The liability of a personal guarantor is co-extensive with that of the corporate debtor, commencing upon default, and limitation is governed by contractual terms, which allow for acknowledgment extensions.

ORDER

1. This application has been filed by State Bank of India (hereinafter referred as Financial Creditor) under Section 95 (1) of the Insolvency and Bankruptcy Code, 2016 read with Rule 7(2) of Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Rules, 2019 to initiate Insolvency Resolution Process against Personal Guarantor, Mr. Thota Chandrakanth (hereinafter referred to as Personal Guarantor/Respondent No.1) of M/s.Turbo Machinery Engineering Industries Limited (hereinafter referred as Corporate Debtor).

2. The Corporate Debtor availed credit facilities of Rs. 40,36,00,000/- from the Financial Creditor in the form of a cash credit and non-fund based limits vide sanction letter dated 31.01.2012, which was extended vide letter dated 29.02.2012. The Respondent No.1 stood guarantor for the repayment of the loan and Guarantee Deeds dated 02.03.2010 and 28.02.2012 were executed between the Financial Creditor and Respondent No.1.

2.1 The default in payment of debt occurred on 30.06.2013. Due to non-payment of the loan amount, one of the financial creditors filed CP No.64 of 2017 under Section 7 of the IBC against the Corporate Debtor which was admitted. Finally, the Corporate Debtor was put into liquidation vide order dated 06.11.2019.

2.2 The Financial Creditor received a part payment of loan amount by auction and Rs. 8,17,18,639.87/- was left as principal outstanding amount. Thereafter, demand notice dated 11.08.2021 was issued to the Respondent No.1, but the amount was not paid.

2.3 The Financial Creditor also approached the Debts Recovery Tribunal, Hyderabad by filing OA No.9734 of 2017 regarding the outstanding debt.

3. In reply, the Respondent No.1 has contented and contested the averments made by the applicant.

3.1 It is submitted that that Corporate Debtor did not avail the credit facilities of Rs.40,36,00,000/- but only the amount was sanctioned and it is for this reason, the Financial Creditor has not furnished the utility certificate confirming the liability. Further, the amount was also not mentioned in the recovery through e-auction in CP No.64 of 2017.

3.2 The Respondent No.1 has also submitted that the present application is barred by limitation. It is averred that the application under Section 95 of IBC is independent and not supplementary to application under Section 7 of IBC. The date of default of the Corporate Debtor is 26.06.2013 and the Guarantee Agreement was signed in the year 2012.

4. In the rejoinder, the Applicant has reaffirmed and reasserted the contentions put forward in the application.

4.1 It is explained that availing of loan of Rs. 40,36,00,000/- is clear from the sanction letter. Besides, this fact has also been admitted by the Corporate Debtor in OA No.9734 of 2017 filed before the Debts Recovery Tribunal, Hyderabad. The Respondent No.1 has also admitted his signature on the Guarantee Deed. It is further averred that, there is also no need to submit the utility certificate confirming the liability as it was not mandatorily required to be filed at the time of filing of the application.

4.2 On the question of liability of the Personal Guarantor, it is averred that the guarantee is irrevocable and continuing, which is co- extensive with the Corporate Debtor. On account of non-payment of loan amount, the account of Corporate Debtor was classified as Non-Performing Assets (NPA) on 26.01.2013 and therefore the Petition No. 64 of 2017 of IBC under Section 7 of IBC was filed by one of the financial creditors of the Corporate Debtor. The l