NCLAT upholds admission of Section 95 application against personal guarantor despite limitation challenge

NCLAT dismissed appeal by personal guarantor challenging admission of Section 95 application filed by State Bank of India. Court held that limitation period was properly extended under Section 18 of Limitation Act based on pleadings on record. Single notice of demand to personal guarantor was sufficient to invoke guarantee, and repeated notices were not required before filing Section 95 application. Adjudicating Authority correctly admitted the application as it was filed within prescribed time limits. No error found in lower authority's order admitting proceedings against personal guarantor.

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Issues:
1. Condonation of delay in filing the appeal.
2. Condonation of delay in refiling the appeal.
3. Appeal against the order admitting a Section 95 application.
4. Question of limitation in the Section 95 application.

Condonation of Delay:
- The judgment addresses two applications for condonation of delay in filing and refiling the appeal. The delay in filing the appeal was condoned due to sufficient cause shown. The delay in refiling the appeal was also condoned as the appellant had rectified the defect within the stipulated time, and the registry had re-notified the defects.

Appeal Against Section 95 Application:
- The appeal was filed against an order admitting a Section 95 application by the State Bank of India against the appellant as the personal guarantor for a loan given to a corporate debtor. The appellant challenged the order, claiming the application was time-barred as the notice invoking the corporate guarantee was issued in 2014, while the application was filed in 2022.

Question of Limitation:
- The key issue revolved around whether the application under Section 95 was barred by time. The appellant argued that the application was time-barred due to the notice of demand issued in 2014. However, the respondent contended that various factors, including offers for One Time Settlement and a decree passed by the Debt Recovery Tribunal, extended the limitation period under Section 18 of the Limitation Act.

- The judgment highlighted that the pleadings made by the State Bank of India provided for an extension of limitation under Section 18 of the Limitation Act. The Adjudicating Authority admitted the Section 95 application based on these pleadings, indicating no error in the decision. The court emphasized that even if there was no plea raised regarding limitation, the court must examine the question of limitation before proceeding further in an application.

- The court also analyzed the guarantee clause, which required a notice of demand to be given after a default by the borrower. The notice of demand was issued in 2014 to the personal guarantor, invoking the guarantee. The appellant argued that fresh notices were required for filing the Section 95 application, but the court disagreed, stating that the bank was entitled to initiate proceedings after invoking the guarantee. The court found no error in admitting the Section 95 application and dismissed the appeal.

This judgment delves into the procedural aspects of condonation of delay, the grounds for challenging an order admitting a Section 95 application, and the critical examination of whether the application was time-barred. The court's detailed analysis of the limitation issue, considering various factors affecting the limitation period, demonstrates a thorough legal reasoning process leading to the dismissal of the appeal.

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