State Bank of India Vs Deepak Kumar Singhania (NCLAT Delhi)
NCLAT Delhi held that issuance of notice under rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 doesn’t amount to invoking of guarantee.
Facts- The Corporate Debtor – LML Ltd. was extended Financial Facilities by State Bank of India. The Respondent – Deepak Kumar Singhania executed a Deed of Guarantee dated 28.03.2005 along with other two Personal Guarantors in favour of SBI and a Multi-Partite Agreement dated 28.03.2005 was executed. The Guarantor undertook to pay to the Lender in event any default is committed by the Borrower upon demand.
The SBI filed application u/s. 19 of the Recovery of Debts and Bankruptcy Act 1993 before the Debts Recovery Tribunal, which is pending disposal. With respect to Corporate Debtor an order of liquidation has been passed on 23.03.2018. The SBI issued a Demand Notice under Rule 7 of Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 upon the Guarantor – Deepak Kumar Singhania, calling upon the Respondent to make payment of Rs.125,05,28,848.56 as on 30.04.2022.
An application u/s. 95 has been filed by the Appellant on 28.05.2022. The Adjudicating Authority appointed Resolution Professional by order dated 02.01.2024. The application was heard by Adjudicating Authority and orders were reserved on 20.11.2024. On 28.11.2024, the impugned order was passed by the Adjudicating Authority, rejecting Section 95 Application. The Adjudicating Authority held that Applicant having failed to invoke the guarantee, the application filed u/s. 95 does not satisfy the mandatory pre-requisite for issuing a legally valid demand notice under Rule 7(1) for filing such application. Application u/s. 95 was held as not maintainable and dismissed. It was held that the Respondent is not a Guarantor as defined in Rule 3(1)(e) of 2019 Rules. Aggrieved by the impugned order this Appeal has been filed.
