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Issues: (i) Whether the notice issued under Section 13(2) of the SARFAESI Act, 2002 amounted to invocation of the personal guarantee and fixed the commencement of limitation for proceedings under the Insolvency and Bankruptcy Code, 2016. (ii) Whether the petition under Section 95 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation despite acknowledgment of debt in the corporate debtor's financial statements.
Issue (i): Whether the notice issued under Section 13(2) of the SARFAESI Act, 2002 amounted to invocation of the personal guarantee and fixed the commencement of limitation for proceedings under the Insolvency and Bankruptcy Code, 2016.
Analysis: The notice dated 12.04.2018 was addressed not only to the borrower but also to the guarantors and specifically called upon the guarantor to discharge liability within 60 days. The operative effect of such a notice depends on its language and the intent conveyed to the guarantor. Where the notice expressly demands payment from the guarantor in that capacity, it is treated as invocation of the personal guarantee. The existence of later notices under the insolvency framework did not displace the earlier invocation arising from the contents of the SARFAESI notice.
Conclusion: The notice under Section 13(2) was treated as invocation of the personal guarantee.
Issue (ii): Whether the petition under Section 95 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation despite acknowledgment of debt in the corporate debtor's financial statements.
Analysis: The corporate debtor's independent auditor's report and financial statements contained a clear acknowledgment of the debt. An acknowledgment in writing within the limitation period attracts Section 18 of the Limitation Act, 1963 and gives rise to a fresh period of limitation. Such acknowledgment by the principal borrower also operates for the benefit of the personal guarantor. On that basis, the limitation period was recomputed from the date of acknowledgment, and the petition filed thereafter was held to be within time. The Tribunal also noted that proceedings under SARFAESI and the Insolvency and Bankruptcy Code are independent and the latter is not displaced by parallel recovery steps.
Conclusion: The petition under Section 95 was not barred by limitation.
Final Conclusion: The appeals succeeded, the dismissal of the insolvency petitions was set aside, and the proceedings against both personal guarantors were held maintainable.
Ratio Decidendi: A notice under Section 13(2) of the SARFAESI Act, 2002 invokes a personal guarantee if its language expressly requires the guarantor to discharge liability, and an acknowledgment of debt by the principal borrower in its financial statements extends limitation for proceedings against the guarantor under Section 18 of the Limitation Act, 1963.
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