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2024 (12) TMI 1314 - AT - IBCTime limitation of Section 95 application filed by the Respondent No. 1 Bank - Section 95 application was filed by a duly authorized person or not. Whether the Section 95 application filed by the Respondent No. 1 Bank was time-barred? - HELD THAT - Demand Notice under Rule 7(1) clearly stipulated that the debt was due on 04.06.2021 being the date of Demand Notice under Section 13(2) of the SARFAESI Act. The date of default in the Rule 7(1) notice was clearly shown as 04.08.2021 being 60 days from 04.06.2021. The Section 13(2) Notice was also attached with the Rule 7(1) Notice. Since the guarantee deed specifically mentioned that the guarantee was in the nature of an on-demand guarantee the default was to arise on the part of the Guarantor only when the Demand Notice was issued as contemplated in the Deed of Guarantee. Thus the period of limitation of the Personal Guarantor was to commence once the demand was made on the Guarantor by the Respondent No.1 Bank. Hence the Notice dated 04.06.2021 issued by the Respondent No.1 Bank to the Personal Guarantor has to be treated to be Notice on Demand as contemplated in the Deed of Guarantee. The Rule 7(1) Notice dated 28.06.2021 had therefore rightly recorded that the debt was due on 04.06.2021 being the date of Demand Notice under Section 13(2) of the SARFAESI Act and that the date of default occurred on 04.08.2021 on the expiry of 60 days from 04.06.2021. Section 95 petition which was filed on 18.06.2022 was very much within the limitation period since the Personal Guarantee had been invoked on 04.06.2021 and demand qua the Personal Guarantor arose on the expiry of the period specified in the Demand Notice. When the Respondent No.1 Bank has given time to the Guarantor to make payment by 04.08.2021 in terms of the Notice dated 04.06.2021 there can be no default on the part of the Guarantor on any earlier date. Whether the Section 95 application was filed by a duly authorized person? - HELD THAT - It is an admitted fact that the Authority Letter authorising the AGM to file the Section 95 application was signed by the Deputy General Manager. It was clarified by the Ld. Counsel for the Respondent No.1 Bank during the oral submissions that the AGM of the Respondent No1 Bank being SMGS-V was statutorily competent to sign any petition by virtue of The Gazette of India Notification dated 02.05.1987 which notified that in pursuance of Regulations 76(1) of the State Bank of India General Regulations 1955 framed under Section 50 of the State Bank of India Act 1955 the Executive Committee of the Central Board of the State Bank of India authorized all Officers in the Grade of SMGS-IV and above to exercise Signing Power in respect of documents connected with the current or authorized business of the Bank. Since the Gazette of India Notification lies in the public domain and is subsisting the plea raised by the Appellant that the Section 95 application signed by an AGM level Officer of the Respondent No.1 Bank to be unauthorized not impressed - Section 95 application filed by the Respondent No.1 Bank is valid and therefore reject this technical plea raised by the Appellant. All the three impugned orders therefore do not warrant any interference - The Appeals filed by all the three Appellants are devoid of merit and therefore dismissed.
Issues Involved:
1. Whether the Section 95 application filed by the Respondent No. 1 Bank was time-barred. 2. Whether the Section 95 application was filed by a duly authorized person. Issue-wise Detailed Analysis: 1. Time-Barred Application: The primary contention of the Appellant was that the Section 95 application filed by the Respondent No. 1 Bank was time-barred. The Appellant argued that the date of default mentioned in the application was 31.07.2013, and thus the three-year limitation period expired in 2016. The Appellant further contended that any acknowledgment of debt after the expiration of the limitation period, such as the letter dated 11.01.2022, could not revive or extend the limitation period. The Respondent No. 1 Bank argued that the Personal Guarantee was invoked through a Demand Notice dated 04.06.2021 under Section 13(2) of the SARFAESI Act, and since the Appellant did not make the payment within the stipulated period, the application filed on 18.06.2022 was within the limitation period. The Tribunal examined the Deed of Guarantee and noted that it was a continuing guarantee, and the liability of the guarantor was to be read from the Deed of Guarantee. The Tribunal referred to the judgment in Pooja Ramesh Singh Vs. State Bank of India, which stated that the liability of a guarantor stems from the contract of guarantee, and the date of default can differ from that of the principal borrower. The Tribunal concluded that the Demand Notice dated 04.06.2021 was a valid invocation of the guarantee, and the Section 95 application filed on 18.06.2022 was within the limitation period as the default occurred on 04.08.2021, the expiry of the period specified in the Demand Notice. 2. Authorization of the Application: The Appellant challenged the validity of the Section 95 application on the ground that it was signed by an Assistant General Manager (AGM) of the Respondent No. 1 Bank, who was allegedly not authorized to do so. The Appellant argued that the application did not disclose the authority under which the AGM signed the application, and the Authority Letter was not backed by a resolution from the Central Board of Directors of the Respondent No. 1 Bank. The Respondent No. 1 Bank countered this argument by stating that the AGM was authorized to file the application as per a Gazette Notification dated 02.05.1987, issued under the State Bank of India General Regulations, 1955. This notification authorized officers in the grade of SMGS-IV and above to exercise signing power in respect of documents connected with the bank's business. The Tribunal found this explanation satisfactory and held that the Section 95 application was validly filed by an authorized person. Conclusion: The Tribunal dismissed the appeals filed by the Appellant, holding that the Section 95 application was neither time-barred nor filed by an unauthorized person. The Tribunal found no merit in the Appellant's arguments and upheld the impugned orders initiating the insolvency resolution process against the Personal Guarantor. The appeals were dismissed without costs.
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