Authority: National Company Law Appellate Tribunal Principal Bench, New Delhi (Justice Mohd. Faiz Alam Khan, Member (Judicial) and Naresh Salecha, Member (Technical))

Order Date: 06.11.2026

Case Overview

The appeal was filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 against the order dated 09.09.2026 passed by the National Company Law Tribunal, Guwahati Bench in C.P. (IB) No. 12/GB/2024. The NCLT had admitted an application filed by IL&FS Financial Services Ltd. (Financial Creditor) under Section 95 of the Code against Manoj Kumar Agarwal as Personal Guarantor to Adhunik Meghalaya Steels Private Limited (Principal Borrower/Corporate Debtor).

The dispute originated from a term loan facility of up to ₹30,00,00,000 (Rupees Thirty Crores) extended by IL&FS to Adhunik Meghalaya Steels on 27.02.2015, with actual disbursement of ₹24,44,44,456 on 17.03.2015. The appellant executed a Deed of Personal Guarantee dated 27.02.2015. The loan was secured by pledge of shares of Adhunik Metaliks Limited valued at approximately ₹50 Crores at the time of pledge.

The Corporate Debtor's account was classified as Non-Performing Asset (NPA) on 01.03.2018. IL&FS issued an Event of Default Notice on 10.07.2018 and a Recall Facility Notice on 10.08.2018. The Financial Creditor had realized approximately ₹8.30 Crores through enforcement of pledged shares during FY 2016-17 and FY 2017-18.

IL&FS initially filed Section 7 proceedings against the Corporate Debtor (C.P. (IB) No.02/GB/2024), which was dismissed by NCLT on 16.05.2024 on limitation grounds. This dismissal was affirmed by NCLAT on 25.03.2025 but subsequently set aside by the Supreme Court on 30.07.2025 in Civil Appeal No. 5787 of 2025, which remitted the matter back to NCLT. The Supreme Court considered the acknowledgment of debt in the Corporate Debtor's balance sheet dated 12.08.2020 and exclusion of COVID-19 period (15.03.2020 to 28.02.2022), holding the Section 7 application was filed within limitation.

The Section 95 application against the appellant was filed on 08.05.2024 after issuing a statutory Demand Notice in Form B on 20.03.2024. The Resolution Professional appointed on 08.11.2024 submitted his report on 23.12.2024 recommending initiation of insolvency process.

The appellant contended that the Section 95 application was barred by limitation as the guarantee was invoked on 10.08.2018 and even after excluding COVID-19 period, the application was filed 284 days beyond limitation on 08.05.2024. The appellant argued that acknowledgment by the principal borrower cannot bind the guarantor after separate cause of action had occurred.

The respondent argued that Clause 5(f) of the Deed of Guarantee specifically provides that any written acknowledgment or part-payment made by the Borrower shall bind the Guarantor for limitation purposes. They relied on the Supreme Court's finding in the Section 7 matter that the application was within limitation until 28.02.2025, making the Section 95 application filed on 08.05.2024 within time.

Final Outcome

The NCLAT dismissed the appeal, upholding the NCLT order initiating insolvency resolution process against the appellant. The Tribunal held that:

1. Clause 5(f) of the Deed of Guarantee expressly stipulates that any admission or acknowledgment in writing by the borrower shall be binding on the guarantor for limitation purposes

2. The acknowledgment of debt in the Corporate Debtor's balance sheet dated 12.08.2020 was binding on the appellant guarantor

3. Considering the Supreme Court's computation in the Section 7 matter (which took 01.03.2018 as default date, acknowledged the 12.08.2020 acknowledgment, and excluded COVID-19 period), the limitation period extended until 28.02.2025

4. The Section 95 application filed on 08.05.2024 was therefore within limitation

5. The guarantee was properly invoked through notices dated 10.07.2018 and 10.08.2018 which were addressed to the appellant

6. The appellant's liability is co-extensive with the principal borrower under the terms of the guarantee deed

The Tribunal relied on precedent cases including State Bank of India v. Bernard John (2025 SCC Online NCLAT 1670) which was approved by the Supreme Court, and Laxmi Pat Surana v. Union Bank of India (2021) 8 SCC 481.

Topics: Personal Guarantor Insolvency, Limitation Computation, Guarantee Deed Interpretation