TaxTMI 
TaxTMI 
2026 (2) TMI 1219
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....whereby the Adjudicating Authority has dismissed the petition as being time barred and not filed within the period of limitation. 2. The brief facts necessary for the disposal of the appeal are that the Respondent No. 1 executed a corporate guarantee on 22.03.2014 agreeing to repay the DNS Bank Ltd. all outstanding amounts granted to Pandhe Infracons Pvt. Ltd. through a Flexi Overdraft Facility of Rs. 15,00,00,000/- and due to failure of the CD and the Borrower to repay the outstanding amounts under the facility, a demand notice was sent by the Financial Creditor of date 18.02.2022 invoking the deed of guarantee requiring the CD to pay an amount of Rs. 28,22,36,755/- as on 15.02.2022 along with future interest until the date of actual payment within the period of 7 days after receiving the notice. 3. It is further reflected that in part iv of the application, the total amount in default as on 19.07.2023 has been shown as Rs. 35,38,03,129/- and the date of default has been specified as 19.11.2019. 4. It is also reflected that the aforementioned facility account, agreements and all security documents executed by the parties were assigned and transferred by the DNS Bank to th....
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....me Court on 10.01.2022 was required to be appreciated and read along with earlier orders passed by the Hon'ble Supreme Court in this regard. 9. It is vehemently submitted that in the instant case the petition was filed on 20.08.2023 while demand notice invoking the corporate guarantee was issued on 04.11.2019 and the period of 15 days was given for making the payment, hence, the date of default mentioned in the petition is 19.11.2019 which is 16th day after the date of notice i.e. 04.11.2019 and this has been affirmed by the Adjudicating Authority and computation of the limitation period was required to be done from 19.11.2019 and as held by the Hon'ble Supreme Court, the period from 15.03.2020 till 28.02.2022 was required to be excluded in calculating the limitation and thus the period as available on 15.03.2020 would be calculated from 01.03.2022 and by this computation the petition has been filed well within the limitation period on 20.08.2023 i.e within a period of 653 days. 10. It is further submitted that the Respondent has not set out any dispute with regard to its liability to pay the Appellant and the issues raised with regard to the limitation is not having any subs....
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....nce the amount has not been paid in pursuance of the notice issued on 04.09.2018 under Section 13(2) and the guarantee has been invoked thereon, the limitation would start running from 04.09.2018 and therefore, time up to 03.09.2021 i.e. 3 years, was available for the Appellant. 15. It is further submitted that if the limitation is calculated on the basis of the judgment passed by the Supreme Court in Suo Motu Writ Petition (C) No. 3 of 2020, only 90 days were available to the Appellant w.e.f 01.03.2022 as the period of limitation has expired within the period from 15.03.2020 till 28.02.2022 and therefore including 90 days after 28.02.2022 the last for filing the petition under Section 7 was 29.05.2022, therefore, the petition filed by the Appellant has been rightly held as time barred. 16. It is further submitted that the date of default as 19.11.2019 has been wrongly claimed by the Appellant and even if the date of default is taken as 19.11.2019, three years would end on 18.11.2022 and keeping in view the judgment of the Hon'ble Supreme Court in Suo Motu Writ Petition (C) No. 3 of 2020 the balance period of limitation remaining as on 03.10.2021 shall be available w.e.f 01.0....
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....al action. The notice period provided in the invocation notice expired on 18.11.2019, and accordingly, the date of default has been mentioned in Part-IV of the Application as 19.11.2019. It is settled law that for the purposes of guarantors, including corporate guarantors, when a demand invoking the guarantee is raised in accordance with the terms and the guarantee is payable on demand, the default occurs when the demand notice is issued and the guarantor fails to comply with the demand. Therefore, we find that the Financial Creditor has rightly relied on the judgment passed by the Hon'ble National Company Law Appellate Tribunal in Pooja Ramesh Singh v. State Bank of India & Anr. (supra). 4.7 In view of this legal position, we are unable to accept the Corporate Debtor's plea for treating the Demand Notice dated 04.09.2018 as the notice of invocation of corporate guarantee and for computing limitation accordingly. In this connection, it is pertinent to mention that the Demand Notice dated 04.09.2018 was issued under Section 13(2) of the SARFAESI Act, 2002 which was meant for enforcement of security interest. It is true that the said notice dated 04.09.2018 was addre....
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....t orders dated 08.03.2021, 27.04.2021 and 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi- judicial proceedings. II. Consequently, the balance period of limitation remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022. III. In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply. IV. It is further clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under Sections 23(4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other l....
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....en some meaning. As laid down by the Hon'ble Supreme Court in "Syndicate Bank v. Channaveerappa Beleri" (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. 26. The judgment of the Hon'ble Supreme Court in "Syndicate Bank v. Channaveerappa Beleri" has categorically laid down that liability of the Guarantor depends on the terms of his contract. The relevant clauses of the Deed of Guarantee, as noted above, clearly contemplate demand by the Bank upon the Guarantor. Clause 1 provides that "the Guarantors shall forthwith on demand pay to the Bank the whole of such principal sum not exceeding Rs. 186,60,00,000/- together with interest". Similarly, Clause 13 uses expression, "the Guarantors shall forthwith on demand made by the Bank ....
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....rantee as also the question as to when the liability of a guarantor will arise, would depend purely on the terms of the contract". 26. This Appellate Tribunal in Ujjwal Gupta v. Union Bank of India, 2026 SCC On Line NCLAT 8 held as under: 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 earlier in Amanjyot Singh (Supra), to be a case confined to its own facts, by observing in para 12 of the judgment, that the dismissal of the appeal in Amanjyot Singh case was on the facts of the said case and has no application in the facts of the case under scrutiny and also that the invocation of personal guarantee has to be in accordance with the terms of the guarantee agreement. We reproduce the para no. 12 of the aforesaid judgment (Asha Basan....
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....0.08.2023. The Adjudicating Authority in Para no. 4.6, 4.7 of the impugned judgment has stated that guarantee was invoked by the financial creditor vide notice dated 04.11.2019 and thus fixed the date of default as 19.11.2019. The relevant paragraphs of the impugned judgment are reproduced as under: "4.6 We find that in the present case, the Deed of Guarantee dated 30.09.2016 was invoked by the Financial Creditor vide its notice dated 04.11.2019, wherein the Corporate Debtor/Guarantor was called upon to make payment of the outstanding amount within a period of 15 days from the notice, failing which the Financial Creditor would initiate appropriate legal action. The notice period provided in the invocation notice expired on 18.11.2019, and accordingly, the date of default has been mentioned in Part-IV of the Application as 19.11.2019. It is settled law that for the purposes of guarantors, including corporate guarantors, when a demand invoking the guarantee is raised in accordance with the terms and the guarantee is payable on demand, the default occurs when the demand notice is issued and the guarantor fails to comply with the demand. Therefore, we find that the Financial C....
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....ion if it appears to the court that it is for one and the same cause. 81. Thus, the principle of finality of litigation is based on a sound firm principle of public policy. In the absence of such a principle great oppression might result under the colour and pretence of law inasmuch as there will be no end to litigation. The doctrine of res judicata has been evolved to prevent such anarchy". 29. Having considered all the facts and circumstances and the law placed above we are not in agreement with the submissions made by Ld. Counsel for the Respondent as aforesaid findings would be binding on the Respondent unless the impugned judgment or findings are not set aside by any higher Forum. 30. It is also recalled that Ld. Adjudicating Authority while treating the Notice dated 4.11.2019 as a notice for revocation of guarantee counted the limitation period from 19.11.2019 i.e. the date of default and hold that since the limitation period would have ended beyond 28.02.2022 (the cut-off date specified in the judgment of the Hon'ble Supreme Court) the issue will have to be considered in accordance with direction no. I and II of the order of the Hon'ble Supreme Court and held ....
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.... 31.08.2023 it is well within the limitation period. 5. The Appellant categorically falls within the ambit of Para I of the said judgment whereby the period from 15.03.2020 to 28.02.2022 would stand excluded from the period of limitation. Even per Para IV of the judgment the limitation would extend. In Captain Sudhanshu Bhardwaj v. AIR India Limited (2023 SCC OnLine Del 8177), High Court of Delhi while interpreting the judgment of In Re: Cognizance for Extension of Limitation, expressly held that the period from 15.03.2020 till 28.02.2022 stood excluded for the purposes of the limitation. The court held: "... 12. Thus, the entire period from 15.03.2020 to 28.02.2022 is required to be excluded in computing the period of limitation. It follows that the period of limitation would stop running on 15.03.2020 and would start running again on 01.03.2022. Consequently, the balance period of limitation remaining as on 03.10.2021 as contemplated in para 5 (II) would be the same as balance period of limitation remaining as on 15.03.2020. 13. It is incongruous to suggest that while the period from 03.10.2021 to 28.02.2022 is to be excluded for the purpose of calculat....
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....d. vs. Aptech Ltd., (2024) 5 SCC 313 held as under: "84. Thus, in ordinary circumstances, the limitation period available to the petitioner for raising a claim would have come to an end after an expiry of three years, that is, on 27-3-2021. However, in March 2020, the entire world was taken under the grip of the deadly Covrn-19 Pandemic bringing everyday life and commercial activity to a complete halt across the globe. Taking cognizance of this unfortunate turn of events, this Court vide order dated 23- 3-2020 passed in Cognizance for Extension of Limitation, In re 19 directed the period commencing from 15-3-2020 to be excluded for the purposes of computation of limitation. The said extension of limitation was extended from time to time by this Court in view of the continuing pandemic. As a result, the period from 15-3-2020 to 28-2-2022 was finally determined to be excluded for the computation of limitation. It was provided that the balance period of limitation as available on 15-3-2020 would become available from 1-3-2022. 85. The operative part of the order dated 10-1-2022 is extracted herein below: (Cognizance for Extension of Limitation, In re case SCC pp. 119....
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....2123, this Court specifically provided for exclusion of the period from 15- 3-2020 till 2-10-2021. A look at the scheme of the Limitation Act, 1963 makes it clear that while extension of prescribed period in relation to an appeal or certain applications has been envisaged under Section 5, the exclusion of time has been provided in the provisions like Sections 12 to 15 thereof When a particular period is to be excluded in relation to any suit or proceeding, essentially the reason is that such a period is accepted by law to be the one not referable to any indolence on the part of the litigant, but being relatable to either the force of circumstances or other requirements of law (like that of mandatory two months' notice for a suit against the Government25 ). The excluded period, as a necessary consequence, results in enlargement of time, over and above the period prescribed." (emphasis supplied) 87. The effect of the above referred order of this Court in the facts of the present case is that the balance limitation left on 15-3-2020 would become available w.e.f. 1-3-2022. The balance period of limitation remaining on 15-3-2020 can be calculated by computing the number ....
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....out filing any appeal any finding emerging against a party may not be challenged in the appeal filed by other party. 38. Coming to the second scenario, the date of default in petition has been shown as 19.11.2019 and it is concluded by the Adjudicating Authority that the date of default is 19.11.2019 as the time, as per the notice given on 04.11.2019 was available to the CD to pay the outstanding dues till 18.11.2022. In this scenario 3 years' limitation would have expired on 18.11.2022. Since the last date of the limitation period was falling beyond the date stipulated in the order of the Hon'ble Supreme Court i.e. 28.02.2022 the whole of the period provided in direction no. 1 of the order of the Hon'ble Supreme Court i.e. from 15.03.2020 till 28.02.2022 would be excluded and thereafter the whole period which was available to the Appellant for filing of the appeal, on 15.03.2020 would be available to the Appellant and thus by assuming the date of default as 19.11.2019, which has been endorsed by the Adjudicating Authority, the petition of the Appellant was within the period of limitation. 39. Now coming to the another scenario which has been apparently overlooked by the Adju....
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....ent passed by the Adjudicating Authority may not with stand the test of the law and therefore is liable to be set aside. 41. We also notice that none of the contesting party has placed any documentary evidence with regard to the acknowledgment made by the principal borrower vide OTS proposal dated 10.11.2019 and the only reference of it has been found in the impugned judgment, that too, only in the submissions of the Appellant. Thus keeping in view the fact that there is no material before us with regard to the acknowledgment made by the principal borrower vide OTS proposal dated 10.11.2019 and in this scenario a fresh exercise is required to be done by the Adjudicating Authority wherein the contention of the Respondent No. 1 with regard to the invocation of guarantee from the notice given under Section 13(2) may also be considered by the Adjudicating Authority, the matter is required to be remanded back to the Ld. Adjudicating Authority for afresh consideration. 42. However, it is clarified and has also been held by this Court in catena of judgments that whether the guarantee may be invoked by issuing a notice under Section 13(2) would depend on the facts and circumstances o....