMBLY PRAYED
COUNSELS FOR THE APPLICANT

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1

19th Surana & Surana National Corporate Law

BEFORE THE NATIONAL COMPANY LAW TRIBUNAL

Application No. 5/ 2021

Fugistar Diamond India Private Limited

APPLICATION FILED UNDER CLAUSE 12 OF INSOLVENCY AND

WRITTEN SUBMISSIONS ON BEHALF OF THE APPLICANT

LIST OF ABBREVIATIONS……………………….…………………….…………. .….. 4-5

SUMMARY OF ARGUMENTS…………………….………………………..…….…... …13

1. WHETHER THE PROCEEDINGS BEFORE HON’BLE NCLT ARE

[1.1] THAT THE SUIT QUALIFIES AS A FOREIGN PROCEEDING…………………...14

[1.2] THAT THE SUIT QUALIFIES AS A FOREIGN MAIN PROCEEDING……………15

[1.3] THAT THE SUIT IS OPPOSED TO PUBLIC POLICY……………………...………16

2. WHETHER CENTRE OF MAIN INTREST LIES IN SINGAPORE?

[2.1] THAT THE DIRCTOR CONTROL THE INDIAN OFFICE FROM

[2.2] THAT THE DATE OF RECOGNITION OF APPLICATION OF INSOLVENCY WAS

EARLIER IN SINGAPORE THAN INDIA………………………………………………20

[2.2] THATSINGAPOREIS ACERTAINBLE BY CREDITOR…………………………21

3. WHETHER THE INSOLVENCY PROCEEDINGS CAN BE INITIATED AGAINST

THE GUARANTOR OF THE CORPORATE DEBTOR FOR THEIR

WRITTEN SUBMISSIONS ON BEHALF OF THE APPLICANT

CAN BE SUBJECTED TO INSOLVENCY PROCEEDINGS…………………………22-24

[3.2] THAT THE LIABILITY OF THE GUARANTOR IS CO-EXTENSIVE, JOINT AND

SEVERAL WITH THE PRINCIPAL BORROWER………………………………………25

[3.3] THAT THE ENTIRE INSOLVENCY PROCEEDINGS AGAINSTTHE INDIAN

COMPANY BE LEFT TO THE HIGH COURT OF SINGAPORE IN GOOD FAITH AS

PER CLAUSE 6 OF THE DRAFT MODEL LAW…………………………………….26-28

WRITTEN SUBMISSIONS ON BEHALF OF THE APPLICANT

AIR All India Reporter

COMI Centre of Main Interest

In re. In the matter of

IBC Insolvency and Bankruptcy Code

INR Indian Rupees

IRDA Insolvency, Restructuring and Dissolution Act

IRP Insolvency Resolution Professional

L. Rev. Law Review

WRITTEN SUBMISSIONS ON BEHALF OF THE APPLICANT

NCLT National Company Law Tribunal

NCLAT National Company Law Appellate Tribunal

NPA Non-Performing Asset

SBI State Bank of India

SCA Singapore Companies Act

SCC Supreme Court Cases

SCR Supreme Court Record

U.S. United States

U.K . United Kingdom

u/s Under Section

w.e.f. With effect from

UNCITRL United Nations Commission on International

WRITTEN SUBMISSIONS ON BEHALF OF THE APPLICANT

6. Industrial Investment Bank of India v. Biswanath Jhunjhunwala, (2009) 9 SCC 478

9. In re Eurofood IFSC Ltd. 397 BCC (ECJ) (2006)

12. In re Ran 607 F 3d 1017 (5th Cir, 2010

13. In Re Kaupthing Singer and Friedlander Ltd., (1) All ER 883(2012)

15. In re Stanford Int'l Bank Ltd. 137 EWCA [Gr. Brit.:2010].

WRITTEN SUBMISSIONS ON BEHALF OF THE APPLICANT

(3) SCC 358

Ltd 2016 SCCOnLine Kar 599

21. Punjab National Bank v. State of U.P., 2002 5 SCC 80.