Personal guarantee not invoked by SARFAESI notice; section 94 insolvency application found inadmissible

A notice under section 13(2) of the SARFAESI Act, issued for enforcement of security interest against mortgaged property, did not amount to invocation of the appellant's personal guarantee because the creditor took no independent steps to proceed against the guarantor for recovery. The materials before the Tribunal did not establish invocation of the guarantee itself, and the Resolution Professional's report also noted that no later notice was issued to the personal guarantor, with limitation considerations mentioned. On that basis, the application under section 94 of the Insolvency and Bankruptcy Code, 2016 was not admissible.

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Issues: Whether the notice issued under section 13(2) of the SARFAESI Act, 2002 constituted invocation of the appellant's personal guarantee so as to sustain an application under section 94 of the Insolvency and Bankruptcy Code, 2016.

Analysis: The notice was issued in the context of enforcement of security interest against the mortgaged property. The record showed that no independent steps had been taken by the creditor to proceed against the appellant as guarantor for recovery of dues. The statutory scheme of section 13 of the SARFAESI Act, 2002 was treated as a mechanism for enforcing security interest, and the materials placed before the Tribunal did not establish that the guarantee itself had been invoked. The report of the Resolution Professional also noted that no subsequent notice had been issued to the personal guarantor and adverted to limitation considerations.

Conclusion: The notice under section 13(2) did not constitute sufficient invocation of the appellant's guarantee, and the application under section 94 of the Insolvency and Bankruptcy Code, 2016 was not admissible.

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