Limitation and invocation of personal guarantees under insolvency law were linked to the pleaded default and valid recall notice.

For proceedings against personal guarantors under the Insolvency and Bankruptcy Code, limitation ran from the pleaded default tied to invocation of the guarantee, not from the earlier corporate debtor default reflected in the NeSL certificate. The Section 95 application was therefore not time-barred, and the absence of the revival letter did not justify rejection on limitation grounds on these facts. A SARFAESI demand notice expressly requiring the guarantors to discharge liability within 60 days constituted valid invocation of the personal guarantees; the pleaded default date of 24.12.2019 was consistent with that invocation, so the finding of inconsistency was incorrect. The rejection orders were set aside and the Section 95 proceedings restored for fresh consideration under Section 100.

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Issues: (i) Whether the applications under Section 95 of the Insolvency and Bankruptcy Code, 2016 were barred by limitation. (ii) Whether the personal guarantees had been validly invoked and the dates of default were wrongly treated as inconsistent.

Issue (i): Whether the applications under Section 95 of the Insolvency and Bankruptcy Code, 2016 were barred by limitation.

Analysis: The application under Section 95 was filed on 31.03.2022 and the relevant date of default pleaded in the application was 24.12.2019. The earlier date of 30.06.2018 appearing in the NeSL certificate related to the corporate debtor's default, not the personal guarantors' liability. The non-filing of the revival letter along with the application did not affect limitation on the facts found, and the computation of limitation could not justify rejection of the proceedings as time-barred.

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

Issue (ii): Whether the personal guarantees had been validly invoked and the dates of default were wrongly treated as inconsistent.

Analysis: The notice dated 25.10.2019 under Section 13(2) of the SARFAESI Act, 2002 expressly called upon the personal guarantors to discharge their liabilities within 60 days and therefore amounted to invocation of the guarantees. The demand notice under Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Guarantors to Corporate Debtor) Rules, 2019 also referred to the guarantee deed and the recall notice dated 25.10.2019. On that basis, the pleaded date of default as 24.12.2019 was held to be consistent and the Adjudicating Authority's view to the contrary was incorrect.

Conclusion: The guarantees had been validly invoked and the finding of inconsistency in dates of default was in law and on the record.

Final Conclusion: The impugned rejection orders were set aside, and the Section 95 proceedings were restored for fresh consideration under Section 100 of the Insolvency and Bankruptcy Code, 2016.

Ratio Decidendi: For proceedings against personal guarantors, limitation runs from the pleaded default linked to invocation of the guarantee, and a demand/recall notice expressly calling upon guarantors to discharge liability can constitute valid invocation of the personal guarantee.

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