Personal guarantee invocation through SARFAESI notice upheld, and procedural defects did not defeat insolvency proceedings.

A Section 13(2) SARFAESI notice can amount to invocation of a personal guarantee where, read with the guarantee deed, it clearly demands payment from the guarantor for the secured liability; on that basis, the insolvency application under Section 95 of the IBC was maintainable. Alleged defects in authorisation and filing were treated as rectifiable procedural irregularities, and in the absence of prejudice they did not invalidate the petition. The Tribunal therefore sustained the insolvency initiation against the personal guarantor and rejected the appeal on merits.

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Issues: (i) Whether the notice issued under Section 13(2) of the SARFAESI Act, 2002 invoked the personal guarantee and furnished a valid for proceedings under Section 95 of the Insolvency and Bankruptcy Code, 2016; (ii) Whether alleged defects in authorisation and filing of the petition vitiated the insolvency application.

Issue (i): Whether the notice issued under Section 13(2) of the SARFAESI Act, 2002 invoked the personal guarantee and furnished a valid for proceedings under Section 95 of the Insolvency and Bankruptcy Code, 2016.

Analysis: The guarantee deed provided that the guarantor's liability would arise on demand and that notice could be given personally or by post without any prescribed special form. The notice dated 29.02.2016 demanded payment of the outstanding liability from the addressees, including the appellant, in relation to the credit facilities extended to the corporate debtor. The fact that the appellant was described as a director did not alter the substance of the demand. The Tribunal also distinguished earlier decisions and held that whether a Section 13(2) notice invokes the guarantee depends on the wording of the notice and the terms of the guarantee deed.

Conclusion: The notice was a valid invocation of the personal guarantee and the insolvency proceedings were maintainable.

Issue (ii): Whether alleged defects in authorisation and filing of the petition vitiated the insolvency application.

Analysis: The objection was treated as a hypertechnical one. No prejudice was shown and the defect, if any, was of a rectifiable procedural nature. Such procedural infirmities were held not to justify rejection of the insolvency petition when the debt, default, and invocation of guarantee were otherwise established.

Conclusion: The alleged procedural defects did not vitiate the petition.

Final Conclusion: The appeal failed on merits, and the order initiating insolvency against the personal guarantor was sustained.

Ratio Decidendi: A Section 13(2) notice under the SARFAESI Act will constitute invocation of a personal guarantee where, read with the guarantee deed, it clearly demands payment from the guarantor in respect of the secured liability; technical defects in authorisation do not defeat insolvency proceedings in the absence of prejudice.

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