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2024 (4) TMI 537 - Tri - Insolvency and BankruptcyMaintainability of petition seeking initiation of CIRP against Personal Guarantor/Respondent - invocation of Bank guarantee and time limitation - HELD THAT - The contentions raised by Personal Guarantor are devoid of merit. There is no bar in IBC (Insolvency Bankruptcy Code, 2016) to proceed against each separate Personal Guarantor for same debt. Moreover, pendency of CIRP (Corporate Insolvency Resolution Process) against the Principal Borrower does not debar lender from proceeding against Personal Guarantor. Additionally, pendency of Resolution Plan approval also cannot be a ground for dismissal of proceedings against the Personal Guarantor. The Financial Creditor issued notice on 12.12.2017 under section 13(2) of the SARFAESI Act,2002 invoking the guarantee and calling upon the Guarantor to pay the said amount within 60 days - The Financial Creditor issued another demand notice on 31.10.2020 addressed to the Principal Borrower and Personal Guarantor and is relying on this notice for limitation. This bench holds that the guarantee was invoked on 12.12.2017 and the limitation began on that day and any subsequent notice of demand cannot be considered for the purpose of limitation. Since the invocation of guarantee was on 12.12.2017 and the present Company Petition was filed on 21.12.2021, it is beyond the limitation period and hence the Company Petition deserves to be rejected. Petition dismissed.
Issues involved:
Initiation of insolvency process against a personal guarantor under the Insolvency and Bankruptcy Code, 2016, invoking guarantees, limitation period for filing a Company Petition. Initiation of Insolvency Process: The application was filed by Bank of Baroda under Section 95 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate insolvency process against the Personal Guarantor for recovery of a specified amount. Various agreements and notices were executed and issued to secure credit facilities. The Corporate Debtor was previously brought under Corporate Insolvency Resolution Process (CIRP) under Section 7 of the IBC. Appointment of Resolution Professional: The Tribunal appointed a Resolution Professional to oversee the process and make recommendations for acceptance or rejection of the Company Petition. The RP's report highlighted the outstanding debt against the Personal Guarantor and the satisfaction of the application requirements under Section 95 of the Code. Contentions and Affidavit by Personal Guarantor: The Personal Guarantor raised objections, including denial of liability, limitation under the law, and the pendency of CIRP against another Personal Guarantor. Additionally, it was argued that the debt had been paid off/settled by the principal borrower, thereby questioning the cause of action against the Personal Guarantor. Constitutional Validity and Supreme Court Judgment: The proceedings were halted pending the Supreme Court's decision on the Constitutional Validity of Sections 94 to 100 related to personal guarantor insolvency. The Supreme Court upheld the validity of these sections, emphasizing the role of the resolution professional and the protection of debtors' rights during the process. Findings and Order: The Tribunal found the contentions of the Personal Guarantor lacking merit, allowing separate proceedings against each guarantor for the same debt. The bench ruled that the Company Petition was beyond the limitation period, based on the invocation of the guarantee in 2017. Consequently, the Petition seeking CIRP against the Personal Guarantor was rejected.
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