Case Note & Summary
The appeal was filed by a personal guarantor challenging an order admitting a petition under Section 95 of the Insolvency and Bankruptcy Code, 2016 (IBC). The respondent bank had advanced loans to a corporate debtor, which subsequently defaulted, leading to the classification of the loan as a Non-Performing Asset (NPA) in April 2012. The appellant had provided personal guarantees for these loans. Despite various settlement proposals and a part-payment made in February 2021, the bank initiated proceedings against the appellant under Section 95 of the IBC in September 2023. The appellant argued that the application was barred by limitation, asserting that the acknowledgment of liability from earlier settlement proposals only extended the limitation until April 2019. The respondent bank countered that the part-payment made in 2021 was a valid acknowledgment that kept the application within the limitation period. The court analyzed the arguments, emphasizing that the deed of guarantee binds the guarantor to any part-payment made by the borrower. It concluded that the dismissal of a previous recovery application for default did not extinguish the debt. Ultimately, the court dismissed the appeal, affirming the admission of the petition under Section 95 of the IBC.
Headnote
A) Insolvency Law - Personal Insolvency Resolution Process - Limitation for Filing - Insolvency and Bankruptcy Code, 2016, Section 95 - The appellant contended that the application was barred by limitation as the account was classified as NPA in 2012 and recalled in 2015. The court held that part-payment made in 2021 constituted an acknowledgment of liability, thus keeping the application within the limitation period (Paras 3-8).
Issue of Consideration
Whether the application filed under Section 95 of the Insolvency and Bankruptcy Code, 2016 was within limitation.
Final Decision
The appeal was dismissed, affirming the admission of the petition under Section 95 of the IBC. The court found that the part-payment made by the corporate debtor constituted an acknowledgment of liability, thus keeping the application within the limitation period.
Law Points
- Insolvency
- Personal Guarantee
- Limitation
- Acknowledgment of Debt
- NPA Classification
