Continuing guarantee invocation and balance sheet acknowledgment can both extend limitation for insolvency claims against personal guarantors.

An express invocation of a continuing guarantee can preserve limitation for a creditor's insolvency application against personal guarantors, and a written acknowledgment in a signed balance sheet can independently extend limitation under the Limitation Act. The guarantee notice issued in 2016 was treated as a valid invocation, so the absence of a later invocation did not defeat limitation. The balance sheet signed on 01.09.2017 also contained admissions of loan liability and amounted to acknowledgment in writing, giving rise to a fresh limitation period. The insolvency application filed on 02.12.2021 was therefore held to be within time, with the Covid-19 suspension orders also relevant to the limitation calculation.

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Issues: (i) Whether the demand notice and the earlier guarantee invocation placed the Section 95 application within limitation; (ii) Whether the balance sheet signed by the appellants constituted acknowledgment of liability so as to extend limitation.

Issue (i): Whether the demand notice and the earlier guarantee invocation placed the Section 95 application within limitation.

Analysis: The guarantee deed provided for payment on demand and described the guarantee as continuing. The notice issued in 2016 expressly called upon the guarantors to pay the outstanding dues within 60 days and stated that the guarantee was being invoked. The later contention that the notice could not be treated as invocation was not accepted. The proceedings under Section 95 required the creditor's demand notice under Rule 7(1), but the earlier invocation of liability remained relevant for computing limitation.

Conclusion: The guarantee was treated as invoked in 2016, and the limitation plea based on absence of invocation failed.

Issue (ii): Whether the balance sheet signed by the appellants constituted acknowledgment of liability so as to extend limitation.

Analysis: The balance sheet signed on 01.09.2017 contained admissions regarding the loan liability and therefore amounted to acknowledgment in writing within the meaning of Section 18 of the Limitation Act, 1963. Acknowledgment before expiry of the prescribed period gives rise to a fresh period of limitation from the date of signing. On that basis, the application filed on 02.12.2021 was still saved by the period excluded during the Covid-19 limitation suspension orders.

Conclusion: The balance sheet constituted a valid acknowledgment and the Section 95 application was within limitation.

Final Conclusion: The appeals failed because the creditor's action was not time-barred, and the order admitting the insolvency application against the personal guarantors was sustained.

Ratio Decidendi: For a personal guarantor, an express invocation of liability under the guarantee and a subsequent written acknowledgment of debt in the balance sheet can each operate to save limitation for a creditor's insolvency application.

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