TaxTMI 
TaxTMI 
2026 (1) TMI 398
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....er Section 95 of the Code was admitted and personal insolvency was initiated against the Appellant/Personal Guarantor. 2. It is to be recalled that the Financial Creditor, namely, Union Bank of India, during the pendency of this appeal, vide assignment agreement dated 07.10.2024 assigned its debt due from the Corporate Debtor along with the guarantors including the Appellant to the Respondent No. 1 i.e M/s CFM Asset Reconstruction Pvt. Ltd. and in this regard an application bearing I.A No. 259 of 2025 was filed by M/s CFM Asset Reconstruction Pvt. Ltd. seeking replacement of it with the financial creditor and vide order dated 15.01.2025 of this Appellate Tribunal the erstwhile financial creditor, namely, Union Bank of India was replaced with M/s CFM Asset Reconstruction Pvt. Ltd./R1. 3. The brief factual matrix giving rise to the instant appeal is in terms that the CD i.e M/s Green World International Pvt. Ltd. availed credit facilities from the erstwhile Financial Creditor - Union Bank of India vide sanction letter dated 19.02.2013 and subsequently the loan facility was restructured as per the restructuring sanction letter dated 13.03.2015. 4. It is further reflected that....
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.... as a guarantor, has passed the impugned order which could not be sustained. 9. It is further submitted that the issue of invocation of personal guarantee through notice under Section 13(2) of the SARFAESI Act though was not pleaded specifically before the Adjudicating Authority, however, the same being a legal issue is being raised before this Appellate Tribunal and perusal of the notice given under Section 13(2) of the SARFAESI Act to the Appellant would clearly reveal that the notice has been addressed to the CD and its directors and mortgagers whereby the CD has been called upon to make the payment and in the same notice the Appellant has been addressed as 'Director' of the CD and not as a 'personal guarantor', therefore, there is no invocation of guarantee and consequently the same could not be enforced. 10. It is also submitted that the said demand notice dated 29.02.2016 does not even mention about the personal guarantee of the Appellant and therefore, the same could not be treated to have invoked the personal guarantee and in this regard, the relevant clause of the guarantee deed executed by the Appellant may be looked into wherein a specific procedure....
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....avour of the financial creditor on 01.03.2013 wherein the Appellant had specifically agreed to discharge jointly and severally any liability of the CD and it was specifically mentioned therein that any notice by way of request, demand or otherwise may be given by the Bank to the guarantor or any of them personally or may be left in the manner as shown in the guarantee deed, therefore, the notice given by the financial creditor on 29.02.2016 under Section 13(2) of the SARFAESI Act is perfectly in terms of the stipulations made in the guarantee deed dated 01.03.2013 and through the said demand notice the Appellant has been called upon to pay the outstanding liability within 60 days from the receipt of the notice and therefore, the same is sufficient invocation of personal guarantee. 17. It is also submitted that the said demand notice was also served on the co-guarantors of the CD and Mr. Radha Raman Gupta, father of the Appellant/Co-guarantor, had also filed a petition under Section 94 of the Code seeking commencement of insolvency resolution process upon the personal guarantor on the basis of this demand notice dated 29.02.2016 claiming it to be an invocation of guarantee by the....
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.... 2022, Amanjyot Singh vs. Navneet Kumar Jain, Resolution Professional & Ors. in paragraph no. 11 and 12 this appellate tribunal held as under: "11. In its reply, the Bank has submitted that although after sale of the mortgaged asset, part of the facility was realized, but no steps have been taken by the Bank against the Appellant for recovery of any dues. The notice, which is the basis of the Application, was issued on 04.10.2013. Nine years have been passed from issuance of the notice and no steps have been taken by the Bank so far for recovery of any amount from the Appellant. Default, which is claimed by the Appellant, at best can be said to be a technical default and when substantially, no steps have been taken by the Bank and the Bank's categorical case is that guarantee of the Appellant has not been invoked, it is the Bank, who after invoking the guarantee shall proceed against the Appellant. 12. We, thus, are satisfied that foundation which was laid down by the Appellant for initiating the CIRP against the Appellant, was not sufficient to admit Section 94 Application and initiate the CIRP against the Appellant. We may further notice that Section 10 Applicat....
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....ntors to make payment of the amount of Rs 32.60 Cr. as on 30.04.2021 within 60 days. The Section 13(2) Notice which was sent to the Corporate Debtor was also forwarded to the Guarantor with the specific demand to make payment of the amount mentioned in the notice in terms of the guarantee. This Section 13(2) Notice was indisputably also sent to the Personal Guarantors separately and independently. When we see the Section 13(2) notice under SARFAESI Act as placed at pages 549 to 551 of Appeal Paper Book ("APB" in short) we find that there is clear indication of the names of all the Personal Guarantors therein which includes the present Appellant (and also the other two Appellants whose appeals are also under consideration before us). Para 11 of the Section 13(2) SARFAESI addressed to the Corporate Debtor notice which was also forwarded to the personal guarantors including the Appellant is relevant to be noticed which is as extracted below: "11. Further we are also forwarding the copy of this notice to personal guarantor who are liable to pay the aforesaid outstanding amount. This notice is without prejudice to the Bank's right to initiate such other actions or legal pro....
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....hich have been raised by the Appellant. The Appellant contended that the notice of demand dated 22.06.2018 under Section 13(2) of the SARFAESI Act is not an invocation of personal guarantee and therefore present petition cannot be invoked in absence of proper invocation of property. On this point we note that the Respondent No. 1 has issued notice to the Appellant specifically mentioning the personal guarantee dated 03.06.2018 which clearly stipulated that "The said financial assistance is also secured by the personal guarantee of Sh. Shantanu Prakash & Sh. Jagdish Prakash & corporate guarantee of Edu Smart Services Pvt limited for consortium advance." It has further brought to our notice that while notice was issued under Section 13(2) of the SARFAESI Act, which has also specifically called upon the Appellant to discharge in full the borrower liability stated therein within 60 days of the notice. Thus, the notice fulfils all the condition stipulated under personal guarantee and can be treated as valid invocation. On this issue, the Adjudicating Authority has also held that the demand notice issued by the Respondent No. 1 under Rule 7(1) of the I&B (Application to Adjudicating Auth....
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....e I&B Code. When we read with as is delineated by Section 3(11) of the Code, debt becomes due both on Principal Borrower and the Guarantor, as noted above. The definition of default under Section 3(12) in addition to expression 'due' occurring in Section 3(11) uses two additional expressions i.e "payable" and "is not paid by the debtor or corporate debtor". The expression 'is not paid by the debtor' has to be given some meaning. As laid down by the Hon'ble Supreme Court in "Syndicate Bank vs. Channaveerappa Beleri & Ors." (supra), a guarantor's liability depends on terms of his contract. There can be default by the Principal Borrower and the Guarantor on the same date or date of default for both may be different depending on the terms of contract of guarantee. It is well settled that the loan agreement with the Principal Borrower and the Bank as well as Deed of Guarantee between the Bank and the Guarantor are two different transactions and the Guarantor's liability has to be read from the Deed of Guarantee." 27. In view of the foregoing discussion, we are not persuaded to accept the submission of the Appellant that Notice under Rule 7 (1) issued in Form-B to the Guarantor,....
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...., in our considered opinion, it was a crystal clear communication not only to the Appellant but to all the addressees to discharge their liability with regard to the credit facilities extended to CD by the financial creditor and there appears no ambiguity in this. Since the appellant has extended guarantee by executing a deed and the principal borrower/ CD failed to pay the amount of credit facilities extended by the Financial Creditor and the liability of the principal borrower and guarantor is coextensive, this demand notice was sufficient communication to the appellant to discharge his liability under the guarantee deed towards the credit facility extended by the creditor to the CD and is sufficient invocation of guarantee. 28. Keeping in view the submissions made by Ld. Counsel for the Appellant that notice has not been served as per the terms and conditions of the guarantee, we perused the guarantee given by the Appellant, a copy of which has been placed at pg. 135 of the appeal paper book and the relevant extract of the same is reproduced as under: - "IN CONSIDERATION OF Union Bank of India (hereafter the bank which expression shall include its successors and assi....
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....s or residence in India of guarantor or may also be sent by post. 30. Thus, the requirement of only sending a notice was contemplated in the guarantee deed and no specific or particular process or the format of notice or formality was stipulated therein. To our understanding if nothing special or specific has been given under the terms of the guarantee, the sending of notice to the guarantor specifically demanding outstanding payment within specific time frame, would be sufficient, in so far as invocation of guarantee is concerned, if it sufficiently demonstrate the liability of the guarantor and also having a clause for discharge of its liability for the credit facilities extended to the CD. 31. This Appellate Tribunal in Asha Basantilal Surana (Supra), which is a three member's decision, after considering Amanjyot Singh (Supra) and Mavjibhai Nagarbhai Patel (Supra) clearly holds that in a case where notice under Section 13(2) makes a demand as per the guarantee agreement between the parties, the notice has to be treated as a notice for invocation of bank guarantee. This appellate Tribunal in the above case has also distinguished the law laid down by this Appellate Tribunal ....