A personal guarantor's liability arises only upon valid invocation of the guarantee, which was not established in this case.

ORDER

[PER: SANJIV DUTT, MEMBER (TECHNICAL)]

1. BACKGROUND

1.1 The present Application has been filed by Bank of Maharashtra (hereinafter referred to as "the Financial Creditor") on 11.05.2023 in the prescribed Form ‘C’ under Section 95(1) and Section 60(2) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "the Code") read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (hereinafter referred to as "PG to CD Rules") seeking initiation of the insolvency resolution process against Mrs. Kavita Ninad Mestry (hereinafter referred to as "Personal Guarantor/Respondent") being personal guarantor to M/s Autocrat Automotive Stamping Private Limited, the Corporate Debtor.

1.2 The Corporate Debtor availed Term Loan facility of Rs.3.75 Crore and Cash Credit Facility of Rs.1.25 Crore from the Financial Creditor in the year 2013. The Respondent being one of the Directors to the Corporate Debtor had provided personal guarantee against the Credit Facility extended to the Corporate Debtor.

1.3 The total outstanding debt including interest and penalties is shown at Rs.14,90,72,181/- (Fourteen Crore Ninety Lakh Seventy-Two Thousand One Hundred and Eighty-One Rupees). The said debt became due on 12.05.2014 and the date of default, as stated in Part-III of the Application is also 12.05.2014.

2. AVERMENTS OF FINANCIAL CREDITOR

2.1 The Respondent is the Personal Guarantor to Autocrat Automotive Stamping Pvt. Ltd. (hereinafter referred to as the “Corporate Debtor/Borrower”), a company incorporated on 10.11.2010, having Corporate Identification Number (CIN) U28910PN2010PTC137729 and its registered office at Shop 4, Babar Heritage, SNO.41/2//1A Dattawadi / Akurdi, Pune-411035, Maharashtra.

2.2 The Corporate Debtor availed a Term Loan Facility of Rs.3,75,00,000/- (Three Crore Seventy-Five Lakh Rupees) and a Cash Credit Facility of Rs.1,25,00,000/- (One Crore Twenty-Five Lakh Rupees) from the Financial Creditor vide Sanction Letter dated 09.02.2013. Against the Credit Facilities extended to the Corporate Debtor, the Respondent, being one of the Directors, provided a personal guarantee vide Guarantee Agreement dated 14.03.2013.

2.3 The Corporate Debtor defaulted in repaying the loan, leading to its account being classified as a Non-Performing Asset (NPA) on 12.05.2014. In 2017, the Financial Creditor filed an Application before the Hon’ble Debt Recovery Tribunal, Pune, bearing Original Application (OA) No. 481 of 2017, which was within the limitation period as stipulated under Section 24 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDB Act). The OA was disposed of on 31.12.2017 in favour of the Financial Creditor. Subsequently, on 17.05.2018, a notice under Section 13(2) of the SARFAESI Act was issued to both the Corporate Debtor and the Guarantor calling upon them to repay in full the outstanding debt within 60 days from the date of receipt of said notice. Thereafter, the Financial Creditor issued a Demand Notice dated 03.11.2022 in Form B to the Respondent/Personal Guarantor calling upon her to make payment of the outstanding debt in default in full within 14 days from the receipt of the notice failing which personal insolvency resolution process under the Code shall be initiated against her. The said notice was delivered to the Respondent/Personal Guarantor on 11.11.2022 as per the Tracking Report annexed to the Application. However, she failed to respond to the said Demand Notice.

2.4 In view of the foregoing, the present Application has been filed by the Financial Creditor under Section 95(1) of the Code read with Rule 7(2) of the PG to CD Rules, seeking orders for initiating the Insolvency Resolution Process in the case of the Personal Guarantor to the Corporate Debtor.

3. CONTENTIONS OF PERSONAL GUARANTOR TO CORPORATE DEBTOR

3.1 It is observed that this Bench vide Order dated 31.1