Personal guarantor proceedings: guarantor-specific default date and clear recall notice can satisfy limitation and invocation requirements.

In Section 95 proceedings against personal guarantors, limitation is assessed by reference to the default pleaded against the guarantor, not an earlier corporate debtor default reflected in supporting records. A demand or recall notice that unequivocally calls upon the guarantors to pay the outstanding debt and discharge their liability can amount to valid invocation of the personal guarantees. Different dates appearing in related documents did not, on these facts, create a fatal inconsistency or bar the applications. The reasoning therefore supports acceptance of the Section 95 applications where the guarantor-specific default date was within limitation and the guarantees were properly invoked.

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Issues: (i) Whether the Section 95 applications against the personal guarantors were barred by limitation. (ii) Whether the recall notice dated 25.10.2019 constituted invocation of the personal guarantees and whether the different dates of default stated by the applicant defeated the applications.

Issue (i): Whether the Section 95 applications against the personal guarantors were barred by limitation.

Analysis: The application under Section 95 was filed on 31.03.2022 and stated the date of default as 24.12.2019. The earlier date of 30.06.2018 appearing in the NeSL certificate related to the corporate debtor's default and not the default pleaded against the personal guarantors. The absence of the revival letter along with the application did not affect the computation of limitation in the facts of the case. The period of limitation, as applied to proceedings against personal guarantors, was not shown to have expired before filing of the applications.

Conclusion: The applications were not barred by limitation and the objection on this ground was unsustainable.

Issue (ii): Whether the recall notice dated 25.10.2019 constituted invocation of the personal guarantees and whether the different dates of default stated by the applicant defeated the applications.

Analysis: The notice dated 25.10.2019 demanded payment from all personal guarantors, referred to their liability, and called upon them to discharge the outstanding dues within 60 days. It was treated as a clear invocation of the personal guarantees. The demand notice under Rule 7 of the 2019 Rules also referred to the recall notice and the same date of default as 24.12.2019. The presence of 30.06.2018 in the NeSL certificate did not create a fatal inconsistency because that date pertained to the corporate debtor's default. The reasoning that no proper invocation had occurred was therefore incorrect.

Conclusion: The personal guarantees were validly invoked and the alleged inconsistency in dates did not justify rejection of the applications.

Final Conclusion: The dismissal orders were set aside, and the Section 95 proceedings were restored before the Adjudicating Authority for fresh consideration in accordance with law.

Ratio Decidendi: In proceedings under Section 95 against personal guarantors, limitation is to be tested on the basis of the default pleaded against the guarantor and a demand notice that unequivocally calls upon guarantors to pay the debt can amount to valid invocation of the personal guarantee.

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