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2026 (4) TMI 1835
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....AT) (Ins) No. 621 of 2025- 2. The instant appeal has been preferred by the appellant who is the personal guarantor to Palavi Synthetics Pvt. Ltd. (Principal Borrower/CD) which had availed various financial facilities from Sarvodaya Sahakari Bank Ltd. (SSBL) against the impugned judgment dated 25.02.2025, passed by the National Company Law Tribunal, Ahmedabad, Bench -I (Adjudicating Authority) in CP (IB) No. 249/AHM/2024 with IA No. 1563 of 2024 whereby the insolvency process has been initiated against the appellant. 3. Factual matrix with regard to this appeal is in terms that Respondent SSBL granted financial facilities to Palavi Synthetics Pvt. Ltd. (CD)/Principal Borrower by entering into various hypothecation agreement for goods against which the appellant extended personal guarantee vide Guarantee Deed dated 05.09.2012, 21.02.2013, 22.10.2013 and 23.04.2015 respectively. 4. It is also evident that the Principal Borrower defaulted in its financial obligations with regard to the loan account which was classified as Non-Performing Asset (NPA) by the Respondent on 30.07.2016 and thereafter on an application filed by an operational creditor the CIRP was initiated against t....
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....vi Synthentics Pvt. Ltd. (Principal Borrower/CD) which has availed various financial facilities from Respondent Sarvodaya Sahakari Bank Ltd. (SSBL) and also executed Guarantee Deeds in order to secure the financial facilities extended to the CD. 10. It is also evident that the Principal Borrower defaulted in its financial obligations with regard to the loan account which was classified as Non-Performing Asset (NPA) by the Respondent on 30.07.2016 and thereafter on an application filed by an operational creditor the CIRP was initiated against the Principal Borrower vide order dated 23.01.2020 passed in Insolvency Petition No. 225 of 2019. 11. It is further reflected that since no resolution was achieved with regard to the CD, the liquidation process was initiated against the Principal Borrower/CD vide order dated 13.04.2021 which was followed up by a dissolution order dated 13.07.2022 and the CD stands dissolved. 12. It is also reflected that subsequent to the classification of the loan account of the CD as NPA, Respondent -SSBL invoked the personal guarantee advanced by the appellant on 11.08.2016, and thereafter on 24.10.2016 SSBL filed a Summary Suit No. 144 of 2016 unde....
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....indbhai Dave vs. ARC (India) Ltd., (2019) 10 SCC 572, Sagar Sharma and Anr. V. Phoenix ARC Pvt. Ltd. and Anr. (2019) 10 SCC 353. 17. It is further submitted that the conclusions drawn by the Ld. Adjudicating Authority that Article 136 of the Limitation Act would apply in this case is erroneous as any civil suit filed by the Respondent and the judgment passed by the Joint Registrar and Member, Board of Nominees Surat under Gujarat Co-operative Societies Act, 1961 could not provide a fresh cause of action for the purpose of providing a fresh limitation thereafter as the limitation starts from the date of default and not from the date of enactment or the date of passing of any subsequent order by any civil court. 18. It is further submitted that any order passed in summary suit could not extend the limitation prescribed under the Limitation Act as the order passed by the Joint Registrar dated 15.09.2017 merely grants a right to recover which is to be enforced through execution proceedings and could not revive or extend the right to apply under the IBC which is governed by Article 136 of the Limitation Act. Reliance in this regard has been placed on Jignesh Shah vs. Union of Indi....
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....mitation order passed by the Hon'ble Supreme Court the limitation period was frozen till 01.03.2022 and during this Suo Motu extension period the claim of the Respondent was admitted in the CIRP of CD (Principal Borrower) and keeping in view the settled law admission of claim by the RP results in acknowledgment of debt under Section 18 of the Limitation Act which results in further extension of limitation for three years and thereafter on 14.07.2022 the demand notice under Form B was issued and thereafter the application under Section 95 was filed which has rightly been taken by Ld. Adjudicating Authority within prescribed limitation. 24. While relying on the law laid by the Hon'ble Supreme Court in B K Educational Pvt. Ltd. (supra) it is submitted that the law laid down by the Hon'ble Supreme Court in this case is not confined to Section 7 or 9 of the Code but would also be applicable to the instant proceedings and thus Article 137 of the limitation act applies to this case. 25. It is also submitted that the decree passed by the Joint Registrar under the Gujarat Co-operative Societies Act, 1961 on 15.09.2017 on the suit which was filed on 24.10.2016 would further given limit....
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.... 2021 (6) SCC 366. 28. Ld. Counsel for the Respondent No. 2 i.e. RP has relied on the timeline of the events and submits that the limitation for filing the application commences from 11.08.2016 whereon the guarantee was invoked against the appellants and therefore the limitation was set to expire on 11.08.2019 however in between, within three years of invocation of guarantees on a civil suit filed by the Respondent on 24.10.2016 the judgment therein was passed on 15.09.2017 decreeing the suit and directing appellants for payment of Rs. 28,865,468.35/- along with 13% compound interest. 29. It is further submitted that the decree of the civil court gives rise to fresh limitation of three years which was to expire on 14.09.2020 and keeping in view the order passed by the Hon'ble Supreme Court in Suo Motu WP (Civil No. 03 of 2020) In Re: Cognizance for extension of limitation, the balance period of limitation existing as on 15.03.2020 was available to the Respondent No. 1 from 01.03.2022. However, before the expiry of the extended period of limitation which was set to expire on 31.08.2022 the appellant sent letter to the Respondent no. 1 on 17.03.2022 promising to pay 70% of the ....
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....ll personal guarantors, including appellants to the Respondent No.1. 35. It also appears to be an admitted fact that no amount after the passing of this decree has been paid by the Appellants to the Respondent Bank. 36. It also appears to be an admitted fact that on 01.07.2022, a demand notice under Section 95(4)(b) of the Code was issued by the Respondent Bank to the appellants which is stated to have been returned by the appellants and it is claimed by the Respondent Bank that this notice was again delivered to the appellants through email on 14.07.2022 and 16.07.2022. 37. It also appears to be an admitted fact that the Respondent Bank has filed petition under Section 95 of the IBC before the Ld. Adjudicating Authority on 14.11.2022 which was registered on 11.01.2023, however was dismissed on 22.12.2023 as defective with the liberty to file fresh petition and it was thereafter on 18.06.2024, petition under Section 95 of the Code was filed by the Respondent Bank whereon, after appointment of the Resolution Professional and having perused its reports the impugned orders have been passed by the Ld. Adjudicating Authority admitting the petitions filed by the Respondent Bank ....
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....rs submitting the application for insolvency resolution process as on the date of application; (b) the failure by the debtor to pay the debt within a period of fourteen days of the service of the notice of demand; and (c) relevant evidence of such default or non-repayment of debt. (5) The creditor shall also provide a copy of the application made under sub-section (1) to the debtor. (6) The application referred to in sub-section (1) shall be in such form and manner and accompanied by such fee as may be prescribed. (7) The details and documents required to be submitted under sub-section (4) shall be such as may be specified. 42. This Appellate Tribunal in IDBI Bank vs. Hemangi Patel 2025 SCC OnLine NCLAT 1263 Opined as under: 8. Hon'ble Supreme Court, however, held that claim of acknowledgment under Section 18 on basis of letter dated 29.01.2020 cannot be accepted since the said acknowledgement was subsequent to expiry of 3 years. Hon'ble Supreme Court relied on earlier judgment of Hon'ble Supreme Court in the matter of 'B.K. Educational Services Pvt. Ltd.' v. 'Parag Gupta & Associates', [(2019) 11 SCC 633], where ....
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....ply. The judgment relied by the counsel for the appellant in 'Tottempudi Salalith' (Supra) also does not lay down any such proposition as contended by the counsel for the appellant. The adjudicating authority in the impugned order come to the conclusion that Section 95 application filed by the IDBI Bank was filed after expiry of three years period of limitation even after giving the benefit of judgment of the Hon'ble Supreme Court in Suo Motu WP (Civil) No. 3 of 2022 in 'Re: Cognizance for Extension of Limitation'. 14. We do not find any error in the order of the adjudicating authority rejecting Section 95 application filed by the appellant as barred by time. There is no merit in the appeals. Both the appeals are dismissed. 43. In Shankar Khandelwal v. Omkara Asset Reconstruction Pvt. Ltd. and Anr., (2025) ibclaw.in 845 NCLAT, it is Observed as under: 19. There is therefore, little difficulty in holding that the date of admission of a Claim by the IRP grants a fresh date for commencement of limitation and when the Claims are subsequently updated it pushes the date of terminus a quo to that date. 44. In State Bank of India vs. Gourishankar Poddar & Anr. (....
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....sed in that behalf, have the effect of creating a fresh starting of limitation. The difference is that an acknowledgment under Section 18 of the Limitation Act has to be made within the period of limitation and need not be accompanied by any promise to pay. If an acknowledgment shows existence of jural relationship, it may extend limitation even though there may be a denial to pay. On the other hand, Section 25(3) is only attracted when there is an express promise to pay a debt that is time-barred or any part thereof. Promise to pay can be inferred on scrutinising the document. Only the promise should be clear and unconditional. 46. The Hon'ble Supreme Court in Laxmi Pat Surana vs Union Bank of India & Anr. (2021) SCC OnLine SC 267 Opined as under: 43. Ordinarily, upon declaration of the loan account/debt as NPA that date can be reckoned as the date of default to enable the financial creditor to initiate action under Section 7 IBC. However, Section 7 comes into play when the corporate debtor commits "default". Section 7, consciously uses the expression "default" - not the date of notifying the loan account of the corporate person as NPA. Further, the expression "default....
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....es 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 laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termin....
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....onger period shall apply. 20. In the present case the said excluded period comes to total number of 531 days. In ordinary circumstances the limitation period would have come to an end on 14.09.2020. However, after exclusion of 531 days, the three years' limitation period would come to an end on 16.08.2024. Thereby meaning that the limitation period available to the Applicant Bank for invoking the personal guarantee would come to an end on 16.08.2024. 21. In the present case the Applicant Bank has invoked the personal guarantee by serving Form-B being Demand Notice dated 01.07.2022 Section 95(4)(b) of the IBC, 2016 r.w. Rule 7(1) of the I&B (AAA for IRP for PGCD) Rules, 2019 after fresh default in terms of order dated 15.09.2017 passed in the Summary Suit No.144/2016 U/s 99(4) of the Gujarat Co-Operative Societies Act with in period of limitation in terms of section 18 of the Limitation Act, 1963. 22. Hence, in our view, even taking the date of invocation of Guarantee dated 01.07.2022 applying the judgment of Hon'ble Supreme Court in Suo Motu WP (Civil) No. 3 of 2022 (should be 2020) In Re: Cognizance for Extension of Limitation as well as in the matte....
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.... under Form-B the guarantee may not be invoked and in this regard the law laid down by a Co-ordinate Bench of this Appellate tribunal in SBI vs. Deepak Kumar Singhania, (2025) ibclaw.in 153 NCLAT may be recalled and relevant part of the same is reproduced as under: "17. The Notice, thus, contemplate demanding payment of the amount of default. The above Rule clearly indicate that Demand Notice has to be issued, demanding payment of the amount in default. Thus, the default by Guarantor has to exist on the date when Notice in Form-B is being issued. When we read Section 95, sub-section (4) and Rule 7 of 2019 Rules, the above is the only intendment of the legislative scheme, i.e. default on the part of Guarantor should exist on the date when Notice in Form-B has to be issued. We have noticed the definitions of 'debt' and 'default' in Section 3(11) and (12) of the IBC. Default shall arise on account of non-payment of debt, when whole or part of it become due. 'Debt' means a liability or obligation in respect of a claim which is due from any person. Thus, for a default, debt has to be due and Debtor shall be only that person, to whom debt is due. A Personal Guarantor becomes a D....
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....n., it has been accepted that "to carry out the intention of the legislature it is occasionally found necessary to read the conjunctions 'or' and 'and' one for the other". The coordinate bench of this Appellate Tribunal in the above noted case further opined as under: - "20. The above judgment reiterates that one of the basic principles of interpretation of statutes is to construe them according to plain, literal and grammatical meaning of the words. When we look into definition of 'Guarantor' in Rule 3(1)(e), fulfilment of both the condition that Debtor is a Personal Guarantor to a Corporate Debtor and in respect of whom guarantee has been invoked, has been cumulatively used. The submission of the Appellant that use of the expression 'and' has to be read as 'or', shall not further the statutory object and purpose. Guarantor with regard to whom guarantee has not been invoked, shall not be a Debtor and no default can be committed by Guarantor, unless guarantee is invoked as per the terms of Deed of Guarantee. Thus, the insolvency resolution process against a Guarantor, against whom debt has not become due, is not understandable. We, thus, reject the submission of t....
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.... on 24.10.2016 and passing of decree by the JR on 15.09.2017 and this period was admittedly expiring on 14.09.2020 and in our considered opinion the decree passed by the JR would provide a fresh cause of action of three years which would conclude in ordinary way on 14.09.2020. In this regard the law laid down by this Appellate tribunal in IDBI Bank vs. Hemangi Patel (supra) and by the Hon'ble Supreme Court in B.K. Educational Services Pvt. Ltd. vs. Parag Gupta and Associates may be recalled and relevant part of these judgments is reproduced as under: 41. Shri Dholakia argued that the Code being complete in itself, an intruder such as the Limitation Act must be shut out also by application of Section 238 of the Code which provides that, "notwithstanding anything inconsistent therewith contained in any other law for the time being in force", the provisions of the Code would override such laws. In fact, Section 60(6) of the Code specifically states as follows: "60. Adjudicating authority for corporate persons. - (1)- (5) * * * (6) Notwithstanding anything contained in the Limitation Act, 1963 (36 of 1963) or in any other law for the time being in force, in computing the perio....
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....vailable till 14.09.2020 calculated that 531 days in view of the judgment of the Hon'ble Supreme Court In Re: Cognizance for extension of limitation dated 10.01.2022, would be excluded from counting the limitation period and in this way the limitation period would come to end on 16.08.2024. 56. We are of the considered view that Ld. Adjudicating authority has also committed patent illegality in computing the period which may be excluded from counting the limitation period as according to the law laid down by the Hon'ble Supreme Court In Re: Cognizance for extension of limitation dated 10.01.2022 and M/s Arif Azim Company Ltd. vs. M/s Aptech Ltd. (2024 INSC 155), the period from 15.03.2022 to 28.02.2022 could only be excluded however where the limitation period has expired before 28.02.2022 is greater than 90 days that longer period would be available to the petitioner from 01.03.2022. 57. The appellant in their written submissions filed before us has calculated this period from 15.03.2020 to 14.09.2020 as 182 days while the Respondent No. 1 in his written submissions has counted this period from 15.03.2020 to 14.09.2020 (184 days) and by such computation the period was to exp....
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....e for extension of limitation dated 10.01.2022 the period of 184 days would have been excluded from counting the limitation period and by such exclusion the limitation would have expired on 31.08.2022. Keeping in view the communication of the appellants dated 17.03.2022 and 12.07.2022 a copy of which has been placed at (page no. 256 to 265) (268 to 269) of the appeal paper book of CA (AT) (Ins) No. 2147 of 2024 the same may amount to an acknowledgment in writing and this acknowledgment would have extended the limitation for a further period of three years from such date and the petition appears to have been filed within this period. 62. However, we notice that in none of the impugned order Ld. Adjudicating Authority has discussed anything about the filing of claim by the Respondent Bank before the IRP or the RP in the CIRP of the CD nor any discussion has been made pertaining to the letters dated 17.03.2022 and 12.07.2022 written by the appellants to Respondent No. 1 acknowledging the debt and therefore in absence of the same we are not in a position to dispose of the issue of limitation emerging between the parties and therefore there appears no option before us except to reman....
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....248-254) 6. 23.01.2020 Before 15.09.2020, NCLT admitted CP (IB) No. 225/9/NCLT/AHM/2019, filed by OC, i.e. M/s. Balabux Synthetics Pvt. Ltd., against CD thereby initiating the CIRP against CD. 121-131 /VI 7. 02.03.2020 RI Bank had filed claim form in CIRP and was admitted as the sole secured Financial Creditor in CIRP of CD. Also stated in Liq. Order @ Pg. 36-37 of Reply. 94-95/V2 (CP) Also, 134 (dissol. Order) 8. 15.03.2020 Time period between 15.03.2020 to 28.02.2022 was exempted from limitation computation, by the Hon'ble SC in Suo Moto W.P (C) No. 3/2020, because of Covid 19 pandemic. Balance period of limitation existing as on 15.03.2020, or a period of 90 days, whichever is longer, was made available from 01.03.2022 onwards. 14.09.2020 The period which was extended from the date of decree was expiring. However, in view of the suo-moto order of Hon'ble SC, period between 15.03.2020 to 14.09.2020 was to be excluded i.e. 184 days. For being more than 90 days, the limitation will expire on 31.08.2022. 10. 13.04.2021 Liquidation Process qua CD was initiated vide I.A. No.89/2021. Order records that RI was sole secured Financial Creditor in CIRP of CD. 135-136 (diss....