Deemed service under a guarantee deed and an operative decree can sustain personal guarantor insolvency proceedings despite denial of receipt.

A guarantee deed providing deemed service on dispatch to the guarantor's address supported valid notice service where the record showed dispatch to the address recognised in an operative decree and postal tracking corroborated delivery. The plea of non-service therefore failed, and later material about an alternate address did not vitiate the proceedings. The article also notes that an existing decree holding the personal guarantors jointly and severally liable defeated the argument that the personal guarantee had never been invoked, so proceedings under the insolvency framework could continue. The Resolution Professional's notice was treated as duly served, and the guarantor insolvency challenge failed, subject to an opportunity to propose a repayment plan in accordance with law.

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Issues: (i) Whether the personal guaranty stood invoked so as to sustain the proceedings under Section 95 of the Insolvency and Bankruptcy Code, 2016. (ii) Whether service of the demand notice and the notice issued by the Resolution Professional was valid and in compliance with the applicable rules and the guarantee deed.

Issue (i): Whether the personal guaranty stood invoked so as to sustain the proceedings under Section 95 of the Insolvency and Bankruptcy Code, 2016.

Analysis: The debt against the personal guarantors had already been the subject of proceedings before the Debt Recovery Tribunal, which culminated in a decree holding the defendants jointly and severally liable and permitting recovery against the person and properties of the guarantors. The decree remained operative and had not been shown to have been set aside. In these circumstances, the contention that the personal guarantee was never invoked could not be accepted.

Conclusion: The objection failed and was decided against the appellants.

Issue (ii): Whether service of the demand notice and the notice issued by the Resolution Professional was valid and in compliance with the applicable rules and the guarantee deed.

Analysis: The guarantee deed contained a deeming clause that treated dispatch of notice by registered post or certificate of posting to the guarantor's address, or any other address intimated to the bank, as sufficient service. The record showed dispatch to the Masab Tank address, which was treated as the correct address in the earlier decree, and the postal tracking report was read with the notice itself. On that basis, service was held to be complete. The subsequent filing of material relating to the alternate address did not vitiate the proceedings, and no non-compliance with the service requirements was found. The Resolution Professional's notice under Section 99(2) was also treated as duly dispatched and served.

Conclusion: The objection to service was rejected and held to be without merit.

Final Conclusion: The appellate challenge to the admission of the personal guarantor insolvency application failed, while the Resolution Professional was expected to afford the appellants an opportunity to place a repayment plan in accordance with law.

Ratio Decidendi: Where a guarantee deed provides for deemed service on dispatch to the guarantor's address, and the record shows dispatch to the correct address supported by the decree and postal record, service cannot be defeated by disputing actual receipt; an operative decree fixing liability against the personal guarantor also defeats the plea that the guarantee was never invoked.

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