State Bank of India Vs Bernard John (NCLAT Delhi)
NCLAT Delhi held that acknowledgment of liability by Corporate Debtor in its balance sheets constitutes valid acknowledgement for both borrower and guarantor. Accordingly, the present appeal is allowed.
Facts- The present appeal has been filed by the State Bank of India (Financial Creditor) against the order dated 16.07.2024 passed by the Hon’ble National Company Law Tribunal. By the said impugned order, the application of the Appellant under Section 95 of the Insolvency and Bankruptcy Code, 2016, for initiation of insolvency resolution process against the personal guarantor, Shri Bernard John, was dismissed on the ground that the petition was barred by limitation, since the balance sheets relied upon as acknowledgment of debt were not signed by the guarantor himself. The Appellant, being aggrieved by the impugned order, has therefore approached this Tribunal under Section 61 of the Code.
Conclusion- Held that acknowledgment of liability in the Corporate Debtor’s balance sheets extends limitation against the Respondent Personal Guarantor. To hold otherwise would create an absurd inconsistency whereby the same debt remains enforceable against the borrower but becomes time-barred against the guarantor, despite their liabilities being concurrent and co-extensive.
Held that acknowledgment of liability made by the Corporate Debtor in its balance sheets for FY 2016–17 to 2019–20 constitutes valid acknowledgment not only for the borrower but also for the guarantor.
