Canara Bank Vs Smt. Valsala T S (NCLT Kochi)
NCLT Kochi dismissed the application filed by the Financial Creditor under section 95 of the Insolvency and Bankruptcy Code in as much as the claim of debt against personal guarantor not proved. Accordingly, since claimed debt remained unverified, hypothetical and disputed, the application is rightly dismissed.
Facts- These Company Petitions are filed by the Financial Creditor, Canara Bank, Asset-Recovery Management Branch u/s. 95 of the Insolvency & Bankruptcy Code, 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, to initiate the insolvency resolution process in respect of Valsala T S, Mr. Stephen Logan and Mr. P A Nazeeb, Personal Guarantors to M/s Savute Textiles Private Limited, the Corporate Debtor, for default of a debt amounting to Rs. 43,68,79,602/- plus further interest thereon from 01.01.2024. The date of default is stated to be 14.06.2019.
Conclusion- Held that in the demand itself, the bank should have specified the extent of each guarantor’s liability. The bank has erred in claiming the entire amount from the personal guarantors, contrary to the terms of the guarantee. Alternatively, it would be appropriate to state that the bank has failed to produce any evidence on record to show that the guarantor ever executed or accepted liability for the credit facility of Rs. 20,00,00,000/- as claimed in the demand notice. The Demand Notice as issued contains some other credit facilities also for which the guarantor did not agree to accept his guarantee. Further, there is no stipulation in the Demand Notice about the limited liability of the guarantors, nor is there any indication that guarantors would be liable to pay only to the extent of their guarantee, though the borrower is liable to pay the entire sum due. In the absence of any such stipulation or clarification, it cannot be said that there was a valid demand.
