Part-payment by the borrower extends limitation against a co-extensive personal guarantor, keeping insolvency proceedings maintainable.

A corporate debtor's undisputed part-payment extended limitation against the personal guarantor because the guarantee bound the guarantor to the borrower's part-payments and the guarantor's liability was co-extensive with that of the principal borrower. Dismissal of an earlier recovery application for default did not extinguish the underlying debt or render insolvency proceedings non-maintainable. Accordingly, the application to initiate insolvency resolution against the personal guarantor under Section 95, filed after the part-payment, was within limitation and maintainable.

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Issues: Whether the application for initiation of insolvency resolution process against the personal guarantor under Section 95 was barred by limitation.

Analysis: The corporate debtor's part-payment on 03.02.2021 was undisputed. Under the deed of guarantee, a part-payment by the borrower bound the guarantor; further, the guarantor's liability was co-extensive with that of the principal borrower. The earlier dismissal of the recovery application for default did not extinguish the underlying debt or make the Section 95 proceeding non-maintainable.

Conclusion: The Section 95 application instituted on 28.09.2023 was within limitation and was maintainable against the personal guarantor.

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