TaxTMI 
TaxTMI 
2026 (2) TMI 537
X X X X Extracts X X X X
X X X X Extracts X X X X
....o. 1255/KB/2020 admitting Section 95 application filed by DBS Bank Limited against the Appellants who are personal guarantors of the Corporate Debtor- Hindustan National Glass & Industries Limited. These two Appeals have been filed challenging the two separate orders of the same date dated 03.05.2024 admitting Section 95 application. 2. It shall be sufficient to notice the facts in the Company Appeal (AT) (Insolvency) No.999 of 2024 for deciding both the Appeals. 2.1. The Corporate Debtor was extended foreign currency loan on 17.08.2011 by DBS Bank. On 28.09.2011, Facility Agreement was entered into between DBS Bank and the Principal Borrower- Hindustan National Glass & Industries Limited. On 13.10.2015, two separate deeds of guarantee were executed by the Appellants in favour of DBS Bank. On 27.08.2018, Memorandum of Understanding was executed between Principal Borrower, its secured creditors and Guarantors specifying manner of payment under the one-time settlement (OTS). Financial Creditor filed an application under Section 7 on 03.02.2020 before the Adjudicating Authority against the principal borrower. A demand notice dated 27.02.2020 was issued by the Financial Creditor ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the personal guarantor. ii. If the answer to above question is yes, whether financial creditors at any point of time has invoked the personal guarantee to enable them to file Section 95(1) application. We direct these appeals to be listed again for further hearing on above issues. List these appeals for further hearing on 17th April, 2025." 4. After the order dated 07.04.2025, Financial Creditor sought liberty to file additional affidavit on 04.09.2025. An IA No.5689 of 2025 was filed for taking the documents as Annexure R-1 and R-9 on record which application was allowed on 29.10.2025. An IA No.6623 of 2025 dated 03.11.2025 was filed by the Respondent No.1 for accepting Annexure Nos.1 and 2 on record. 5. We have heard Shri Niranjan Reddy and Shri Raghenth Basant, Learned Senior Counsel for the Appellant and Shri Krishnendu Datta, Learned Senior Counsel for the Respondent- Financial Creditor. 6. As noted in our order dated 07.04.2025, parties were given opportunity to address submission on following two questions:- "i. Whether deed of guarantee dated 13.10.2015, contemplates invocation of guarantee by the financial creditors before taki....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Bank/s having entered into the Agreement's and entering into Transactions at the request of Guarantors for so long as the Bank/s may think fit with the Borrower, the Guarantors DO HEREBY IRREVOCABLY AND UNCONDITIONALLY guarantee to the Bank the due and punctual payment of all Guaranteed Money expressed to be payable from time to time by the Borrower as and when the same become due and payable and accordingly undertakes to pay to the Bank forthwith upon the demand of the Bank without demur and/or contestation and in the manner and currency prescribed by the Agreement's for payments by the Borrower, any and every sum or sums which the Borrower is at any time liable to pay In respect of the Guaranteed Money and which the Borrower has failed to pay and the same shall be limited to the Facility amount as mentioned at Serial No. 6 of the Schedule I written hereunder, together with all costs, charges and expenses Incurred by the Bank/s In enforcing or attempting to enforce this Guarantee and any security thereof or in suing for or otherwise attempting to recover any monies guaranteed hereby remaining unpaid to the Bank/s by the Borrower until full payment of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....antee executed by Guarantor 1, Guarantor 2 and Mr. Chandra Kumar Somany being represented by his legal heir Guarantor 3, as more particularly identified under Schedule VII of this Agreement, whereby the Guarantors have unconditionally, absolutely and irrevocably guaranteed and agreed to the Lenders Inter alia that: (a) the Borrower shall duly and punctually repay/ redeem the Facilities together with all interest, additional interest and all other monies payable in accordance with the terms of the Facility agreements; and (b) in the event of any failure on the part of the Borrower in the repayment or payment of any monies due under the Facilities, and/ or in the event of occurrence of any failure or event of default as envisaged under the Facility Agreements, the Guarantors shall forthwith pay to the Lenders all the amounts payable by the Borrower." 13. Learned Counsel for the Respondent has relied on Clause 2.1 (b) and submits that the above clause contemplated that Guarantors shall forthwith pay to the Lenders all the amounts payable by the Borrower. It is submitted that the due to the above clause, the invocation of guarantee is no more necessary. 14. When....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... debtor by the financial creditors on 03.02.2020, Section 7 application was registered as C.P. (IB) 369/KB/2020 against HNG. Thereafter, demand notice was issued on 27.02.2020 under Rule 7 of the 2019 Rules against the personal guarantors and application under Section 95 was filed on 15.10.2020 being C.P. (IB) 1255/KB/2020 and C.P. (IB) 1139/KB/2020. In a recent judgment delivered by this Tribunal in Comp. App. (AT) (Ins.) No. 191/2025, 'State Bank of India' Vs. 'Mr. Deepak Kumar Singhania', this Tribunal has taken the view that default before issuance of notice under Rule 7(1) must exist on the part of the personal guarantor and notice under Rule 7(1) cannot be treated as a notice invoking the guarantee. This Tribunal has also after noticing the judgment of the Hon'ble Supreme Court in 'Syndicate Bank' Vs. 'Channaveerappa Beleri & Ors.' reported in (2006) 11 SCC 506, has held that guarantor liability depends on the terms of his contract. This Tribunal has also considered Rule 3(1)(e) of the 2019 Rules and has held that notice under Rule 7 has to be issued after guarantee is invoked. In the above case, Section 95 application was filed by the financial creditor, relying on notice is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t has relied on two judgments of the Hon'ble Supreme Court in support of the above submission, i.e. AIR 1968 SC 1450 - Ishwar Singh Bindra and Ors. vs. State of U.P. The Hon'ble Supreme Court in the above case had occasion to consider the definition of 'drug' contained in Section 3(b)(i) of Drugs Act 1940. Expression 'and' used in Section 3(b)(1) of the Drugs Act was considered in the said case and in paragraph 11 of the judgment, following was laid down: "11. Now if the expression "substances" is to be taken to mean something other than "medicine" as has been held in our previous decision it becomes difficult to understand how the word "and" as used in the definition of drug in Section 3(b)(i) between "medicines" and "substances" could have been intended to have been used conjunctively. It would be much more appropriate in the context to read it disconjunctively. In Stroud's Judicial Dictionary, 3rd Edn. it is stated at p. 135 that "and" has generally a cumulative sense, requiring the fulfilment of all the conditions that it joins together, and herein it is the antithesis of or. Sometimes, however, even in such a connection, it is, by force of a contexts, read as "or"....