Personal guarantor escapes insolvency proceedings due to time-barred application and procedural lapses under Section 95 IBC

NCLT Ahmedabad dismissed an application under Section 95 of IBC, 2016 for initiating insolvency resolution process against a personal guarantor. The tribunal found the application time-barred due to inconsistencies in default dates (30.06.2018 vs 24.12.2019), lack of proper guarantee invocation, and doubts about genuineness of revival letter and service acknowledgment filed later without explanation. The court noted that SARFAESI notice was issued before the claimed default date, indicating no actual invocation of guarantee when default occurred.

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Issues Involved:
1. Maintainability of the application under Section 95 of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016).
2. Limitation period for filing the application.
3. Validity of the revival letter and service of notice.

Issue-wise Detailed Analysis:

1. Maintainability of the Application:
The application was filed by the State Bank of India (Financial Creditor) under Section 95 of the IBC, 2016, seeking to initiate the Insolvency Resolution Process against the personal guarantor of the Corporate Debtor, M/s. Yogiraj Ginning and Oil Industries Pvt. Ltd., for a default amounting to Rs. 24,41,53,898.12. The personal guarantor contested the application, arguing it was barred by limitation and defective due to the non-filing of relevant documents, including the revival letter dated 19.09.2017 and the notice invoking the personal guarantee.

2. Limitation Period for Filing the Application:
The personal guarantor argued that the application was filed beyond the limitation period, citing the date of default as 30.06.2018, while the application was e-filed on 28.01.2023. The applicant contended that the limitation period should be counted from the date of the demand notice under Section 13(2) of the SARFAESI Act, which was issued on 14.06.2019. The Tribunal noted that the revival letter, which could extend the limitation period, was not initially filed with the application and was only produced later without permission, creating doubts about its genuineness. The Tribunal also considered the exclusion of the limitation period due to the COVID-19 pandemic as directed by the Hon'ble Supreme Court but found that the application was still time-barred.

3. Validity of the Revival Letter and Service of Notice:
The personal guarantor disputed the authenticity of the revival letter dated 19.09.2017, claiming she never signed it and requested a forensic examination of the signature. The Tribunal noted that the revival letter was not mentioned in the Resolution Professional's (RP) report, creating further doubts about its authenticity. Additionally, the service of the demand notice was contested by the personal guarantor, who claimed it was not served upon her. The Tribunal found that the notice was received by someone else at the respondent's address, which could be considered proper service under the provisions of the Civil Procedure Code (CPC).

Conclusion:
The Tribunal concluded that the application was not maintainable due to the following reasons:
1. The revival letter was not initially filed with the application, and its authenticity was doubtful.
2. The application was filed beyond the limitation period, even after considering the exclusion period due to the COVID-19 pandemic.
3. The correct procedure for invoking the guarantee was not followed, as the dates of default and the notice did not correlate.

Order:
The Tribunal rejected the application CP(IB) 170(AHM)2023 with IA/1431(AHM)2023.

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