Omkara Assets Reconstruction Pvt. Ltd. Vs. Ritu Jankiprasad Shah - It is evident from these stipulations that the promise to pay was conditional and not having been accepted by the Petitioner with these conditions cannot constitute a clear and unconditional promise to pay. Hence, the said letters do not give rise fresh cause of action in terms of Section 25(3) of the Contract Act.

 NCLT Mumbai (2026.07.13) in  Omkara Assets Reconstruction Pvt. Ltd. Vs. Ritu Jankiprasad Shah [(2026) ibclaw.in 2738 NCLT, CP (IB) No. 1117/(MB)/2025] held that;

• There is a distinction between acknowledgment under Section 18 of the Limitation Act, 1963 and a promise within the meaning of Section 25 of the Contract Act. Both promise and acknowledgment in writing, signed by a party or its agent authorised in that behalf, have the effect of creating a fresh starting of limitation.

• The difference is that an acknowledgment under Section 18 of the Limitation Act has to be made within the period of limitation and need not be accompanied by any promise to pay. If an acknowledgment shows existence of jural relationship, it may extend limitation even though there may be a denial to pay.

• On the other hand, Section 25(3) is only attracted when there is an express promise to pay a debt that is time barred or any part thereof. Promise to pay can be inferred on scrutinising the document. Only the promise should be clear and unconditional”.

• It is evident from these stipulations that the promise to pay was conditional and not having been accepted by the Petitioner with these conditions cannot constitute a clear and unconditional promise to pay. Hence, the said letters do not give rise fresh cause of action in terms of Section 25(3) of the Contract Act.

Excerpts of the Order; 

1) The present Company Petition is filed u/s. 95 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC, 2016/Code”) r/w Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 by Omkara Assets Reconstruction Private Limited (“hereinafter referred to as Petitioner/Financial Creditor”) for initiating Insolvency Resolution Process against Ritu Jankiprasad Shah (“hereinafter referred to as Personal Guarantor/Respondent”) of the Corporate Debtor/ M/s Maharashtra Steel Pvt. Ltd. for having committed default in repayment of the Loan Amount Guaranteed by the Personal Guarantor even after invocation of Guarantee and Demand.

2) The brief facts leading to the filing of the present Company Petition are as follows:

i. State Bank of India (SBI) through its Sterling Branch, sanctioned and disbursed various Credit Facilities aggregating to Rs. 45 Crores in favour of the Borrower vide Sanctioned Letter dt. 19.11.2009. Having executed various documents by the Corporate Debtor to secure the above said Credit facilities, the Personal Guarantee was also executed by Janki Prasad Shah and Ritu Janki Shah and the Corporate Guarantee by Maharashtra Steel Rolling Mills Pvt. Ltd. and Maharashtra Steels Investments Pvt. Ltd.

ii. The Corporate Debtor failed to make payments towards various Financial Facilities availed by them and as a result account of the Corporate Debtor was classified as the Non-Performing-Asset (NPA) on 31.01.2014. SBI initiated action against the provision of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 and issued Notice under Section 13(2) of the said Act for the default Amount of Rs. 41,43,72,431/- on 02.07.2014.

iii. SBI took physical possession of the factory property at Wada on 22.11.2014 Corporate Debtor. Subsequently, vide Assignment Agreement dated 28.11.2019, · the account has been assigned to ASREC (India) Limited by SBI and further ASREC (India) Limited assigned the debt to Omkara Assets Reconstruction Pvt Ltd as on 17.03.2022. Vide SARFAESI Notice dt. 02.07.2014, to the Corporate Debtor, the Personal Guarantee vide the same Letter was also invoked and the demand was made to the Personal Guarantor to make the repayment of the Loan. In spite of that, no repayment was made.

iv. It is the case of the Applicant that the Corporate Debtor after availing the Loan has duly acknowledged the Debt from time to time and the debt was also acknowledged in the Financial Statement for the Year 2016-17. It is contended that no further Financial Statements were prepared and uploaded by the Corporate Debtor or else debt would have been further acknowledged by the Corporate Debtor. Meanwhile, the Company Petition No. 1187 of 2015 was filed before the Hon’ble High Court of Bombay and the Hon’ble High Court of Bombay admitted the said Petition and appointed Official Liquidator on 03.05.2018.

v. Due to pandemic Covid -19, the Limitation Period from 15.03.202 to 28.02.2022 was excluded and 90 days thereafter was available to file the Petition, till 31.05.2022. Thereafter, the Personal Guarantor Ms. Ritu Shah, addressed various Letters acknowledging debt due and payable to the Petitioner on 27.05.2024, 08.07.2024 and 16.01.2025. The Borrower through ex-Directors and Guarantor have acknowledged the Debt. The last Letter from the Personal Guarantor to the Corporate Debtor was received on 16.01.2025, though there is a break in chain of continuous acknowledgement of debt by the Corporate Debtor/Personal Guarantor. It is contended that the acknowledgement of liability even after expiry of original period of Limitation constitutes a fresh promise and gives rise to renewed cause of action, accordingly, any acknowledgement of debt made after the expiry of prescribed three years of Limitation rendering the claim maintainable from the date of such acknowledgement. Reliance is placed on the judgment in the case of Kotak Mahindra Bank Limited….vs….Kew Precision Parts Private Limited and Others (2022) 9 Supreme Court Cases 364, in Civil Appeal No. 2176 of 2020.

vi. It is submitted that the Hon’ble Supreme Court contemplates the Criteria required to be fulfilled i.e. a promise to pay whole or part of the Debtor in writing and signed by the respective party and such debt is of nature which Creditor will enforce but for the reasons of Limitation is unable to enforce the Payment. Thus, the promise to pay essentially must be treated as a contract and does not require an explicit acceptance of the same. Section 25(3) of the Contract attracted in the present case extending the Limitation.

vii. It is therefore submitted that the Petition is within Limitation and there is debt and default established by the Petitioner and therefore Personal Insolvency Resolution Process against the Personal Guarantor is required to be initiated.

3) The Respondent Personal Guarantor, pursuant to the Report under Section 99 of the Insolvency and Bankruptcy Code, 2016 filed by the Resolution Professional, appeared and filed their Reply and contended that the Petition is barred by Limitation and without going into the merits of the Case, the Petition is required to be dismissed. The account of the Corporate Debtor, M/s Maharashtra Steel Pvt. Ltd., was classified as Non-Performing-Asset (NPA) on 31.01.2014, thereafter, the Personal Guarantee was invoked vide Notice dt. 02.07.2014, consequently, the cause of action for filing the Petition against the Respondent herein crystalised at the latest on 02.07.2014. Accordingly, the Limitation for initiating proceedings against Respondent expires on 02.07.2017. Reliance of Financial Statements of the Corporate Debtor for the Financial Year 2016-17 is an attempt to contend that the debt stood acknowledged and consequently, the Limitation period stood extended.

4) Even if it is assumed to constitute the valid acknowledgement of debt by the Personal Guarantor, Petition would still remain barred by Limitation. The fresh period of Limitation would be commenced from the date of such acknowledgement i.e. 31.03.2017 and the period of 3 years would expire on 01.04.2020. Even if the exclusion of Limitation during Covid-19 Pandemic is taken and also 90 days period from 01.03.2022 is taken into consideration, the period of Limitation would still expire on 29.05.2022. The present Petition is filed admittedly on 15.10.2025, i.e. more than 3 years after the outer most period of Limitation available to the Petitioner, which is expired. It is therefore contended that the Petition is ex-facie barred by Limitation.

Submissions of Respondent/Personal Guarantor

5) It is submitted that the Petition is ex-facie barred by Limitation even after excluding Covid-19 Pandemic period and period of further 90 days as per the Judgment of the Hon’ble Supreme Court in the case of IL&FS Financial Services Ltd…vs…Adhunik Meghalaya Steels Pvt. Ltd., (2025) SCC OnLine SC 1567 is considered.

6) The reliance on Directors’ Report 03.09.2018 is wholly misconceived. Firstly, the document is neither signed nor stamped and its authenticity is therefore seriously disputed. Secondly, the said document does not pertain either to the Corporate Debtor or to the Respondent herein. It is a document of an altogether different entity and cannot constitute an acknowledgement on behalf of either the Corporate Debtor or the Respondent. Thirdly, the report does not contain any acknowledgement whatsoever of the alleged outstanding amounts claimed by the Petitioner. The Independent Auditors’ Reports for the Financial Years 2017-18 to 2020-21 are not the Reports of the Corporate Debtor or of the Respondent. They pertain to Maharashtra Steels Investment Pvt. Ltd., which is a separate Legal entity. The acknowledgement capable of extending Limitation must be clear, unambiguous and made by the person against whom the right is sought to be enforced. Documents of a third-party entity cannot operate as an acknowledgment on behalf of the Respondent.

7) The reliance on One Time Settlement (OTS) Proposals dt. 27.05.2024, 08.07.2024 and 16.01.2025 cannot revive a debt that had already become time-barred. It is a settled principle under Section 18 of the Limitation Act that an acknowledgement extends Limitation only if it is made before expiry of the prescribed period of Limitation. Once Limitation has expired, a subsequent acknowledgement cannot revive a barred claim. Reliance is placed on the Judgment of the Hon’ble Supreme Court in the case of Laxmi Pat Surana…vs…Union Bank of India (2021) 8 SCC 481 and also in the case of Small Industries Development Bank of India…vs…Sh. Krishnakant Bagree, (2025) ibclaw.in 2314 NCLT, wherein it was held that an acknowledgement made after expiry of Limitation does not revive a time-barred debt.

8) It is further submitted that OTS proposal relied upon by the Petitioner were merely proposals made in the course of settlement discussions and never culminated into a concluded contract between the Parties. The said OTS proposals were in the nature of conditional offers made by the Respondent with a view to explore an amicable resolution of disputes. The proposals were at all times subject to acceptance by the Petitioner. The Petitioner has neither pleaded nor produced any document evidencing its unequivocal acceptance of the said OTS proposals. In the absence of acceptance, the essential requirements for formation of a binding and enforceable contract are not satisfied. In other words, the said OTS proposals cannot be construed as forming any contract between the Parties which can be regarded as enforceable in law. Hence, the reliance of Section 25(3) of the Contract Act is also misconceived and erroneous. The OTS proposal was conditional upon it being accepted by the Applicant in full and final settlement, and there is no express promise to make any payment in any of the OTS Proposals without the acceptance of OTS proposals by the Applicant. Therefore, the Section 25(3) of the Contract Act is not applicable in the present case.

9) The only question falls for consideration in the present case is whether the Petition is filed within the Limitation and whether the OTS proposal by the Respondent amounts to acknowledgment of time barred debt and whether the Petition as filed on the basis of Notice of invocation dt. 02.07.2014 would survive, in view of Section 25(3) of the Contract Act.

Findings:

10) It is trite Law that provisions of Limitation Act are applicable to the proceedings under Section 238A of the Insolvency and Bankruptcy Code, 2016. Therefore, the Petition is required to be filed within a period of Three Years from the date of accrual of cause of action as contemplated under Section 137 of the Limitation Act. In the present case, undisputedly, the invocation of the Personal Guarantee was vide Notice dt. 02.07.2014, therefore, the cause of Action would first accrued on the expiry of the period stipulated under the Notice dt. 02.07.2014 (i.e. on 31.08.2014).

11) Therefore, the period of Limitation would expire on 31.08.2017. Admittedly, the present Petition is filed on 15.10.2025, therefore, the Petition would be barred by Limitation. However, it is the case of the Petitioner that there were acknowledgements of debt from time to time from the Corporate Debtor. The Corporate Debtor in its Financial Statements for the Year 2016-17 has acknowledged the Debt; therefore, the period of Limitation would stand extended till 31.03.2020. Now, since this period has fallen under the Covid-19 Pandemic period which taken from 15.03.2020 and ended on 28.02.2022, the Limitation after 15.03.2020 stands suspended and it would starts running after 28.02.2022 as held by the Hon’ble Supreme Court in the case of IL&FS Financial Services Ltd…vs…Adhunik Meghalaya Steels Pvt. Ltd., (2025) SCC OnLine SC 1567, further, period of 90 days would be available. Even excluding that period of 90 days, the Petition ought to have been filed on or before 29.05.2022 and the Petition is filed on 15.10.2025. Therefore, even on basis of acknowledgements of debt by the Corporate Debtor in its Financial Statement for the year 2016-17, the Petition would still fail on count of Limitation.

12) The submission of the Ld. Counsel for the Petitioner that there would have been further acknowledgment, had the Corporate Debtor filed its Financial Statements for the subsequent periods after 2017 does not holds any merit as they are admittedly not filed, which does not amount to acknowledgment of any debt thereafter.

13) As regards reliance on audited Financial Statements of Maharashtra Steels Investment Private Limited, the Corporate Guarantor to the facilities guaranteed by the Respondent, is concerned, it is noted that the said Financial Statements has neither acknowledged any liability towards the Petitioner Creditor in any of the year(s) in the said Financial Statements, nor any liability towards Petitioner Creditor is disclosed even as Contingent Liability therein. Accordingly, it can not be said that the debt, in question, has been acknowledged by such corporate guarantor binding the respondent herein in terms of clause 14 of the Guarantee Agreement, which provides that “14. If the Guarantors be more than one Individual or entity, each one or any of them is hereby authorised by the others of them to admit and acknowledge their liability to the Bank by any payment Into the account or by way of writing or in any manner otherwise and any such acknowledgement of liability or part payment by any or more of them shall in addition to this / their personal capacity be deemed to have been made on behalf of each of them for the purposes of Sections 18 and 19 of the Limitation Act, 1963.” Accordingly, we do not find merit in the reliance of these financial statements of corporate guarantor namely Maharashtra Steels Investment Private Limited. Nonetheless, the submission of the Ld. Counsel for the Respondent that the Financial Statements are prepared by some Third-Party and Independent Auditor and therefore it has no evidentiary value so far as the Corporate Debtor is concerned also does not have any substantial force and merits in view of clause 14 of Guarantee Agreement binding each of guarantor by the acknowledgement of other guarantor.

14) Only question that remains now is whether Section 25(3) of the Contract Act comes to the rescue of the Petitioner. It is the case of the Petitioner that the Personal Guarantor vide its Letter dt. 27.05.2024, which was received by the Petitioner on 16.01.2025, submitted an One Time Settlement proposal (OTS) offering to pay amounts due from the Principal borrower and such letter(s) are signed by the Respondent as “ex-director and guarantor” of Principal Borrower. Accordingly, it is submitted by the Petitioner that though there is break in chain of continuous acknowledgement of Debt by the Personal Guarantor/Corporate Debtor, the acknowledgement of liability even after expiry of Original Period of Limitation constitutes fresh promise and give rise to renewed cause of action. As against this contention, it is submitted by the Respondent that the OTS proposal was just a proposal and it was not accepted and therefore, it cannot be considered to be a valid contract between the Parties and it cannot give any extension of Limitation.

15) It is further submitted that it is settled principal under Section 18 of the Limitation Act that an acknowledgement extends limitation only if it is made before expiry of the prescribed period of Limitation. Once Limitation has expired, a subsequent acknowledgement cannot revive a barred claim. Reliance is placed on the Judgment of the Hon’ble Supreme Court in the case of Laxmi Pat Surana…vs…Union Bank of India (2021) 8 SCC 481 and also in the case of Small Industries Development Bank of India…vs…Sh. Krishnakant Bagree, (2025) ibclaw.in 2314 NCLT. It is therefore, submitted that the Petition is thus, barred by Limitation and the acknowledgment after the expiry of period of limitation would not revive the cause of action.

16) The Ld. Counsel for the Petitioner has placed reliance on the judgment in the case of Kotak Mahindra Bank Limited vs Kew Precision Parts Private Limited and Others (2022) 9 Supreme Court Cases 364, in Civil Appeal No. 2176 of 2020, wherein the Hon’ble Supreme Court held as under:

• “31. Under Section 25(3), a debtor can enter into an agreement in writing, to pay the whole or part of a debt, which the creditor might have enforced, but for the limitation of a suit in law. A written promise to pay the barred debt is a valid contract. Such a promise constitutes novation and can form the basis of a suit independent of the original debt, for it is well settled that the debt is not extinguished, the remedy gets barred by passage of time as held by this Court in Bombay Dyeing and Manufacturing Company Limited vs. State of Bombay1.

• 32. Section 25(3) applies only where the debt is one which would be enforceable against the defendants, but for the law of limitation. Where a debt is not binding on the defendant for other reasons, and consequentially not enforceable against him, there is no question of applicability of Section 25(3).

• 33. There is a distinction between acknowledgment under Section 18 of the Limitation Act, 1963 and a promise within the meaning of Section 25 of the Contract Act. Both promise and acknowledgment in writing, signed by a party or its agent authorised in that behalf, have the effect of creating a fresh starting of limitation. The difference is that an acknowledgment under Section 18 of the Limitation Act has to be made within the period of limitation and need not be accompanied by any promise to pay. If an acknowledgment shows existence of jural relationship, it may extend limitation even though there may be a denial to pay. On the other hand, Section 25(3) is only attracted when there is an express promise to pay a debt that is time barred or any part thereof. Promise to pay can be inferred on scrutinising the document. Only the promise should be clear and unconditional”.

17) The above Authority clearly lays down the difference between the provisions of Section 18 of the Limitation Act and Section 25(3) of the Contract Act. It is a trite Law that any acknowledgement of debt within the period of Limitation would attract Section 18 of the Limitation Act and the Limitation would stand extended for the further period as contemplated under the Law. However, Section 25 deals with the acknowledgement of time barred debt.

18) The Hon’ble Supreme Court in the above said Authorities has held that there is distinction between acknowledgement of Section 18 of the Limitation Act and a promise within the meaning of Section 25 of the Contract Act. Both Promise and acknowledgement in writing signed by a party or its agent authorised in their behalf, have the effect of creating fresh starting of Limitation. The difference is that the acknowledgment under Section 18 of the Limitation Act has to be made within the period of limitation and need not be accompanied by a promise to pay, and if an acknowledgement shows existence of jural relationship, it may extend limitation even though there may be a denial to pay. On the other hand, Section 25(3) is only attracted when there is an express promise to pay a debt that is time barred or any part thereof. Promise to pay can be inferred on scrutinising the document. Only the promise should be clear and unconditional. In the present case, the acknowledgement at exhibit “H” would show that there is a proposal sent by the Personal Guarantor for One-Time-Settlement of the debt, wherein willingness to Pay an amount towards the full and final settlement of the outstanding debt was made. Therefore, there is a promise to pay which is unequivocally made in writing with the signature of the Personal Guarantor; and this Letter is not disputed. However, such promise has to be clear and unconditional.

19) Therefore, what is required under Section 25(3) is only a promise to pay time barred debt in clear terms. Acceptance of the promise is not contemplated and therefore, acknowledgement of time barred debt would attract Section 25(3) of the Contract Act and it would give a fresh cause of action for initiating the recovery.

20) It is noted that the said letter(s) contemplates that, On payment of upfront amount, we shall be granted approval for sale of Wada land – 6, acres, and any offer received from party will be accepted to conclude the sale”; “payment arranged from our sources and sale proceeds of the secured assets appropriated to you should be considered towards the payment of the settlement amount”; and “on the acceptance of the above proposal, all the recovery proceedings/actions taken by you shall be kept in abeyance”. It is evident from these stipulations that the promise to pay was conditional and not having been accepted by the Petitioner with these conditions cannot constitute a clear and unconditional promise to pay. Hence, the said letters do not give rise fresh cause of action in terms of Section 25(3) of the Contract Act. Needless to say, as against the provisions of Section 18 of the Limitation Act, the acknowledgement of time barred debt would gives fresh cause of action for which the Petitioner would have a fresh remedy available.

21) Therefore, since, the invocation of Guarantee and the demand thereunder was made sometimes in the Year, 2014 and admittedly, the Petition was not filed within the period of 3 years. The Original Cause of Action would stand extinguished after the period of Limitation. Hence, the present Petition filed on the Original cause of action on the contention that the acknowledgement of time barred debt subsequently by the Personal Guarantor would continue the same cause of action does not hold merits, therefore, the Petition would not survive.

22) In view of the above, we are of the Considered view that the present Petition as filed is barred by Limitation.

23) Accordingly, the Company Petition bearing CP (IB) No. 1117 of 2025, is disposed of as dismissed.

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Canara Bank vs Mr. Rajiv Prasad - It is trite that a demand upon the personal guarantor to pay the outstanding due from the Principal Borrower constitutes the invocation of the personal guarantee executed by the personal guarantor and the limitation runs from the expiry of period specified in the first demand notice.

 NCLT Mumbai-1 (2026.04.23) in Canara Bank vs Mr. Rajiv Prasad  [(IB)/1075(MB)2025] held that;-

• In terms of aforesaid specific averment, the release of borrower consequent to its liquidation does not discharge the Personal Guarantor herein and the Personal Guarantor remains liable for the unsatisfied debt owed to the Applicant Creditor by the dissolved corporate debtor. Hence, the personal guarantor remains liable for the unsatisfied debt and does not get discharged on the ground of discharge of corporate debtor consequent to its dissolution.

• It is trite that a demand upon the personal guarantor to pay the outstanding due from the Principal Borrower constitutes the invocation of the personal guarantee executed by the personal guarantor and the limitation runs from the expiry of period specified in the first demand notice.

Excerpts of the Order;

# 1. The present petition CP (IB) 1075 of 2025 has been preferred by Canara Bank (“Applicant / Creditor”) under Section 95 of the Insolvency and Bankruptcy Code, 2016 seeking initiation of insolvency resolution proceedings against the Respondent, Mr. Rajiv Prasad (“Respondent / Personal Guarantor”), the personal guarantor in respect of the credit facilities extended by the Applicant to the Corporate Debtor, M/s Ultra Drytech Engineering Ltd.

# 2. It is stated that, in order to secure the repayment of the Credit facilities extended to the Principal Borrower/Corporate Debtor, the Respondent executed a Deed of Guarantee dated 29.11.2014, thereby undertaking to be jointly and severally liable for the dues of the Corporate Debtor. The Applicant/Creditor issued a statutory demand notice in Form B on 30.08.2025.

# 3. This Tribunal observed that the Applicant has not placed on record a Notice of invocation of Guarantee along with the Petition. Accordingly, the Applicant was directed to place on record Notice of invocation of guarantee prior to the issuance of statutory demand notice, which was placed by the Applicant vide additional affidavit dt. 11.11.2025. On perusal of the said Affidavit, it is noticed that the liability of the Respondent in terms of the guarantee was invoked vide notice dt. 07.08.2025, upon failure of the Corporate Debtor to discharge its obligations, stating that “The Financial creditor through this notice brings to your attention that the Corporate Debtor has failed and neglected to repay the dues/ outstanding liabilities and hence hereby demand you under the provisions of IBC, by issuing this notice to discharge in full the liabilities of the Corporate Debtor as stated in Schedule A hereunder to the secured creditor within 07 days from the date of receipt of this notice. Further, it is brought to your notice that you are also liable to pay future interest at the rate of 12.95 % per year together with all costs, charges, expenses and incidental expenses with respect to the proceedings undertaken by the Financial Creditor in recovering its dues. The said notice was served by Speed Post dated 18.08.2025, thus the said notice is presumed to have been delivered within 48 hours i.e. on 20.08.2025. Accordingly, the period specified in the said notice expires on 26.08.2025

# 4. The Applicant issued a demand notice in Form B dt 30.08.2025 upon the Respondent requiring him to pay the outstanding debt, if not paid earlier, within 14 days from receipt of demand notice. Along with this Petition, and has also placed on record the sanction letter, loan agreement, deed of guarantee, bank statements, NeSL record of default and proof of service.

# 5. It is stated that, as on 31.07.2025, the total outstanding debt recoverable from the Respondent is Rs. 42,00,53,235.02/- (Rupees Forty-Two Crore Fifty-Three Thousand Two Hundred Thirty-Five and Two Paise only), which has remained in default since 30.06.2016, and despite repeated reminders and demands, the Respondent has failed to clear the said dues.

# 6. This Tribunal appointed MR. Kamal Kumar Jadwani, as the Resolution Professional vide order dated 25.11.2025 requiring him to examine the Company Petition and file the report within 10 days from the date of receipt of this order. The Resolution Professional filed his report dated 10.12.2025 vide IA (IBC) 5854 of 2025 recommending the admission of present petition. It is also stated in the said report that “In response to the letter served upon the Personal Guarantor, the Resolution Professional received an email dated 05.12.2025 from the Advocates representing the Personal Guarantor, alleging suppression of pending DRT proceedings by the Financial Creditor before this Hon’ble Tribunal, indicating that the Personal Guarantor would move an appropriate application, and asserting that the Personal Guarantor has no assets”.

# 7. The Respondent Personal Guarantor filed his reply dated 04.02.2025 stated that the present petition is barred by limitation as the Applicant, as back as on 25 January 2017, herein had demanded the alleged outstanding dues in the sum of Rs. 9,94,34,018.20(Rupees Nine Crores Ninety Four Lacs Thirty four Thousand Eighteen and Paise Twenty Only) from the Respondent in its alleged capacity as guarantor (under the alleged guarantee dated 29/11/2014 claimed to have been executed by the Respondent in favor of Applicant. It is further stated that the Respondent however, has only an incomplete copy of the said letter of demand dated 25" January 2017, (which is annexed as an exhibit “OO” to OA No.1109 of 2024 filed by the Applicant against the Respondent in DRT) whereby the Applicant had made the aforesaid demand in the sum of Rs. 9,94,34,018.20(Rupees Nine Crores Ninety Four Lacs Thirty four Thousand Eighteen and Paise Twenty Only) on the Respondent in his alleged capacity of guarantor of the said corporate debtor Ultra Dry tech Engineering Limited. It is further stated that the debts of the Corporate debtor having been extinguished with effect from the date of its dissolution on 21.8.2024, the alleged liability of the Respondent herein as guarantor of corporate debtor (as claimed by Applicant ), being co-extensive with the debt of the said corporate debtor, has also extinguished and come to an end on 21.8.2024. The Respondent has also submitted that the demand notice dated 27.08.2024 was not served upon him.

# 8. We have heard the learned Counsel and perused the material on record.

# 9. The Respondent Personal Guarantor has challenged this petition on the ground of extinguishment of liability of Corporate Debtor consequent to its dissolution thus discharging the Personal Guarantor herein as well from his obligation under the deed of guarantee executed to secure the debt owed by the Corporate Debtor to the Applicant creditor; Non service of demand notice dated 27.08.2024; and on limitation ground stating that the guarantee came to be invoked in terms of notice dated 25.01.2017 as per own admission of the Applicant in the proceedings filed before the Debt Recovery Tribunal (DRT).

# 10. Indubitably, the Principal Borrower/Corporate Debtor was liquidated and after distribution of the liquidation proceeds, the claim of the Applicant Creditor against the Corporate Debtor remained unsatisfied, and consequent to the liquidation the Corporate Debtor was dissolved. It is noted that the executed deed of guarantee states that

• “……….The guarantor also agrees that the Guarantor shall not be discharged from his liability by the Bank's releasing the Borrower or by any act or omission of the Bank legal consequence of which may be to discharge Borrower or by any act of the bank which would, but for this present provision, be inconsistent with the Guarantor's right as surely or by the Bank's omission to do any act which, but for this present provision, the Bank's duty to the Guarantor would have required the Bank to do. Though as between the Borrower and the Guarantor, the Guarantor is surety only, the guarantor agrees that as between the Bank and the Guarantor, the Guarantor is the principle debtor, jointly with the Borrower and accordingly the Guarantor shall not be entitled to any of the rights conferred as surety by Section 133, 134, 135, 139 and 141 or any other relevant provision of the Contract Act.” 

In terms of aforesaid specific averment, the release of borrower consequent to its liquidation does not discharge the Personal Guarantor herein and the Personal Guarantor remains liable for the unsatisfied debt owed to the Applicant Creditor by the dissolved corporate debtor. Hence, the personal guarantor remains liable for the unsatisfied debt and does not get discharged on the ground of discharge of corporate debtor consequent to its dissolution.

# 11. It is further noted that the Applicant has pleaded service of the demand notice dated 27.08.2024, however, as per Annexure E attached to the Petition the said notice is dated 30.08.2025. It appears to us that this typographical error in the pleading is inconsistent with the copy of the demand notice in Form B dated 30.08.2025 attached with the Petition. The relevant document i.e. demand notice in Form B dated 30.08.2025 shall prevail over the pleadings, which is sufficient compliance of the provisions of IBC. In our considered view, the substance has to prevail over the form, hence, we do not find any merit in this ground.

# 12. On perusal of the notice dated 25.01.2017 placed as Exhibit B to the reply by the personal guarantor, it is noted that the said notice was issued by the Applicant Creditor to the Principal Borrower as well as Personal Guarantors, including the personal guarantor herein requiring them to pay the debt due. The relevant part of the said notice reads as 

• “We hereby finally call upon you to pay the said sum of Rs.9,94,34,018.20(Rupees Nine Crores Ninety Four Lacs Thirty four Thousand Eighteen and paise Twenty only) with Interest at 18.35% (Inclusive of 2% penal interest) compounded monthly from 26.01.2017 till payment within 7 days from the date of receipt hereof”. 

Indubitably, the said notice is address to the personal guarantor as well in his capacity as personal guarantor which is evident from the description of the noticee i.e. “Mr.Rajeev Prasad {Managing Director / Guarantor)”. The Respondent personal guarantor has relied upon the said notice in his defence thus it is presumed that the receipt thereof is not challenged by him. It is further noted that the corporate debtor was admitted into the CIRP on 30.03.2017 in terms of C.P. No. 29/2017.

# 13. The Applicant Creditor in its rejoinder has stated that Even assuming, without admitting, that the letter dated 25th January 2017 constituted an invocation of the guarantee, it is well established in law that a creditor may at any time thereafter issue a fresh demand upon the guarantor, which constitutes a fresh invocation of the guarantee and gives rise to a fresh cause of action”. It is further stated by the Applicant that “it is the demand that specifically invokes the personal guarantee in the context of IBC proceedings, i.e., the demand notices of 2024 and 2025. The 2017 letter was issued in a different context and under a different legal framework, and any limitation period computed from the said date is irrelevant for proceedings under Section 95(1) of the IBC, for the reasons elaborated in detail hereunder”.

# 14. It is trite that a demand upon the personal guarantor to pay the outstanding due from the Principal Borrower constitutes the invocation of the personal guarantee executed by the personal guarantor and the limitation runs from the expiry of period specified in the first demand notice. Further, any subsequent demands after first notice of demand are not relevant for the purpose of determination of limitation. It is noted that the notice dated 25.01.2017 forms part of the application filed by the Applicant Creditor herein before DRT, which constitutes admission on part of the Applicant Creditor before a Court of Law as to the genuineness, including its contents, of the said document as well as its due service upon the notice(s) and such admission binds the applicant creditor. Accordingly, in our considered view, the limitation starts running from the expiry of 7 days from the date of receipt of said notice. Accordingly, after taken into consideration some period for the delivery of the said notice, the limitation shall start to run from from first week of February, 2017 and the period of three years shall expire in first week of February, 2020. The present petition having filed on 30.09.2025, is beyond the limitation period.

# 15. Accordingly, CP (IB) 1075 of 2025 is dismissed and disposed of.

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Anil Kumar Mittal, RP of Surya Kant Jaipuria - We are of the considered view that the receipt or distribution of sale proceeds in the course of liquidation is merely a statutory consequence of the insolvency process and cannot, by itself, amount to an acknowledgment of debt by the Personal Guarantor or the Corporate Debtor. Such realisation does not satisfy the legal requirements of a conscious and voluntary acknowledgment capable of extending the period of limitation. Accordingly, the said contention of the Applicant is untenable.

  NCLT ND (2026.02.26) in Anil Kumar Mittal, RP of Surya Kant Jaipuria [(2026) ibclaw.in 285 NCLT, IA (I.B.C)/883(ND)2024 and IA (I.B.C)/ 4716(ND)2024 and IA (I.B.C)/232(ND) 2024 in C.P. (IB)/9(ND)2023] held that;

• We are of the considered view that the receipt or distribution of sale proceeds in the course of liquidation is merely a statutory consequence of the insolvency process and cannot, by itself, amount to an acknowledgment of debt by the Personal Guarantor or the Corporate Debtor. Such realisation does not satisfy the legal requirements of a conscious and voluntary acknowledgment capable of extending the period of limitation. Accordingly, the said contention of the Applicant is untenable.

• Once the Corporate Debtor stands liquidated and its assets have been dealt with in accordance with the provisions of the Code, the subsequent invocation of the Personal Guarantee, in the manner sought, would effectively amount to initiating a recovery proceeding under the guise of insolvency.

Excerpts of the Order;

# 1. The present petition is filed under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 by Canara Bank for initiation of Insolvency Resolution Process qua the Respondent/Personal Guarantor i.e., Mr. Surya Kant Jaipuria. This Adjudicating Authority vide order dated 21.12.2023 initiated Interim Moratorium under Section 96 of the Code and appointed Mr. Anil Kumar Mittal bearing registration no. IBBI/IPA-002/IP-N00742/2018-2019/12263 as the Resolution Professional to submit a Report within a stipulated time as per Section 99 of the Code. In compliance of order dated 21.12.2023, the Resolution Professional submitted a report under section 99 of the Code through IA/883/ND/2024. However, since the report was found to be under defect, the RP refiled its report under section 99 of the Code through IA (I.B.C)/4716(ND)2024.

# 2. FACTS OF THE CASE

a. The Canara Bank, vide its Sanction Letter dated 28.02.2015, bearing Reference No. SYNB/NOTICE/ICPL/2018, sanctioned various Working Capital Facilities in favour of the Corporate Debtor, M/s Integrated Caps Pvt. Ltd., aggregating to Rs. 33,95,43,000/- (Rupees Thirty-Three Crores Ninety-Five Lakhs Forty-Three Thousand only). The said facilities were stipulated to fall due for repayment on or before 27.09.2017.

b. It is submitted that the Corporate Debtor defaulted in the repayment of the Working Capital Facilities sanctioned by Canara Bank and, consequently, the loan accounts were classified as Non-Performing Assets (NPA) on 27.09.2017. Pursuant to the default, Canara Bank, vide its Guarantee Invocation Notice dated 09.03.2018 bearing No. SYNB/NOTICE/ICPL/2018, invoked the personal guarantee furnished by the Personal Guarantor and called upon him to discharge the outstanding dues under the said facilities. Thereafter, Canara Bank, through its Demand Notice in Form B dated 22.07.2022 issued to the Personal Guarantor, once again demanded repayment of the amounts due and payable under the sanctioned facilities.

c. It is submitted that a Petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 was filed by Shri Bal Pratap Srikent against the Corporate Debtor, M/s Integrated Caps Private Limited, and the said Petition, bearing C.P. (IB) 74/ND/2018, was admitted by this Tribunal (New Delhi, Court–IV) vide Order dated 06.03.2018, thereby commencing the Corporate Insolvency Resolution Process (“CIRP”). Subsequently, an Application under Section 33 of the Code was filed by the Resolution Professional seeking initiation of the Liquidation Process of the Corporate Debtor, which was allowed by this Bench vide Order dated 01.02.2019.

d. The Applicant stated that an application under Section 54 of the Code was filed by the Liquidator of M/s Integrated Caps Private Limited seeking dissolution of the Corporate Debtor, which was allowed by this Bench vide Order dated 01.07.2021.

e. Canara Bank has claimed a total debt of Rs. 24,07,59,668.25 in its application filed under Section 95 of the Insolvency and Bankruptcy Code, 2016. In terms of Section 99 of the Code, the Resolution Professional is required to submit a report within ten working days of appointment, recommending admission or rejection of the said application. Pursuant thereto, the Resolution Professional called upon the Personal Guarantor, Mr. Surya Kant Jaipuria, to furnish proof and details of any repayment made to Canara Bank, by e-mail dated 29.12.2023 and by courier dated 28.12.2023.

f. The Personal Guarantor submitted a reply dated 01.01.2024 to the Resolution Professional, inter alia, raising the following contentions:

i. The application under Section 95 was filed on or about 10.11.2022, beyond three years from the date of declaration of NPA (27.09.2017) and invocation of the alleged guarantee (09.03.2018), and is therefore barred by limitation.

ii. Canara Bank had filed an Original Application before the DRT on 27.03.2018 claiming an outstanding amount of Rs. 28,79,95,483.98. Subsequently, the Bank received Rs. 19,92,99,267/- towards liquidation proceeds of the Corporate Debtor by December 2020, leaving a balance of Rs. 8,86,96,216.93. Accordingly, the present claim is disputed.

iii. The Bank has levied interest at 17.2% per annum, compounded monthly, allegedly contrary to the terms of the agreement and RBI guidelines, and has failed to give due credit of Rs. 19,92,99,267/-.

g. Upon consideration of the submissions of the Personal Guarantor, the Resolution Professional submitted that it formed the opinion that the application filed by Canara Bank on 10.11.2023 was within the period of limitation, as the cause of action subsisted until the dissolution of the Corporate Debtor vide Order dated 01.07.2021, and the limitation period of three years is to be reckoned therefrom. It was further observed that the amount claimed in the Original Application before the DRT was computed up to the date of its filing and, since the dues remained unpaid, interest continued to accrue. During the liquidation proceedings in 2021, amounts were disbursed to the Bank in three tranches and credited to three separate bank accounts in the following manner:

I. Account No. VAAOSLB192840472

i. Rs. 1.00 crore on 31.12.2019

ii. Rs. 10.00 lakh on 23.12.2020

II. Account No. VAAOSLB1928404745

i. Rs. 2.95 crore on 22.11.2019

ii. Rs. 32.99 lakh on 30.12.2019

iii. Rs. 50.00 lakh on 30.03.2020

III. Account No. 90491250001606

i. Rs. 10.00 crore on 01.10.2019

ii. Rs. 5.04 crore on 21.11.2019

These payments were duly appropriated towards the outstanding liability in accordance with banking norms and the applicable provisions of law.

h. It is submitted that a total sum of Rs. 19,92,99,267/- was recovered by Canara Bank through the liquidation proceedings of the Corporate Debtor up to the year 2020, which recovery was duly recorded and certified by this Hon’ble Tribunal vide Order dated 01.07.2021. However, owing to the continued accrual of interest on the unrecovered portion of the debt, the outstanding liability has increased substantially, and the total amount presently due and recoverable stands at Rs. 28,33,36,763.51/-, the bifurcation of which is set out hereinbelow.

i. In light of the above, and considering that the Personal Guarantee dated 27.03.2015 secures an amount of Rs. 34,06,00,000/-, the Bank is legally entitled to recover the outstanding sum of Rs. 28,33,36,763.51/- from the Personal Guarantors of the Corporate Debtor.

j. In compliance with the order dated 21.12.2023 of the Adjudicating Authority, the Resolution Professional submitted a report under Section 99 of the Code recommending for admission of the Application.

k. Submissions of the Resolution Professional with regards to the present application, is as extracted below: –

i. That this Tribunal, vide Order dated 21.12.2023, had appointed Applicant as the Resolution Professional in respect of the Respondent–Personal Guarantor.

ii. In compliance with the aforesaid Order and in discharge of his statutory duties, the Applicant issued a communication to the Personal Guarantor, Ms. Bubbles Sabharwal, calling upon her to furnish documentary proof and complete particulars of any repayments made to the Financial Creditor, Canara Bank. However, despite such request, no written response has been received from the Personal Guarantor.

iii. That the Financial Creditor, Canara Bank, vide its e-mail dated 27.12.2023, has furnished the relevant records and statements, which clearly demonstrate that no repayment whatsoever has been made by the Personal Guarantor towards the outstanding dues.

iv. In view of the above facts, and in compliance with the Order dated 21.12.2023 passed by this Hon’ble Tribunal, and in accordance with Section 99 of the Insolvency and Bankruptcy Code, 2016, the Applicant hereby submits his Report recommending admission of the Application filed by Canara Bank under Section 95 of the Code against the Personal Guarantor.

l. The Applicant has placed its reliance on the judgment of the Hon’ble NCLT, New Delhi Bench-II, in UCO Bank vs. Smt. Nishu Goel (IB-355/ND/2024), wherein it was held that payment made by a liquidator towards the dues of a creditor amounts to acknowledgment of debt, thereby extending the period of limitation. This principle has been further affirmed by the Hon’ble High Court of Kerala in CP Sreelal vs. District Collector, Thiruvananthapuram & Ors. [AIR 2007 KER 131], holding that the repayment of amount of debt to Creditor in any situation would amount to payment in terms of the provisions of Section 19 of Limitation Act, 1963, constitutes a valid acknowledgment for the purpose of limitation.

# 3. Reply on behalf of the Respondent/ Guarantor

a. The Respondent/ PG in its reply contended that the petition filed by the Bank is an abuse of the process of law, having been instituted by suppression and misrepresentation of material facts before this Hon’ble Tribunal. It is submitted that the Bank misled the Tribunal into taking cognizance of the petition and appointing the Resolution Professional, despite no case being made out or disclosed. The maintainability of the petition has accordingly been challenged by the Respondent by filing I.A. No. 232 of 2024, in which notice was issued by this Tribunal on 17.01.2024.

b. The Respondent submitted that it is neither an insolvent person nor is the present petition intended for resolution under the Code. The petition is a coercive and recovery-oriented measure adopted by the Bank, despite its receipt of Rs. 19,92,99,267/- pursuant to the liquidation of the Borrower Company. This material fact has been deliberately suppressed, as there is no disclosure in the petition regarding receipt of the said amount. The Bank has further suppressed the minutes of the CoC meeting pursuant to which the said sum was received in full and final settlement.

c. The PG submitted that the Bank has failed to disclose the manner in which the amount of Rs. 19,92,99,267/- has been adjusted. In any event, such adjustment is improper, as the Bank’s statement of account contains unauthorised entries and is not duly maintained. Further, for an alleged unliquidated debt, the Bank has simultaneously initiated insolvency proceedings against three Personal Guarantors, including two Directors of the Borrower Company, namely Mr. Biren Sabharwal and Mrs. Bubble Sabharwal, who are alleged beneficiaries of the loan amounts. No cause of action arises against the Respondent alone in respect of an unliquidated debt, and there is no basis to contend that any liquidated sum is outstanding solely from the Respondent.

d. The Respondent in its reply stated that that as per Article 137 of the Limitation Act applies to applications under the Insolvency and Bankruptcy Code, prescribing a limitation period of three years. For the purpose of computing limitation, the relevant dates, as submitted by the Respondent, are as follows: the account of M/s Integrated Caps Private Limited was declared NPA on 27.09.2017; a demand notice under Section 13(2) of the SARFAESI Act, 2002 was issued on 19.12.2017; upon receipt of the Respondent’s reply dated 02.01.2018, the Bank issued a further demand notice through its counsel on 17.01.2018; representations were made by the Respondent and his counsel on 31.01.2018 and 13.02.2018; and the Bank invoked the alleged personal guarantee vide letter dated 09.03.2018, which, according to the Respondent, was vague and did not specify the guarantee invoked, to which a reply was submitted on the same date.

e. The PG stated that the present petition, filed on or about 10.11.2022, has been instituted beyond three years from the date of declaration of NPA (27.09.2017), as well as the revocation and invocation of the alleged guarantee on 02.01.2018 and 09.03.2018, and is therefore barred by limitation and not maintainable. The Bank has consciously omitted any pleading on limitation to avoid scrutiny and summary rejection, and the petition is completely silent on this aspect.

f. The PG submitted that the RP has erroneously opined that the petition filed by Canara Bank on 10.11.2022 is within limitation, without citing any statutory provision or settled principle to support the conclusion that the cause of action subsisted until the dissolution of the Corporate Debtor on 01.07.2021. It is settled law that the cause of action to proceed against a Personal Guarantor arises within three years from the declaration of the borrower’s account as NPA and from the invocation or revocation of the deed of guarantee. In the present case, the guarantee was revoked on 02.01.2018 and invoked on 09.03.2018; consequently, the cause of action, if any, last arose on 09.03.2018 and the limitation period expired on 08.03.2021. The conclusion recorded by the Learned RP that the cause of action continued until dissolution is therefore without legal basis.

IA (I.B.C)/232(ND)2024

g. The Respondent further submitted that in the present case, the liquidation proceedings of the borrower company stand concluded and the borrower company was liquidated vide order dated 01.07.2021. The present application was filed by the Bank on or about 10.11.2022, i.e., after completion of the liquidation process. Therefore, this Tribunal lacks jurisdiction, and Section 60 of the Insolvency and Bankruptcy Code, 2016. The competent adjudicating authority, therefore, continues to be the Debt Recovery Tribunal.

h. It is submitted that the Bank is claiming a fictitious and unsubstantiated amount of Rs. 24,07,59,688.25 from the Respondent. In the Original Application dated 27.03.2018 filed before the DRT, the Bank had claimed a sum of Rs. 28,79,95,483.93. Subsequently, the Bank admitted to having received Rs. 19,92,99,267/- by 23.12.2020 pursuant to the liquidation of the Borrower Company and informed the DRT that the balance amount due was Rs. 8,86,96,216.93, as stated in the affidavit of its Chief Manager, Mr. Sachendra Kumar Vimal, filed in the proceedings pending before the DRT. The relevant potion is annexed herewith:

i. Despite the above, the Bank has, in the present proceedings, claimed an amount of Rs. 24,07,59,688.25 without disclosing the basis or manner of computation. No explanation has been furnished as to how, after receipt of Rs. 19,92,99,267/- against the earlier claim of Rs. 28,79,95,483.93, the alleged outstanding has been escalated to Rs. 24,07,59,688.25. Even assuming, without admitting, that a balance of Rs. 8,86,96,216.93 remained due after adjustment, the Bank has failed to justify how the said amount has been inflated to Rs. 24,07,59,688.25 in the application dated 10.11.2022.

j. The Applicant further submits that the Respondent is a businessman of repute, enjoying considerable goodwill in the public domain in India, and was never a Director of Integrated Caps Private Limited. The said company was at all relevant times controlled, managed, and operated by its directors, namely Mr. Biren Sabharwal and Mrs. Bubbles Sabharwal, with Mr. Biren Sabharwal acting as the Managing Director.

ANALYSIS AND FINDINGS

# 4. We have heard the learned counsel appearing for the respective parties and have meticulously examined the pleadings, submissions, and documents brought on record.

# 5. The issue for consideration is whether the present petition is within the limitation or not?

# 6. The Canara Bank, vide its Sanction Letter dated 28.02.2015 bearing Reference No. SYNB/NOTICE/ICPL/2018, sanctioned various Working Capital Facilities in favour of the Corporate Debtor aggregating to Rs. 33,95,43,000/- (Rupees Thirty-Three Crores Ninety-Five Lakhs Forty-Three Thousand only). The said facilities fell due for repayment on or before 27.09.2017.

# 7. That while availing the aforesaid facilities, as per the submissions of the RP, the Personal Guarantor, Mr. Surya Kant Jaipuria, executed a Personal Guarantee Agreement dated 27.03.2015 in favour of Canara Bank, thereby guaranteeing the due repayment of the facilities sanctioned to the Corporate Debtor.

# 8. That the Corporate Debtor, M/s Integrated Caps Private Limited, was admitted into the Corporate Insolvency Resolution Process in C.P. (IB) 74/ND/2018 vide Order dated 06.03.2018 passed by this Adjudicating Authority. Thereafter, the Resolution Professional of the Corporate Debtor filed an Application under Section 33 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the Liquidation Process. The said Application was allowed, and the Corporate Debtor was ordered to be liquidated vide Order dated 01.02.2019 passed by this Bench.

# 9. That the Corporate Debtor defaulted in repayment of the debt sanctioned by Canara Bank and, having failed to regularize the account, was consequently classified as a Non-Performing Asset (NPA) on 27.09.2017. Accordingly, the date of default would be 29.06.2017.

# 10. We note, as per the submissions of the Learned Counsel for the Resolution Professional, that the quantum owed to Canara Bank at the time of initiation of the Original Application (OA) before the Debt Recovery Tribunal (DRT) was computed only up to the date of filing of the said application. It is pertinent to observe that, owing to the continued non-recovery of the outstanding dues, interest accrued on the principal amount, thereby enhancing the total liability of the Corporate Debtor. It is further recorded that a sum of Rs. 19,92,99,267/- was realised by the Bank through the liquidation process by the year 2020. Further, we take note of the affidavit filed by the Bank’s Chief Manager, Mr. Sachendra Kumar Vimal, in the proceedings pending before the DRT, wherein it is stated that the balance amount due was Rs. 8,86,96,216.93.

# 11. On the issue of limitation, we note that the Corporate Debtor initially defaulted in repayment of its financial obligations, pursuant to which the loan account was classified as a Non-Performing Asset (NPA) on 27.09.2017. Accordingly, the date of default computed would be 29.06.2017. Consequent thereto, Canara Bank invoked the Personal Guarantee furnished by the Personal Guarantor vide Guarantee Invocation Notice dated 09.03.2018.

# 12. The Applicant has placed reliance on the judgment rendered by the Hon’ble Kerala High Court concerning the enforceability of a personal guarantee issued in favour of the Kerala Financial Corporation. However, we find that the facts of the present case are distinguishable from those obtaining in the said judgment, and therefore, the ratio laid down therein is not applicable to the facts of the instant case.

# 13. The Article 137 of the Limitation Act, 1963 provides a 3 (Three) year of Limitation Period from the date when “Right to Apply” accrues. “The Right to Apply”, accrues when a default occurs. If the default has occurred over three years before the date of filing of the application, the application would be barred under Article 137 of the Limitation Act. The period of limitation is 3 years from the date of default. In the present case, the default occurred on 27.09.2017 (default occurred on 29.06.2017, 90 days prior to NPA). In absence of any acknowledgement, limitation expired on 27.09.2020 and we note from the perusal of record that Applicant has filed this present application on 10.11.2022. Further as per the facts of the case, the NPA was declared on 27.09.2017, so accordingly the date of default would be 29.06.2017 and the guarantee was revoked on 02.01.2018 by the PG on receipt of notice, thereafter, the bank invoked the alleged guarantee vide letter dated 09.03.2018.

# 14. The Hon’ble Supreme Court in Re: Cognizance for Extension of limitation (2022) directed that the period 15.03.2020 to 28.02.2022 be excluded in computing limitation. Applying this exclusion, even if we construe the date of NPA as default date, the limitation period stood extended upto only September 2022 and the Application was filed on application on 10.11.2022.

# 15. Further, upon perusal of the petition and the documents annexed thereto, we find that no acknowledgment of debt, as contemplated under Section 18 of the Limitation Act, 1963, has been placed on record. The Applicant has sought to rely upon the realisation of sale proceeds during the liquidation of the Corporate Debtor as constituting an acknowledgment of liability for the purposes of extending the limitation period. We are of the considered view that the receipt or distribution of sale proceeds in the course of liquidation is merely a statutory consequence of the insolvency process and cannot, by itself, amount to an acknowledgment of debt by the Personal Guarantor or the Corporate Debtor. Such realisation does not satisfy the legal requirements of a conscious and voluntary acknowledgment capable of extending the period of limitation. Accordingly, the said contention of the Applicant is untenable.

# 16. The PG has stated that vide sanction letter dated 28.02.2015, the ILC/FLC limit of Rs. 1,500 lakhs was restructured and was valid only up to 28.02.2016. However, despite expiry of the sanctioned period, the Borrower Company, in collusion with Bank officials, continued to utilise the LC facility thereafter without the consent, knowledge, or guarantee of the Personal Guarantor. It is submitted that the LC outstanding of Rs. 15,90,53,678.60 as on 15.03.2018 arose solely due to LCs aggregating approximately Rs. 31.85 crores opened after 28.02.2016. The outstanding amount, which stood at Rs. 6.04 crores as on 31.03.2016, escalated only due to such unauthorized extensions, which were contrary to the sanction terms. The issues raised involve disputed questions of fact and cannot be adjudicated by this Adjudicating Authority, rendering the present forum inappropriate for determination of the same.

# 17. Moreover, we note that an Original Application was filed before the Learned DRT in 2018, followed by the admission of a Section 9 application under the Code in 2018, culminating in the passing of a liquidation order against the Corporate Debtor. In this backdrop, it is evident that the present application filed by the Applicant does not partake the character of a resolution process in any manner; rather, it is in substance an attempt to recover the outstanding dues.

# 18. Once the Corporate Debtor stands liquidated and its assets have been dealt with in accordance with the provisions of the Code, the subsequent invocation of the Personal Guarantee, in the manner sought, would effectively amount to initiating a recovery proceeding under the guise of insolvency. Such an approach is impermissible, as the Insolvency and Bankruptcy Code, 2016 is not a forum for debt recovery but a mechanism aimed at time-bound resolution, failing which liquidation ensues. The intent and scheme of the Code cannot be permitted to be circumvented for the purpose of mere recovery.

# 19. In the matter B.K. Educational Services Private Limited v. Parag Gupta & Associates (2019)11SCC633 it was held that limitation cannot be extended except by operation of Section 18 or 19 of the Limitation Act. Thus, in absence of acknowledgment, the petition filed in 2023 is accordingly held to be barred by limitation.

# 20. In view of the foregoing discussion and for the reasons recorded hereinabove, this Adjudicating Authority holds that the report submitted by the Resolution Professional under Section 99 of the Insolvency and Bankruptcy Code, 2016 in IA (I.B.C)/4716(ND)2024 does not merit acceptance and is accordingly rejected. Since the report field by the Applicant/RP in IA (I.B.C)/883(ND)2024 was not on board, accordingly, the application stands dismissed and Application/objection filed by the Personal Guarantor i.e. IA (I.B.C)/ 232(ND)2024 stands allowed. Further, the application filed by the Applicant under Section 95 of the Insolvency and Bankruptcy Code, 2016 i.e. C.P. (IB)/9(ND)2023 stands dismissed as barred by limitation.

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