The acknowledgment of debt in a balance sheet extends the limitation period for a personal guarantor, validating the invocation of the guarantee despite prior demand notices.

PER: BENCH

1. This instant petition is filed by the Financial Creditor Central Bank of India under Section 95 of Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “the Code”) read with Rule 60(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Rules, 2019 (hereinafter referred to as Personal Guarantors Insolvency Rules, 2019), for initiation of insolvency resolution process in respect of the Personal Guarantor to the CD i.e. the Respondent No.1 herein before this Hon’ble Tribunal under the provisions of the IBC, 2016. 2. The averments of the Petition in brief as follows:

2.1 It is averred that the Respondent No. 2, namely, Kamineni Steel and Power India Limited (“Corporate Debtor” or “CD”), had been granted, from time to time, various credit facilities, since 2011, in the form of Fund based limits by the Company Petitioner (“Financial Creditor” or “FC”) herein along with other consortium member banks to meet its business needs. The Respondent No.1 herein executed Deed of Guarantee dated 24.12.2014 guaranteeing the repayment of the said credit facilities.

2.2 It is averred that the share of the Applicant Bank in the said facilities sanctioned by the consortium banks under the leadership of Indian Bank is Rs.156.16 Cr. The Respondents herein, who are the borrower and the guarantor for the said credit facilities, executed necessary documentation on 11.02.2015, thereby securing the total amount of Rs. 1322.91 Crore sanctioned by the consortium to the CD and further executed revival letter dated 31.01.2015 and 04.05.2015.

2.3 It is averred that the Respondent No. 1/Personal Guarantor herein executed a Deed of Guarantee dated 24.12.2014 under which he undertook:

“In the event of any default on the part of the Borrower, in payment/ repayment of any moneys referred to clause 2 above, or in the event of any default on the part of the Borrower to comply with or perform any of the terms, conditions and covenants contained in the Facility Agreement and the other Transaction Documents, the Guarantors shall, upon demand, forthwith pay to the lenders without demur all the amounts payable by the Borrower under the Transaction Documents. Any such demand made by the Lenders on the Guarantors shall be final, conclusive and binding notwithstanding any difference or any dispute between the Lenders on the Guarantors shall be final, conclusive and binding notwithstanding any difference or any dispute between the Lenders and the Borrower/arbitration or other legal proceedings, pending before any court, tribunal, arbitrator or any other authority.”

2.4 It is averred that an amount of Rs. 287.64 Cr is due and payable by the CD to the FC herein as on 14.12.2020. Statement of Accounts with bifurcation of Credit Facilities showing the outstanding debit balance are enclosed to the Application. After classification of accounts as NPA on 31.12.2015 the loan accounts of the CD were transferred to the Petitioner Branch for recovery of the dues as per the Petitioner Bank’s policy.

2.5 It is averred that the said Guarantee Agreement was invoked by the Bank vide its Demand Notice dated 21.01.2017. However, the Respondents failed to make the payment as demanded in the notice. The Bank filed OA. No. 742/2018 on the file of the DRT - II Hyderabad on 23.12.2017 against the CD and the Guarantors including the Respondent No. 1 for recovery of total dues amounting to Rs.197.28 Cr as on the date of the suit and it is pending.

2.6 That the CD was referred to Hon’ble National Company Law Tribunal referred by Indian Bank under the Insolvency and Bankruptcy Code, 2016 for initiating CIRP vide CP (IB): 11/10/HDB/2017 dated 26.10.2018. As there has been no resolution plan, the CD was ordered for liquidation and the process is going on. Therefore, this Application is filed before this Hon’ble Tribunal in terms of the provisions of Section 60(2) of the Code.

2.7 It is