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2025 Supreme(Online)(NCLT) 6554
IN THE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI
Shri Anil Raj Chellan, Member (Technical), Shri K. R. Saji Kumar, Member (Judicial)
Solapur Janata Sahakari Bank Limited – Appellant
Versus
Mukund Pandharinath Kulkarni – Respondent
C.P.(IB) No.275/MB/ 2022
For the Financial Creditor: Adv. Raina Birla
For Resolution Professional: Adv. Dhananjaya Sud
For the Personal Guarantor: Adv. Jack Thalakottur
A demand notice issued under SARFAESI Act constitutes valid invocation of personal guarantees, and acknowledgment of debt through arbitration extends limitation period for insolvency applications.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 95(1) - Initiation of insolvency resolution process initiated against a Personal Guarantor based on personal guarantees executed for a Corporate Debtor's loans. The demand notice issued under the SARFAESI Act to the Personal Guarantor refers to the due amounts and meets the requisite conditions for invoking guarantees. Claims about limitation and discharge under previous resolution plans are discussed. (Paras 1.1, 7.7, 7.12, 7.15)
(B) Limitation Period - The application for insolvency was filed within the time frame as per the Arbitration Award, treated as an acknowledgment of debt, permitting the creditor to initiate proceedings. (Paras 7.10, 7.14)
Facts of the case:
Application filed for insolvency resolution under the Insolvency Code against a Personal Guarantor owing financial debt on corporate loans. Notices issued under SARFAESI Act and arbitration processes discussed. Previous legal actions not disclosed by the creditor. Debtor claims released from guarantees due to corporate resolution plans.
Findings of Court:
Valid demand for default of loans established via notices, with ongoing obligations under previously executed guarantees. Acknowledgment of debt through arbitration is valid for the purposes of limitation. Corporate resolution plans do not automatically discharge personal guarantor’s liabilities.
Issues: Whether the notice issued complies with the conditions for invoking the personal guarantees and whether the application is barred by limitation. The broader question revolves around the effects of corporate resolution approvals on personal guarantees.
Ratio Decidendi: The court established that a valid demand was made by the Financial Creditor that complied with the terms of the deed of guarantee. The invocation was supported by evidence of arbitration acknowledging the debt owed, and approved resolution plans do not negate the responsibilities of personal guarantors.
Result: The petition for the Insolvency Resolution Process against the Personal Guarantor is admitted.
| Table of Content |
|---|
| 1. application filed under insolvency code against a personal guarantor based on financial defaults related to corporate loans. (Para 1 , 2) |
| 2. arguments by the personal guarantor regarding multiple forums, limitations, and the validity of actions taken by the creditor. (Para 4) |
ORDER
Per: Anil Raj Chellan, Member (Technical)
1. The instant Application has been filed under section 95 of the Insolvency and Bankruptcy Code, 2016 (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 ‘2019 Rules’) by Solapur Janata Sahakari Bank Limited (Financial Creditor/Applicant) for the purpose of initiating insolvency resolution process against Mr. Mukund Pandharinath Kulkarni (Personal Guarantor/Respondent). The total debt claimed in the application is Rs.14,75,26,917/- (Fourteen Crore, Seventy-Five Lakh, Twenty-Six Thousand, Nine Hundred and Seventeen Rupees) as on 30.09.2021, and the date of default as per Part-III of the Application is 31.03.2017 and 13.12.2016.
2. Submissions of Applicant/Financial Creditor
2.1 The Financial Creditor, by way of a Sanction letter dated 20.08.2015, sanctioned Short Term Other Security (STOS) Facilities amounting to Rs.6,00,00,000/- to Shetkari Sakhar Karkhana (Chandrapuri) Limited (Corporate Debtor). Subsequently, Financial Creditor extended further financial accommodation in the form of Cash Credit (Pledge) Loan amounting to Rs.9,00,00,000/- by way of Sanction Letter dated 19.03.2016 to the Corporate Debtor.
2.2 The Personal Guarantor furnished the personal guarantees in respect of the aforesaid Credit Facilities extended by the Financial Creditor to the Corporate Debtor by executing the Guarantee Deed dated 21.09.2015 in respect of the STOS Facilities, and the Guarantee Deed dated 23.03.2016 in respect of the Cash Credit (Pledge) Loan.
2.3 Pursuant to the default committed by the Corporate Debtor in repayment of the STOS Facilities, the Financial Creditor issued a notice under Section 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) on 21.11.2017, calling upon the Corporate Debtor to repay the outstanding dues. The said notice was also duly addressed to the Directors and Guarantors of the Corporate Debtor. Notwithstanding the issuance of such notice, the Financial Creditor did not receive any satisfactory response or reply from the Corporate Debtor or the Guarantors.
2.4 The Financial Creditor submits that the NCLT vide order dated 14.01.2019 initiated Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. Pursuant thereto, the Financial Creditor initiated insolvency process against the Personal Guarantor under Section 95 of the Code. A Demand Notice in Form B dated 10.11.2021 was served on the Personal Guarantor, calling upon him to discharge the outstanding dues. The present Application arises from the Personal Guarantor's failure to make such payment.
3. Report of Resolution Professional
3.1 By an order dated 25.04.2022, Mr. Sanjay Shrivastava was appointed as a Resolution Professional (RP) for examining the Application filed against the Personal Guarantor. The RP filed his report dated 02.07.2022. As per the report, the RP has issued a letter of intimation dated 23.06.2022 to the Personal Guarantor via speed post.
3.2. The RP, for the reasons recorded in the Application and vide his report, recommended for admission of the Application.
4. Contentions of Respondent/Personal Guarantor
4.1. The Personal Guarantor, through his Reply Affidavit to the Report filed by the RP, submits that the Financial Creditor has approached various forums before the present Application, including the Multi-State Co-operative Societies Act, 2002 vide Case No. ARB/MAL/378/2017(2018) and Case No. ARB/MAL/377/2017(2018) before the Court of the Principal Dist
