An application for insolvency resolution against a personal guarantor is defective and time-barred when the dates of default are inconsistent and the guarantee has not been properly invoked.

JUDGMENT

1. State Bank of India (Financial Creditor) has filed this Application under section 95 of the Insolvency and Bankruptcy Code , 2016 (hereinafter referred to as IBC,2016) 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, seeking to initiate Insolvency Resolution Process against Mr. Shamlabhai Momaiyabhai Movaniya, the Personal Guarantor of the Corporate Debtor namely M/s. Yogiraj Ginning and Oil Industries Pvt Ltd. for default of an amount of Rs.24,41,53,898.12/-.

2. As per letter of arrangement dated 07.01.2012, credit facilities were sanctioned to the Corporate Debtor. It was renewed from time to time i.e. on 15.04.2013, 09.05.2014 and 24.03.2015. The credit facilities were enhanced on 21.04.2016 and renewed on 26.04.2017 and 06.06.2018. The Respondent executed personal guarantee in favour of the applicant for securing various credit facilities to Corporate Debtor on 07.01.2012, 05.06.2014 and 24.03.2015. According to the applicant, as per the last guarantee agreement executed by the respondent dated 24.03.2015, credit facilities aggregating to Rs.19.65 crores were secured. It includes interest, charges, expenses, commissions, etc. The respondent also executed revival letter on 19.09.2017, so limitation started from that date. The Corporate Debtor defaulted in the repayment, hence, its credit facility account becomes Non-Performing Asset (NPA) on 27.09.2018. The applicant, therefore, issued notice on 14.06.2019 under Section 13(2) of the SARFAESI Act to the corporate debtor and personal guarantor. They have not filed reply to said notice. Thereafter, they filed application before DRT for recovery of an amount of Rs.19,00,36,798.08. The applicant also filed application under Section 7 of the IBC against the corporate debtor which was admitted. The application for liquidation of Corporate Debtor is pending before this Tribunal. According to the applicant, the debt was due on 25.10.2019 and default was occurred on 24.12.2019. The total amount of default is mentioned as Rs.24,41,53,898.12 together with interest.

3. This Tribunal vide order dated 04.12.2023 appointed Mr. Vikas Gautamchand Jain as Resolution Professional (RP) in respect of Personal Guarantor. The RP has filed his report dated 14.12.2023. RP Recommended for initiation of insolvency resolution process against the personal guarantor.

4. The personal guarantor objected to the application contending that the application is not maintainable as it is barred by limitation. He has submitted that in the record of default to the Information Utility (IU), the date of default is mentioned as 30.06.2018 while the application is E-filed on 28.01.2023. The application is filed after delay of more than five years. The application is also defective as all relevant documents are not placed on record. No revival letter dated 19.09.2017, as alleged by the applicant, is filed on record. He further submitted that the applicant has not issued any notice invoking the personal guarantee. Applicant has only issued notice under Section 13(2) of the SARFAESI Act. According to the respondent, the notice issued under SARFAESI Act is for the purpose of enforcement of security interest by the banks and it cannot be construed as notice invoking guarantee under Section 95 of the Code. Moreover, the respondent has not received said notice. The applicant has no proof to show that said notice was received by the personal guarantor. He has further submitted that affidavit of applicant supportin