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2025 Supreme(Online)(NCLAT) 127
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Justice Ashok Bhushan (Chairperson) , Hon'ble Mr. Arun Baroka (Member (Technical)) ,
Bahrudeen Noorul Ameen Mahdoom Bava – Appellant
Versus
State bank of India – Respondent
1324/ND/2024 COMPANY APPEAL(AT)(INS)
Mr. Siddharth Khattar, Mr. Divij Andley and Mr. Gaurav Parewa for Appellant; Mr. Siddharth Sangal, Mr. Chirag Sharma, Ms. Richa Mishra and Ms. Harshita Agarwal for Respondent
The court emphasized the mandatory nature of service requirements under insolvency law and clarified that the application was not barred by limitation, remanding the case for further examination of the debt's status.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 61(1), 61(3), 95(1) - SARFAESI Act, 2002 - Section 13(2) - Appeal against initiation of Personal Insolvency Resolution Process - Appellant contested the Demand Notice's validity on grounds of limitation and improper service - The court found that the Demand Notice was served at the correct address and that the application was not barred by limitation, as the Respondent provided sufficient evidence of the debt's existence. (Paras 1-49)
(B) Demand Notice - Service of Demand Notice under Rule 7(1) is mandatory and cannot be substituted with other notices - The court emphasized the necessity of adhering to statutory requirements in insolvency proceedings. (Paras 7, 31, 32)
(C) Limitation - The court ruled that the application under Section 95 was not time-barred, as the Respondent provided evidence of the debt's crystallization within the limitation period. (Paras 35-42)
(D) Remand - The case was remanded to the Adjudicating Authority to determine if the debt was time-barred and to assess the details of individual accounts. (Paras 48-49)
| Table of Content |
|---|
| 1. appellant's objections to demand notice (Para 3 , 4 , 5 , 6 , 7 , 8 , 9) |
| 2. court's analysis of service (Para 10 , 11 , 12 , 13 , 14 , 15 , 16 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44) |
| 3. court's ruling on limitation (Para 17) |
JUDGMENT
(Hybrid Mode)
[Per: Arun Baroka, Member (Technical)]
This is an appeal filed under Section 61(3) in conjunction with Section 61(1) of the Insolvency and Bankruptcy Code, 2016 (“IBC”). The appeal is against the order dated June 13, 2024, issued by the Adjudicating Authority (National Company Law Tribunal, New Delhi) in CP (IB) No. 24(ND)/2023.Through this order, the Personal Insolvency Resolution Process was initiated against the Appellant, who is the Personal Guarantor (PG).
Brief facts of the case
2. Brief chronology relevant for appreciation of the issues involved in the case is a follows:
1. 2007-2012 NaftoGaz India Pvt Ltd took various credit facilities from SBI and SBBJ in which the Appellant was the Personal Guarantor.
2. 28.01.2012 Loan account of NaftoGaz India Pvt Ltd was classified as NPA by SBBJ
3. 13.06.2012 Loan account of NaftoGaz India Pvt Ltd was classified as NPA by the SBI
4. 08.10.2012 NaftoGaz India Pvt Ltd went into liquidation vide Order passed by the High Court of Delhi.
5. 26.12.2013 SBI sent Demand Notice dated 26.12.2013 under Section 13(2) of SARFAESI Act, 2002 , calling upon to repay the amount of Rs 64.48 crs (approx.).
6. 2014 SBI filed OA No. 133 of 2014 before the Debt Recovery Tribunal, New Delhi, and the same is pending adjudication till date.
7. 28.06.2021 Respondent No. 1/SBI sent a Demand Notice under Rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process of Personal Guarantors to Corporate Debtors) Rule, 2019, demanding payment of Rs 264.61 crs - as on 31.05.2021.
8. 03.12.2022 Respondent No. 1 filed the Application under Section 95(1) of IBC seeking initiation of Personal Insolvency Resolution Process against the Appellant (PG) r/w Rule 7(2) of Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process Guarantors to Corporate Debtors) Rules 2019 with an outstanding default amount of Rs. 315 crs (approx.) as on 30.06.2022.
9. 05.12.2023 NCLT appointed Mr Deepak Mittal as the Resolution Professional and directed him to file report in terms of Section 99 of IBC.
10. 22.03.2024 Resolution Professional filed his report vide IA No. 1592/2024.
11. 25.04.2024 Appellant filed his objections to IA No. 1592/2024.
12. 29.05.2024 Pursuant to completion of pleadings, the arguments were concluded and the order was reserved on the said date. The parties were also given liberty to file their written submissions.
13. 05.06.2024 SBI filed its written submissions.
14. 06.06.2024 Appellant filed its written submissions.
15. 13.06.2024 AA passed the Impugned Order under section 100 IBC.
16. 16.06.2024 Resolution Professional published a public announcement in two newspapers on 15.06.2024 and the said fact was communicated to the Appellant vide email.
3. In his Appeal the Appellant has raised the grounds with respect to the limitation period, service of Demand Notice at the wrong address, and also a difference in the amount sought in the Demand Notice r/w Rule 7(1),Rule 7 of Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process Guarantors to Corporate Debtors) Rules 20197. Application by creditor.― (1) A demand notice under clause (b) of sub-section (4) of section 95 shall be served on the guarantor demanding payment of the amount of default, in Form B.of Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process Guarantors to Corporate Debtors) Rules, 2019, and the Section 95(1) Application r/w Rule 7(2) of the Financial Creditor/Applicant i.e. State Bank of India (SBI). No details of two loans were provided
