Invocation of personal guarantee: guarantee-enforcement petition held maintainable and interim moratorium effective from filing, remitted for fresh orders.

Invocation of a personal guarantee by reliance on a legal notice was held sufficient to render a guarantee-enforcement application maintainable; the adjudicating authoritys dismissal for alleged defectiveness was set aside because the notice constituted invocation. Interim moratorium arising on filing of the guarantee-enforcement application operates from filing, and lack of income-tax returns did not render the petition defective. The adjudicating authoritys jurisdiction to proceed and pass orders in insolvency-related proceedings was affirmed and the matter was remitted for fresh expeditious orders under the statutory power to decide such petitions.

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Issues: (i) Whether the personal guarantee was validly invoked prior to filing the Section 95 application; (ii) Whether the Section 95 petition was complete and maintainable.

Issue (i): Whether the personal guarantee was validly invoked prior to filing the Section 95 application.

Analysis: The guarantee deed required a written demand/communication to the guarantor for invocation. The Section 95 application included a legal notice dated 07.12.2020 and a subsequent demand notice under Rule 7 dated 14.12.2020. The earlier legal notice addressed the guarantor, recalled the outstanding amount and demanded payment, and therefore constituted written communication of demand as contemplated by the guarantee deed. Prior precedent holding that a Form-B/Rule-7 demand alone cannot constitute invocation is distinguishable where a prior written notice exists.

Conclusion: The guarantee was invoked prior to filing the Section 95 application. Conclusion in favour of Appellant.

Issue (ii): Whether the Section 95 petition was complete and maintainable.

Analysis: The Form C application requirements were examined. Item entries for annual income do not mandate filing Income Tax Returns; absence of Income Tax Returns therefore does not render the application defective. Given that the guarantee had been invoked by the 07.12.2020 legal notice and the Resolution Professional had filed a Section 99 report recommending admission, the petition met maintainability requirements and the interim moratorium under Section 96 had commenced on filing.

Conclusion: The Section 95 petition was complete and maintainable. Conclusion in favour of Appellant.

Final Conclusion: The Adjudicating Authority's order rejecting the Section 95 petition as non-maintainable is set aside; the underlying company petition and related applications are revived for fresh consideration by the Adjudicating Authority under Section 100.

Ratio Decidendi: A guarantor's liability is invoked where the creditor issues a written communication that, under the terms of the guarantee deed, demands payment; such written notice suffices for invocation even if a subsequent Rule-7/Form-B demand is also issued.

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