Case Note & Summary
The appeal was filed by Deepti Pankaj Chugh, a personal guarantor for loans availed by M/s. Aditya Prints Pvt. Ltd. from the State Bank of India. The Appellant sought to initiate Corporate Insolvency Resolution Process (CIRP) under Section 94 of the Insolvency and Bankruptcy Code, 2016, but her petition was rejected by the National Company Law Tribunal (NCLT) on 24th February 2025, with a cost imposed. The Appellant contended that the Respondent had not invoked the personal guarantee until a later notice was issued, and thus the limitation period for her petition should start from that date. The Respondent opposed the appeal, arguing that the Appellant was attempting to delay the recovery process and that her petitions were barred by the principle of res judicata due to previous dismissals on similar grounds. The court found that the Appellant had filed multiple petitions to gain an interim moratorium and obstruct the recovery process, which constituted an abuse of the legal process. The court upheld the NCLT's decision, emphasizing that the limitation period began with the Demand Notice issued on 20th March 2017, and dismissed the appeal with costs imposed on the Appellant for her conduct. The final order was issued on 3rd July 2026.
Headnote
A) Insolvency Law - Personal Guarantee - Limitation Period - Insolvency and Bankruptcy Code, 2016, Section 94 - The court held that the limitation period for filing a petition under the Code commenced from the issuance of the Demand Notice under Section 13(2) of the SARFAESI Act, not from the Possession Notice under Section 13(4). The Appellant's petitions were dismissed as they were filed beyond the limitation period. (Paras 23-24).
Issue of Consideration
Whether the limitation period for filing an application under the Code should be calculated from the date of issuance of the notices under Section 13(2) of the SARFAESI Act or from the actual invocation of the personal guarantee under Section 13(4) of the SARFAESI Act.
Final Decision
The appeal was dismissed, and the order of the NCLT was upheld. The Appellant was ordered to pay an exorbitant cost of ₹ 2 lakhs to the Prime Minister's National Relief Fund within one month. The Appellant was ordered to pay a cost of ₹ 2 lakhs to the Prime Minister's National Relief Fund within one month.
Law Points
- Insolvency proceedings
- personal guarantee
- limitation period
- res judicata
- abuse of process
