2024 (7) TMI 868 - AT - Insolvency and Bankruptcy

Permission to Financial Creditor to amend the date of default as pleaded in the rejoinder affidavit - date of default - time limitation - HELD THAT - The date of default is relevant for computing the limitation for filing Application under Section 95 for a Court, before whom any Application is filed, to determine as to whether the Application is filed within the limitation. It is well settled that Financial Creditor is permitted to supplement the Application by filing the additional documents. Present is a case where the issue of invocation of guarantee of Personal Guarantor was specifically raised in the reply of the Personal Guarantor. The question of date of invocation of personal guarantee of the Personal Guarantor is yet to be decided by the Adjudicating Authority. The Adjudicating Authority has granted time to the Personal Guarantor to file reply to the amended petition and to oppose the new date of default to be inserted by the Petitioner . By virtue of the order dated 03.05.2024, the date of new default, which is inserted by the Appellant is 22.12.2021 and when the Demand Notice was sent to the Personal Guarantor by which the guarantee was invoked. The Personal Guarantor has ample opportunity to oppose the date of default and satisfy the Court that it is not the correct date of default and raise all contentions with regard to limitation. In the facts of the present case, there are no error in the order of the Adjudicating Authority, permitting the Financial Creditor to amend the date of default, specially when the date of default 01.12.2015, which was mentioned in Section 95 Application is date of default of Corporate Guarantor and the Notice dated 19.01.2022, which was relied under Section 13, subsection (2), was the notice to Guarantors and Mortgagers. It is well settled that parties/ Applicants are entitled to bring additional materials on record, which can be accepted by the Adjudicating Authority for adjudication of Application. Materials brought on the record by rejoinder affidavit, refers to Notice dated 22.12.2021, which is being relied by the Applicant as a date on which guarantee of Personal Guarantor was invoked. The rights of the Personal Guarantor being fully protected by order impugned, there are no ground to entertain this Appeal - appeal dismissed.

Summary

Issues:
- Amendment of date of default in insolvency application
- Invocation of personal guarantee
- Rights of the personal guarantor

Amendment of Date of Default:
The judgment involves an appeal by the personal guarantor of a financial creditor challenging an order allowing the creditor to amend the date of default in the insolvency application. The financial creditor sought to change the date of default mentioned in the application from 01.12.2015 to 22.12.2021. The personal guarantor objected, claiming it would affect their defense rights. The Adjudicating Authority permitted the amendment, giving the personal guarantor the liberty to oppose the new date by filing a reply. The authority considered the importance of the date of default for limitation purposes and allowed the amendment to include the new date, ensuring the personal guarantor could contest it.

Invocation of Personal Guarantee:
The case involved the invocation of the personal guarantee of the corporate debtor by the financial creditor. The financial creditor relied on a demand notice under Section 13(2) of the SARFAESI Act, 2002, dated 19.01.2022, to invoke the guarantee. The personal guarantor contested this, arguing that the notice was not for invoking the personal guarantee but for enforcing security interest on the mortgaged property. The personal guarantor claimed that the notice for invoking the guarantee should have been under the specific guarantee agreement. The financial creditor, in response, filed a rejoinder citing a notice dated 22.12.2021 as the date of default for the personal guarantor. The Adjudicating Authority allowed the financial creditor to amend the date of default, considering the specific issues raised regarding the invocation of the personal guarantee.

Rights of the Personal Guarantor:
The judgment upheld the rights of the personal guarantor by allowing them the opportunity to challenge the new date of default and present their arguments before the Adjudicating Authority. The order emphasized that the personal guarantor's objections and defenses were to be considered, ensuring their rights were protected throughout the proceedings. The Adjudicating Authority granted time for the personal guarantor to file a reply to the amended petition and oppose the new date of default, maintaining fairness and due process in the legal proceedings. Ultimately, the appeal was dismissed, affirming the protection of the personal guarantor's rights despite the amendment of the date of default in the insolvency application.