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2026 Supreme(Online)(NCLAT) 529
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Ashok Bhushan, J
Gurmeet Sodhi – Appellant
Versus
State Bank of India – Respondent
Company Appeal (AT) (Insolvency) No. 774 of 2026 | Company Appeal (AT) (Insolvency) No. 776 of 2026
For the Appellants/Petitioners: Abhijit Sinha, Neeha Nagpal, Malak Bhatt, Ishit Patel, Rohan Tewari, Ajatshatrau S. Rawat
For the Respondents: Siddharth Sangal, Richa Mishra, Kashish, Mrinalini Tandon, Pulkut Goyal
A notice under Section 13(2) of the SARFAESI Act demanding payment and referencing the guarantee deed constitutes valid invocation of the personal guarantee; moratorium under Section 14 IBC does not protect personal guarantors.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 95 and 99 - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 13(2) - Limitation Act, 1963 - Section 18 - Appeal against admission of Section 95 application against personal guarantors - Notice under Section 13(2) SARFAESI Act is sufficient invocation of personal guarantee - Moratorium under Section 14(1) IBC does not extend to personal guarantors - Acknowledgment of debt by corporate debtor in balance sheets extends limitation against personal guarantor. (Paras 8, 14, 17, 18)
Facts of the case:
The corporate debtor availed credit facilities from a consortium of banks. Personal guarantees were executed by the appellants on 30.09.2014 and again on 29.12.2014 after a Master Restructuring Agreement. The account was declared NPA and a notice under Section 13(2) SARFAESI Act was issued. Subsequently, Section 95 applications were filed against the personal guarantors, which were admitted by the Adjudicating Authority. The personal guarantors appealed, arguing that the guarantee was not invoked and that the subsequent guarantee replaced the earlier one.
Findings of Court:
The notice under Section 13(2) SARFAESI Act was a clear invocation of the personal guarantee. The earlier guarantee continued to bind the guarantors despite the restructuring. Moratorium under Section 14 IBC does not bar proceedings against personal guarantors. The application was within limitation due to acknowledgments in balance sheets and the DRT decree.
Issues: Whether the notice under Section 13(2) SARFAESI Act constitutes valid invocation of personal guarantee, and whether the subsequent execution of a fresh guarantee supersedes the earlier one.
Ratio Decidendi: A notice under Section 13(2) SARFAESI Act demanding payment and mentioning the guarantee deed is sufficient invocation of the personal guarantee. The earlier guarantee is not extinguished by subsequent restructuring unless the new document expressly replaces it.
Result: Appeals dismissed.
| Table of Content |
|---|
| 1. background of appeals and factual matrix. (Para 1 , 2) |
| 2. submissions and arguments of counsel. (Para 3 , 4 , 5) |
| 3. whether notice under section 13(2) sarfaesi act constitutes invocation of personal guarantee. (Para 6 , 7 , 8 , 9) |
| 4. effect of restructuring and subsequent guarantee on earlier guarantee. (Para 10 , 11 , 12 , 13 , 14) |
| 5. validity of invocation of guarantee and binding nature of drt decree. (Para 15 , 16) |
| 6. moratorium under section 14 ibc does not apply to personal guarantors; limitation extended by acknowledgment of debt. (Para 17 , 18) |
| 7. final decision dismissing appeals. (Para 19) |
J U D G M E N T
ASHOK BHUSHAN, J.
1.These two appeals have been filed by the personal guarantors of the corporate debtor M/s. Kudos Chemie Ltd. challenging the common order dated 18.03.2026 passed by the adjudicating authority (National Company Law Tribunal, Chandigarh Bench, Court – I, Chandigarh) admitting C.P. (IB) No. 214/2021 filed by the State Bank of India (SBI) against Gurmeet Sodhi and C.P. (IB) No.205/2021 filed by the SBI against Jitendra Singh. Adjudicating authority by the impugned order has admitted Section 95 application against both the personal guarantors, aggrieved by which order, these appeals have been filed.
2. Both the appeals having arisen from common facts and events, it shall be sufficient to refer to Comp. App. (AT) (Ins.) No. 774/2026 for deciding both the appeals:
i. The corporate debtor availed various credit facilities from consortium of lending Banks on 24.04.2014.
ii. State Bank of India (SBI) issued a sanction letter dated 30.09.2014, for allowing Corporate Debt Restructuring (‘CDR’) limit of 193.62 crore, the borrower executed various documents on 30.09.2014. Gurmeet Sodhi and Jitendra Singh executed Deed of Guarantee dated 30.09.2014 in favour of the SBI. In view of the arrangement and restructuring of the amount various loaning documents dated 29.12.2014 were executed. On 29.12.2014, Gurmeet Sodhi and Jitendera Singh have also executed a Deed of Guarantee in favour of the consortium Bank.
iii. The corporate debtor M/s. Kudos Chemie Ltd. could not maintain its account properly failed, to honour its financial commitment, the account was classified as Non-Performing Asset (NPA) by the SBI on 31.05.2015.
iv. On 05.11.2016, SBI issued a notice under Section 13(2) of the SARFAESI Act, 2002 (for short ‘SARFAESI Act’) to the corporate debtor as well as to the personal guarantors, Gurmeet Sodhi and Jitendera Singh demanding an amount of Rs.210,02,71,756.32/- as on 02.11.2016. All the noticee were directed to repay the outstanding liabilities within 60 days from the date of the notice. In Section 13(2) notice, the Guarantee Deed dated 30.09.2014 was relied.
v. Punjab National (PNB), SBI and 4 other Banks filed an OA No.522/2017 against the personal guarantors under Section 19 of Recovery of Debts Due to Banks and Financial Institutions Act, 1993, for recovery of various loans. SBI in the application relied on Term Loan Agreement dated 30.09.2014 and Guarantee Agreement dated 30.09.2014 as well as notice under Section 13(2) dated 05.11.2016. Debt Recovery Tribunal (DRT) granted decree on 06.01.2020 in favour of the Applicant/Bank. The SBI issued a notice under Rule 7(1) of the of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019, (for short the ‘2019 Rules’) to the appellants claiming total outstanding amount of Rs.348,38,57,247.54/- as on 25.05.2021. Date of default was mentioned as 31.05.2015. By subsequent notice 19.07.2021, the Bank in reference to the earlier demand notice dated 29.05.2021 mentioned the date of default. It was mentioned that dates mentioned were default of the corporate debtor but with respect to the guarantors, the date of default is 05.01.2017.
vi. Section 95 application was filed by the Bank in the year 2021. The adjudicating authority in Section 95 application filed by
