Authority: National Company Law Tribunal, Indore Bench Court No. 1

Order Date: 22 June 2026

Case Overview

The Cosmos Co-op Bank Ltd filed an application under Section 95 of the Insolvency and Bankruptcy Code, 2016 on 20 October 2021 against Mr. Subhash Chandra Gupta, personal guarantor of corporate debtor STL Exports Ltd., for default of ₹12,06,01,780.45 as on 31 July 2021. The debt arose from credit facilities availed by STL Exports Ltd. in 2009, with the respondent executing a Deed of Guarantee dated 15 April 2009. The corporate debtor underwent liquidation proceedings with an order dated 11 August 2023.

The principal allegation was the respondent's failure to honor the personal guarantee despite a demand notice (Form B) served on 24 September 2021. The respondent raised multiple objections including limitation, maintainability, multiplicity of proceedings, and violation of Section 146 of the Indian Contract Act, 1872.

The key legal issue concerned limitation, with the respondent contending that the guarantee was first invoked through notices in May-July 2015, making the 2021 application time-barred. The applicant argued that acknowledgments in the corporate debtor's audited financial statements (FY 2015-16 to 2017-18) provided fresh limitation periods under Section 18 of the Limitation Act, reinforced by Clause 26 of the Deed of Guarantee which binds guarantors to acknowledgments made by the borrower.

The Resolution Professional, Ms. Neeraja Kartik Peri (IBBI/IPA-001/IP-P01445/2018-2019/12137), appointed on 7 June 2024, submitted a report on 3 July 2024 recommending admission. She verified the outstanding amount comprising principal (₹5,18,50,739.74), interest (₹6,87,51,040.71), and legal expenses (₹3,190).

The tribunal analyzed four main issues: jurisdiction (affirmed under Section 60(3) IBC), maintainability (applicant qualified as 'person' under Section 3(23) IBC), limitation (application not barred due to acknowledgments and COVID exclusion period from 15 March 2020 to 28 February 2022), and other objections (rejected as without merit).

Final Outcome

The application was admitted under Section 100 of the IBC, initiating the insolvency resolution process against Mr. Subhash Chandra Gupta. A moratorium of 180 days was declared, prohibiting legal actions against the guarantor and transfer of assets. Ms. Neeraja Kartik Peri was confirmed as Resolution Professional and directed to publish a public notice inviting claims within 21 days. The applicant was directed to deposit ₹50,000 towards the Resolution Professional's fees.

Topics: Personal Guarantor Insolvency, Limitation Law, Banking Debt Recovery