NCLAT dismissed the appeal challenging the rejection of a ...

Guarantee Invocation Requires Strict Contractual Compliance: Default Must Exist at Demand Notice Issuance

April 9, 2025

Case Laws     IBC     AT

NCLAT dismissed the appeal challenging the rejection of a Section 95 application. The Tribunal held that a valid guarantee invocation requires strict compliance with contractual terms. The default on the part of the guarantor must exist at the time of issuing the demand notice. The Tribunal emphasized that the mere issuance of a notice under Rule 7(1) does not automatically constitute guarantee invocation. The application was deemed non-maintainable due to failure to satisfy mandatory pre-requisites for filing the application, specifically the proper invocation of the guarantee as per the deed's terms. Consequently, the lower court's order was upheld, and the appeal was dismissed without merit.

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