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TMI Blog2024 (10) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... ed because at that time it was the case of the appellant that the notice dt. 26.05.2016 is for invoking the personal guarantee. The facts in the case of Amanjyot Singh are that the Corporate Debtor M/s Gulati Retail India Ltd. had obtained financial facilities from Punjab and Sind Bank and ICICI Bank Ltd. Amanjyot Singh was one of the personal guarantors of the financial facilities extended by Punjab and Sind Bank. The Punjab and Sind Bank issued a notice under Section 13 (2) of the Act on 04.10.2023 to both the corporate debtor and the guarantors. By the said notice, they were called upon jointly and severally to make the payment and discharge their liability with interest with effect from 01.10.2023. Amanjyot Singh, being the guarantor, himself filed an application under Section 94 of the code to initiate the CIRP. If the notice dated 26.05.2016 is treated to be the notice invoking the personal guarantee, whether the petition having been filed on 02.12.2021 is still within the period of limitation? - HELD THAT:- Section 18 provides for acknowledgement in writing and the balance sheet indicating the liability is the acknowledgement in writing - It is also pertinent to mention that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PNB was the lead bank. The said loan was secured by present appellants in both the appeals along with others as guarantors by executing a deed of guarantee on 27.10.2010. 3.The principal borrower, namely, Vandana Vidhyut Limited was admitted into CIRP on 26.04.2021 by the National Company Law Tribunal, Mumbai on an application filed under Section 7 of the Code by the State Bank of India/Respondent No.1. It is an admitted fact that the principal borrower has already gone into liquidation. 4.The present proceedings were initiated at the instance of Respondent No. 1 by filing an application under Section 95 on 02.12.2021 in terms of provisions of the Code and Rule 7(1) of the Insolvency Bankruptcy (Application to Adjudicating Authority for Insolvency Process of Personal Guarantors to Corporate Debtors), Rules, 2019 (in short Rules ). 5.The said application was contested by the present appellants, before the Ld. Tribunal, on the ground that the application has been filed on 02.12.2021 is barred by limitation as the date of default in the application filed under Section 95 is mentioned as 24.07.2016. 6.It is the case of the appellant that since the date of limitation is three years in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the Tribunal has committed a patent error in treating the notice dated 21.06.2021 as the notice invoking the Bank Guarantee which is otherwise a statutory notice issued under Rule 7 (1) of the Rules in consonance with Section 95 (4) (b) of the code. It is submitted that the said notice dated 21.06.2021 was mainly for the purpose of filing the application under Section 95 as the language of Section 95 (4) (b) itself suggests that the application under section 95 cannot be filed until unless the notice is issued. He further submits that Rule 3 (e) of the Rules provides the definition of the guarantor which says that guarantor means a debtor who is a personal guarantor to a corporate debtor and in respect of whom guarantee has been invoked by the creditor and remains unpaid in full or part . The main thrust of the argument is that for the purpose of proceedings against a guarantor, the guarantee has to be invoked. It is his positive case that the said guarantee which has been given by the present appellant by way of guarantee deed 24.07.2016 has not been invoked. It is submitted that even if there is a notice issued under section 13(2) of the SARAFESI Act 2002, the said notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be given enabling the corporate debtor to make the payment. 12.Mr. Bajaj, appearing on behalf of Respondent No. 2, has also submitted that guarantee deed is a continuing guarantee, therefore, it could have been invoked by virtue of notice issued under Rule 7 (1) of the rules. Otherwise, he has submitted that by the notice issued on 26.05.2016 the appellant have been categorically asked to discharge their liability as guarantors within the period of 60 days, therefore, that has to be treated as a notice issued for the purpose of invoking guarantee. 13.We have heard counsel for the parties and perused the record with their able assistance. 14.There is no dispute that the appellant extended their personal guarantee for the facilities availed by the Corporate Debtor. The relevant part of the guarantee deed dated 27.10.2010 are reproduced as under: If at any time default shall be made by the Borrower in payment of the Loan as aforesaid together with interest, costs, charges, expenses and other money for the time being due to the Lenders in respect of or under the Common Loan Agreement, the Guarantors shall forthwith on demand pay to the Lenders the whole of such. Loan together with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddress to which it is required to be dispatched under this Clause shall be deemed to have been duly served on the Guarantors four days after the date of posting thereof, and shall be sufficient if signed by any officer of any of the Lenders and in proving such service it shall be sufficient if it is established that the envelope containing such notice, communication or demand was property addressed and put into the post. 15.The notice issued on 26.05.2016 was at the instance of five banks including Respondent No. 1 and in that notice it has been categorically averred that: Simultaneously you notices Nos. 2, 3, 4 5 are aware that you have by a guarantee / joint guarantee guaranteed payment on demand of all moneys and discharge all obligations and liabilities then or at any time thereafter owing or incurred to us by M/s Vandana Vidhyut Ltd. We have to inform you notices Nos. 2, 3, 4 5 that the borrower has committed defaults in payment of his liabilities and consequently the accounts have been classified as non- performing asset. Since the borrower has committed defaults, in terms of the guarantee you have become jointly and severally liable to pay to us the outstanding amount of loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter dated 22nd October 2016, regarding exercise of symbolic possession on account of non-payment of debts. (B)Punjab National Bank and other Consortium Banks had filed Original Applications against the Company before the Debt Recovery Tribunal, Jabalpur (DRT ) under section 19 of the Recovery of Debts due to Banks and Financial Institution Act, 1993. In that respect the DRT has issued show cause notice to the company on dated 12.06.2017. NOTE-4 LONG-TERM BORROWINGS Secured loans Term loans From Banks* 13,03,51,39,288 16,22,39,59,995 From Financial Institutions 2,47,54,65,422 - Total 15,51,06,04,710 16,22,39,59,995 (i) Uco Banks has assigned and transfer it's total debt along with all underlying rights, benefits and obligations to Edelweiss ARC Ltd under the Securitisation and Reconstruction of financial Assets and Enforcement of Security Interest Act,2002 ( SARFAESI Act,2002 )w.e.f. 30.03.2016. (ii)Term loan is secured by equitable mortgage of leased land along with proposed building, plant and hypothecation of other movable assets including assignment of the project related documents, contracts, rights, interest, insurance contracts and all benefits incidentals to the proje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failing which insolvency resolution process, under the Code, shall be initiated against you. 18.Since the application has been filed under Section 95, therefore, it is relevant to refer to Section 95 of the code which is reproduced as under:- Section 95: Application by creditor to initiate insolvency resolution process. *95 . (1) A creditor may apply either by himself, or jointly with other creditors, or through a resolution professional to the Adjudicating Authority for initiating an insolvency resolution process under this section by submitting an application. (2)A creditor may apply under sub-section (1) in relation to any partnership debt owed to him for initiating an insolvency resolution process against (a)any one or more partners of the firm; or (b)the firm. (3) Where an application has been made against one partner in a firm, any other application against another partner in the same firm shall be presented in or transferred to the Adjudicating Authority in which the first mentioned application is pending for adjudication and such Adjudicating Authority may give such directions for consolidating the proceedings under the applications as it thinks just. (4) An application und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26.05.2016 was for the purpose of invoking personal guarantee then how the appellant can argue before this court today that the said notice was not for the purpose of invoking the personal guarantee and cannot be used. It appears that while preparing his case, the appellant came across a decision of this court rendered in the case of Amanjyot Singh V. Navneet Kumar Jain Ors. (supra) to take a summersault from his earlier stand and argue the case in such a faishon. 22.We do not want to say much about the act and conduct of the appellant but before we proceed further we would like to discuss the Judgment which has been relied upon in the case of Amanjyot Singh V. Navneet Kumar Jain Ors. (supra) 23.The facts in the case of Amanjyot Singh (supra) are that the Corporate Debtor M/s Gulati Retail India Ltd. had obtained financial facilities from Punjab and Sind Bank and ICICI Bank Ltd. Amanjyot Singh was one of the personal guarantors of the financial facilities extended by Punjab and Sind Bank. The Punjab and Sind Bank issued a notice under Section 13 (2) of the Act on 04.10.2023 to both the corporate debtor and the guarantors. By the said notice, they were called upon jointly and severa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Appellant, at best can be said to be a technical default and when substantially, no steps have been taken by the Bank and the Bank s categorical case is that guarantee of the Appellant has not been invoked, it is the Bank, who after invoking the guarantee shall proceed against the Appellant. 12.We, thus, are satisfied that foundation which was laid down by the Appellant for initiating the CIRP against the Appellant, was not sufficient to admit Section 94 Application and initiate the CIRP against the Appellant. We may further notice that Section 10 Application against the Corporate Debtor has already been admitted and CIRP against the Corporate Debtor had been initiated. The case taken up by the Bank being categorical and clear that no steps have been taken by the Bank against the Appellant, there is no cause for the Appellant to pray for initiation of CIRP against the Appellant the Personal Guarantor. We, thus, do not find any good ground to interfere with the impugned order in this Appeal. The Appeal is accordingly dismissed. No costs. 25.In our considered opinion, the appellant has wrongly relied upon the aforesaid decision and has changed his stand so conveniently during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Civil Appeal No. 323 of 2021 in the case of Asset Reconstruction Company (India) Ltd. v. Bishal Jaiswal Anr. that the admission of liability in the financial statement i.e. balance sheet indicates the debt from the date when it is signed. Since the balance sheet was signed on 01.09.2017, therefore, counting the limitation from 26.05.2016 to 01.09.2017, the period of three years would again start running from 01.09.2017 and shall come to an end on 31.08.2020. This date i.e. 31.08.2020 happens to fall during the period of covid 2019 for which the Hon ble Supreme Court has passed an order in Suo Motu 3/2020 order dated 01.01.2022 that if the limitation expires during this period then it shall continue to run till 01.03.2022 and an additional period of 90 days shall also be available in particular circumstances. 30.Since the period of limitation to file petition under Section 95 by Respondent No. 1 was expiring during the period protected by Hon ble supreme Court, therefore, it cannot be said that this application which has eventually been filed on 02.12.2021 was beyond the period of limitation. 31.Thus, in view of the aforesaid facts and circumstances we are of the considered opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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