NCLT Admits Canara Bank's Insolvency Petition Against Personal Guarantor

Authority: National Company Law Tribunal Principal Bench, New Delhi

Order Date: 12 October 2026

Coram: Justice Anupinder Singh Grewal (President) and Shri Ravindra Chaturvedi (Member Technical)

Case Overview

Canara Bank Limited (Financial Creditor) filed an application under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 read with Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019, seeking initiation of Personal Insolvency Resolution Process (PIRP) against Mr. Suraj Mal Dabas (Personal Guarantor) in respect of personal guarantee furnished for credit facilities availed by M/s Tirupati Infraprojects Private Limited (Corporate Debtor).

The Financial Creditor claimed total debt of Rs. 303,44,75,948.02/- as on 30.12.2024, comprising Rs. 256,88,28,109.82/- towards Term Loan and Rs. 46,56,47,838.20/- towards Funded Interest Term Loan. The guarantee was invoked on 23.06.2015, and Form-B Demand Notice was issued on 05.02.2024.

The Personal Guarantor contested the application on multiple grounds: (i) denial of execution of Deeds of Guarantee dated 16.02.2009 and 27.02.2013, alleging they were forged and fabricated; (ii) contention that his personal guarantee stood discharged pursuant to Corporate Debt Restructuring (CDR) package approved in 2013 and execution of Master Restructuring Agreement dated 30.03.2013 which introduced new guarantors; (iii) argument that the application was barred by limitation as invocation occurred on 23.06.2015 and three-year limitation period expired on 23.06.2018; and (iv) allegation that Financial Creditor suppressed material facts including an Undertaking dated 23.07.2008 that excluded him from Corporate Debtor's management.

The Resolution Professional, Ms. Anju Agarwal (appointed vide order dated 30.03.2026 replacing erstwhile RP Ms. Harmeet Kaur), recommended acceptance of the application under Section 99 of the Code, finding requisite compliance with statutory requirements and debt registration with NeSL for Rs. 2,16,51,68,196.20/- as on 30.11.2023.

Key Legal Issues Decided

The Tribunal framed and decided two principal issues:

1. Whether the application under Section 95 IBC is barred by limitation?

The Tribunal held the application is not barred by limitation. Relying on Section 18 of the Limitation Act, 1963 and Supreme Court precedent in Asset Reconstruction Company (India) Ltd. v. Bishal Jaiswal, the Court found that acknowledgments of debt in Corporate Debtor's balance sheets (particularly as on 31.03.2018, 31.03.2021, and 31.03.2023) constituted valid acknowledgments under Section 18. Crucially, Clause 25 of the Deed of Guarantee dated 27.02.2013 expressly provided that acknowledgments by the Principal Borrower would be binding upon the Guarantor. This contractual stipulation, coupled with the balance sheet acknowledgments, created fresh periods of limitation, making the Section 95 application timely.

2. Whether the CDR restructuring discharged the Personal Guarantor's guarantee obligations?

The Tribunal held that the guarantee obligations were not discharged. Examining the Deed of Guarantee dated 27.02.2013, the Court noted: (a) Clause 2 established it as a continuing security that could only be terminated by written notice with prescribed notice period; (b) Clause 24 contained express waiver of rights under Sections 133, 134, 135 and 139 of Indian Contract Act, including protection against material variations; and (c) Clause 22 preserved the guarantee for the ultimate balance due. The Master Restructuring Agreement contained no express discharge of existing guarantees, and mere introduction of new guarantors did not automatically extinguish prior guarantees. The CDR documents and meeting minutes relied upon by the Guarantor were found insufficient to establish conclusive discharge.

Final Outcome

The Tribunal admitted the petition under Section 95(1) IBC and initiated Insolvency Resolution Process against Mr. Suraj Mal Dabas. A moratorium under Section 101 IBC was declared for 180 days or until order under Section 114 is passed. Resolution Professional Ms. Anju Agarwal was directed to: (i) publish public notice inviting claims within 7 days; (ii) prepare list of creditors within 30 days; (iii) assist in preparing repayment plan; and (iv) submit status reports every 30 days. The Financial Creditor was directed to deposit Rs. 1,00,000/- with the RP for expenses. The Personal Guarantor was ordered to disclose complete assets and liabilities details, including copies of Income Tax Returns for 2024, 2025, and 2026, within two weeks.

Topics: Personal Guarantee, Insolvency Resolution, Limitation Law