Continuing Guarantee sustains guarantor liability despite renewals; insolvency admission upheld when certification and limitation requirements met.

The article addresses admission under Section 95 IBC against a personal guarantor, focusing on whether guarantee deeds were continuing guarantees, whether renewals amounted to novation, limitation, and the sufficiency of the Resolution Professional's certification. It explains that an express continuing guarantee and agreement that loan variations do not discharge the guarantor sustain liability despite sanction letter renewals unless validly revoked or consented novation occurs. Invocation under SARFAESI was treated as triggering default and limitation was held satisfied after suspension principles. It also notes the Code's overriding effect does not preclude filing under Section 95 during SARFAESI proceedings, supporting admission and initiation of the insolvency process.

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Issues: Whether the Adjudicating Authority (NCLT) correctly admitted the application under Section 95 of the Insolvency and Bankruptcy Code, 2016 and ordered initiation of the insolvency resolution process against the personal guarantor.

Analysis: The Tribunal examined whether the guarantee deeds constitute a continuing guarantee, whether the guarantees were revoked, whether the cause of action fell within the limitation period, and whether the Resolution Professional's recommendation under Section 99 satisfied the requirements for admission under Section 95. The guarantee deed dated 25.09.2012 contains express clauses characterising it as a continuing guarantee and containing an agreement by the guarantor that variations in loan terms would not affect liability. The subsequent sanction letters and renewals were treated as renewals rather than novation; principles from the Contract Act concerning novation (Section 62) require consent for substitution of contracts, and the authorities cited establish that a continuing guarantee survives renewals unless validly revoked. The invocation by issuance of notice under Section 13(2) of the SARFAESI Act on 09.11.2018 constituted a triggering default; the petition filed on 11.08.2021 was within the applicable limitation period, taking into account suspension of limitation where applicable. The Tribunal noted that Section 238 of the Insolvency and Bankruptcy Code, 2016 gives the Code overriding effect and does not bar filing under Section 95 during SARFAESI proceedings. The Tribunal found that the Resolution Professional had certified meeting of the requirements of Section 95 and that the NCLT had considered and rejected the appellant's objections based on continuing guarantee, limitation, novation, and multiple proceedings.

Conclusion: The NCLT's admission of the application under Section 95 of the Insolvency and Bankruptcy Code, 2016 and the institution of the insolvency resolution process against the personal guarantor is upheld; the appeal is dismissed and the decision is against the appellant in favour of the respondent.

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