Authority: National Company Law Tribunal (NCLT) Principal Bench, New Delhi

Order Date: 12 October 2026

Case Overview

Canara Bank Ltd. (Financial Creditor) filed an application under Section 95 of the Insolvency and Bankruptcy Code, 2016 (IBC) against Mr. Subhash Dabas (Personal Guarantor) to initiate the Personal Insolvency Resolution Process (PIRP). The application concerned a personal guarantee provided by Mr. Dabas for credit facilities availed by M/s Tirupati Infraprojects Private Limited (Corporate Debtor). The total debt claimed was ₹303,44,75,948.02 as of 30 December 2024, comprising ₹256,88,28,109.82 towards a Term Loan and ₹46,56,47,838.20 towards a Funded Interest Term Loan.

The Financial Creditor submitted that the Corporate Debtor's account was classified as a Non-Performing Asset (NPA) on 30 September 2014. The guarantee was invoked via a notice dated 23 June 2015. The creditor relied on Deeds of Guarantee dated 16 February 2009 and 27 February 2013, arguing they were unconditional, irrevocable, and continuing guarantees.

The Respondent, Mr. Dabas, contested the application on multiple grounds. He denied executing the alleged guarantee deeds, claiming they were forged and fabricated. He argued that his guarantee was discharged pursuant to a Corporate Debt Restructuring (CDR) package approved in March 2013, which allegedly substituted his guarantee with those of new promoters. He also contended the application was barred by limitation, as the guarantee was invoked in 2015 and the three-year limitation period had expired. He further alleged the Financial Creditor suppressed material facts and took inconsistent stands in parallel Debt Recovery Tribunal (DRT) proceedings.

The Resolution Professional (RP), Ms. Anju Agarwal (appointed on 30 March 2026), recommended admitting the application. The RP's report under Section 99 of the IBC concluded the application was complete, the debt was valid and registered with an Information Utility (NeSL), and the Corporate Debtor's balance sheets contained acknowledgments that extended the limitation period.

Final Outcome

The NCLT admitted the application and initiated the Insolvency Resolution Process against Mr. Subhash Dabas. The tribunal addressed two primary issues:

1. Limitation: The application was not time-barred. The tribunal held that acknowledgments of debt in the Corporate Debtor's balance sheets (e.g., as of 31 March 2018, 2021, 2023, 2024, and 2025) constituted valid acknowledgments under Section 18 of the Limitation Act, 1963. Crucially, Clause 25 of the Deed of Guarantee dated 27 February 2013 made such acknowledgments by the borrower binding on the guarantor. Therefore, a fresh period of limitation commenced from each acknowledgment date.

2. Discharge of Guarantee: The Respondent's personal guarantee was not discharged by the 2013 CDR restructuring. The tribunal found no evidence of an express discharge or release instrument from the Financial Creditor. The Master Restructuring Agreement (MRA) dated 30 March 2013 did not contain a provision releasing existing guarantors. Furthermore, Clauses 2, 22, and 24 of the Deed of Guarantee established it as a "continuing security" that was not terminated by subsequent variations or restructuring of the underlying debt. The waiver of rights under Sections 133, 134, 135, and 139 of the Indian Contract Act, 1872, as per Clause 24, prevented the Respondent from claiming discharge due to material variations in the loan terms.

A moratorium under Section 101 of the IBC was declared for 180 days. The appointed Resolution Professional, Ms. Anju Agarwal, was directed to publish a notice, invite claims from creditors, and oversee the process. The Financial Creditor was ordered to deposit ₹1,00,000 with the RP for initial expenses. The Respondent was directed to cooperate fully, disclose all assets and liabilities, and provide copies of Income Tax Returns for FY 2024, 2025, and 2026.

Topics: Personal Guarantor Insolvency, Debt Acknowledgement, Contract Law