Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(NCLAT) 446

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Ashok Bhushan, J, Indevar Pandey, Member (Technical)
State Bank of India – Appellant
Versus
Anopsingh Kiritsinh Sarvaiya – Respondent
Company Appeal (AT) (Insolvency) No. 865 of 2024|I.A. No. 3125 of 2024|Company Appeal (AT) (Insolvency) No. 866 of 2024|I.A. No. 3128 of 2024|I.A. No. 3129 of 2024|Company Appeal (AT) (Insolvency) No. 869 of 2024|I.A. No. 3136 of 2024|Company Appeal (AT) (Insolvency) No. 870 of 2024|I.A. No. 3140 of 2024|Company Appeal (AT) (Insolvency) No. 871 of 2024|I.A. No. 3143 of 2024|Company Appeal (AT) (Insolvency) No. 872 of 2024|I.A. No. 3146 of 2024|Company Appeal (AT) (Insolvency) No. 873 of 2024|I.A. No. 3149 of 2024|Company Appeal (AT) (Insolvency) No. 874 of 2024|I.A. No. 3152 of 2024

Advocates:
For the Appellants/Petitioners: Mr. Siddharth Sangal, Ms. Mrinalini Tandon, Ms. Richa Mishra, Mr. Kashish
For the Respondents: Mr. Shubhanshu Tiwari, Mr. Moonaal Davawala

Date of default for personal guarantors under IBC Section 95 arises on expiry of demand period in Section 13(2) SARFAESI notice invoking guarantee liability, distinct from corporate debtor's NPA; applications within 3 years therefrom, post-COVID extensions, are timely.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 95, 99, 100 - SARFAESI Act, 2002 - Section 13(2) - Personal guarantors to corporate debtor - Application under Section 95 filed by creditor against personal guarantors - Dismissed by Adjudicating Authority on grounds of limitation and non-invocation of guarantee - Date of default for personal guarantors reckoned from expiry of 60 days granted in Section 13(2) notice demanding payment from guarantors, not from corporate debtor's NPA declaration - Notice under Section 13(2) addressed to guarantors invoking liability constitutes valid invocation of guarantee - Limitation commences from date of such default, unaffected by subsequent revival letter - Application filed within three years from default date held within limitation even post-COVID extension orders - Different default dates (corporate debtor vs guarantors) not defective - Revival letter non-filing with application immaterial if default post-dates it - Impugned orders set aside, Section 95 petitions revived for fresh consideration under Section 100. (Paras 5, 8, 13, 15-18)

(B) Limitation Act, 1963 - Suo Motu extension orders - Where limitation expires during excluded COVID period (15.03.2020 to 28.02.2022), 90 days from 01.03.2022 applicable unless balance exceeds it - Full exclusion applies for longer periods, ensuring applications timely. (Paras 5, 11-13)

Facts of the case:
Credit facilities sanctioned to corporate debtor in 2012, renewed 2017-2018; personal guarantees executed 2015; default from 2018, NPA 27.09.2018; Section 13(2) notices 14.06.2019 and 25.10.2019 demanding payment from guarantors within 60 days; Demand Notice under 2019 Rules 21.10.2021; Section 95 applications filed 31.03.2022 claiming default 24.12.2019; RP report recommended initiation; Adjudicating Authority dismissed citing limitation (NeSL date 30.06.2018), inconsistent defaults, non-invocation, revival letter absence.

Findings of Court:
Section 13(2) notice dated 25.10.2019 invoked guarantees by demanding payment from guarantors; default crystallized 24.12.2019; applications within limitation; NeSL date pertains to corporate debtor only; procedural objections untenable.

Issues: Whether Section 95 applications barred by limitation; validity of guarantee invocation via Section 13(2) notice; relevance of revival letter and inconsistent default dates.

Ratio Decidendi: For personal guarantors, default triggers on creditor's demand under guarantee terms via Section 13(2) notice and non-payment within stipulated time, distinct from corporate debtor's default; such applications within three years therefrom, accounting for COVID exclusions, are maintainable; appellate tribunal corrects erroneous limitation computation and procedural findings by Adjudicating Authority.

Result: Appeals allowed; impugned orders set aside; Section 95 petitions revived for fresh orders under Section 100.

Table of Content
1. multiple appeals against nclt dismissal of section 95 applications (Para 2)
2. facts of credit facilities, guarantees, notices, and defaults (Para 3 , 8 , 9 , 15 , 16)
3. appellant: applications within limitation; guarantees invoked (Para 5)
4. respondents: no revival letter; improper guarantee invocation (Para 6)
5. limitation runs from demand notice date post-covid exclusion (Para 10 , 11 , 12 , 13)
6. sarfaesi notice dated 25.10.2019 invokes personal guarantees (Para 14 , 17 , 18)
7. appeals allowed; petitions revived for section 100 order (Para 19)

ASHOK BHUSHAN, J.

All these Appeal(s) have been filed by the State Bank of India (“SBI”)

challenging the order dated 07.03.2024 passed by National Company Law Tribunal, Ahmedabad (Court-III) dismissing application filed by the SBI under Section 95 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the “IBC”) against the Respondents to the Appeals – the Personal Guarantors of the Corporate Debtor (“CD”) – M/s Yogiraj Ginning and Oil Industries Pvt. Ltd.

2. Separate Company Petitions were filed against each of the Respondent(s) in these Appeal(s), for example Company Appeal (AT) (Ins.) No.865 of 2024 has been filed against the order dated 07.03.2024 in CP(IB)No.236/NCLT/AHM/2022, which was filed by SBI against Mr. Anopsingh Kiritsinh Sarvaiya; similarly different Company Petitions under Section 95 were filed by SBI against other Personal Guarantors, who are Respondents in the above Appeal(s). All the applications filed by SBI have been rejected by separate orders passed on 07.03.2024 in different Company Petitions. All the Appeal(s) raises common questions of facts and law and have been heard together and are being decided by this common judgment. It shall be sufficient to refer to pleadings in Company Appeal (AT) (Ins.) No.865 of 2024 for deciding all the Appeal(s).

3. Brief facts of the case giving rise to these Appeal(s) are:

(i) The SBI sanctioned credit facilities in the year 2012 to M/s Yogiraj Ginning and Oil Industries Pvt. Ltd. The facilities were renewed, enhanced on 26.04.2017 and 06.06.2018.

(ii) The Respondent(s), i.e. Personal Guarantors executed personal guarantees. The last guarantee issued was on 24.03.2015, i.e. for credit facility aggregating to Rs.19.65 crores. The Personal Guarantors also claimed to have issued revival letter on 19.09.2017.

(iii) The CD defaulted in repayment on 13.06.2018, hence, account of the CD was declared as NPA on 27.09.2018. Notices under Section 13, sub-section (2) of the SARFAESI Act, 2002 were issued to the CD and the Personal Guarantors to pay the outstanding liabilities of Rs.18,15,08,035/-. Another notice under Section 13, sub-section (2) was issued on 25.10.2019 to the CD and Personal Guarantors, demanding an amount of Rs.19,00,36,798/- as on 22.10.2019. Noticee(s) were asked to pay the amount within 60 days from the date of the notice. The Bank also filed an application before the Debts Recovery Tribunal (“DRT”) for recovery of the amount of Rs.19,00,36,798/-.

(iv) An application under Section 7 was also filed by SBI against the CD. A Demand Notice under Rule 7 sub-rule (2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Guarantors to Corporate Debtor) Rules, 2019 (“2019 Rules”) for initiating proceedings under Section 95 was also issued. Notice of demand mentions the outstanding debt as Rs.24,41,53,898/- The date of default was mentioned as 24.12.2019. Noticee(s) were required to discharge the debt within 14 days from the receipt of the letter. No payments having been made by the Personal Guarantors, Company Petitions under Section 95 dated 31.03.2022 was filed against the Personal Guarantors. CP(IB)No.236/NCLT/AHM/2022 was filed against Anopsingh Kiritsinh Sarvaiya. Similary, C.P.(IB) No.174/NCLT/AHM/2023 filed against Devendrasinh Ranjitsinh Jadeja; C.P.(IB) No.237/NCLT/AHM/2022 against Kuldipsinh Anopsinh Chudasma; C.P.(IB) No.171/NCLT/AH

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