Case Details

Case Name: UCO Bank vs. Makhan Lal Saraf

Parties: Applicant/Financial Creditor: UCO Bank; Respondent/Personal Guarantor: Makhan Lal Saraf; Resolution Professional: Ms. Sangeeta Poddar

Court/Authority: National Company Law Tribunal (NCLT), Kolkata Bench - Court I

Case Numbers: Connected with CP (IB) No. 111/KB/2025, I.A. (IB) No. 1664/KB/2025, I.A. (IB) No. 1797/KB/2025

Date of Pronouncement: 21.05.2026

Period of Dispute: The underlying debt relates to credit facilities granted in 2006 (Rs. 1.54 Cr) and renewed in 2008 (Rs. 2.19 Cr). The account was declared NPA on 22.08.2009. The guarantee was invoked via a SARFAESI notice on 24.08.2009. The insolvency petition (CP 111/KB/2025) was filed in 2025.

Parties Involved

  • Petitioner/Financial Creditor: UCO Bank
  • Respondent/Personal Guarantor: Makhan Lal Saraf (also an applicant in IA 1664/KB/2025)
  • Other Personal Guarantors to the Corporate Debtor: Govinda Ram Saraf and Smt. Renu Devi Kandoi (mentioned but not parties to this proceeding)
  • Corporate Debtor: M/s Navyug Packaging Pvt. Ltd.
  • Resolution Professional: Ms. Sangeeta Poddar (applicant in IA 1797/KB/2025)
  • Adjudicating Authority: NCLT Kolkata Bench comprising Ms. Rekha Kantilal Shah (Member Technical) and Smt. Bidisha Banerjee (Member Judicial)

Issues / Allegations / Violations

UCO Bank filed an application under Section 95(1) of the Insolvency and Bankruptcy Code (IBC), 2016, seeking to initiate an insolvency resolution process against Mr. Makhan Lal Saraf as a personal guarantor for the corporate debtor, M/s Navyug Packaging Pvt. Ltd.

The core issue for determination was whether the petition was barred by limitation. The personal guarantor contended that the petition, filed in 2025, was based on an invocation of guarantee made via a notice under Section 13(2) of the SARFAESI Act on 24.08.2009. He argued that any right to sue based on that invocation expired after the three-year limitation period under the Limitation Act, 1963. The financial creditor argued that the pendency of Debt Recovery Tribunal (DRT) proceedings (O.A. No. 402 of 2011 filed on 14.09.2011) affected the limitation period and alternatively relied on a subsequent notice issued on 17.10.2024 in Form B under Rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019.

Findings & Observations

The tribunal made several key legal findings:

1. Pendency of DRT Proceedings: The bench explicitly rejected the financial creditor's argument, holding that "the pendency of proceeding at the DRT shall not extend or suspend the limitation period" for a petition filed under Section 95(1) of the IBC.

2. Invocation of Guarantee: Relying on the NCLAT judgment in State Bank of India vs. Mr. Deepak Kumar Singhania, the bench held that a notice under Rule 7(1) (Form B) is not an invocation of a guarantee. It cited the NCLAT's reasoning: "Guarantor with regard to whom guarantee has not been invoked, shall not be a Debtor and no default can be committed by Guarantor, unless guarantee is invoked as per the terms of Deed of Guarantee."

3. Valid Invocation and Start of Limitation: The bench found that the notice dated 24.08.2009 under Section 13(2) of the SARFAESI Act, which demanded payment of Rs. 2,04,41,901.63 from the guarantor within 60 days, constituted a valid invocation of the guarantee. Following the Supreme Court's ruling in Syndicate Bank vs. Channaverappa Beleri & Ors., the tribunal held that the three-year limitation period for proceedings against the guarantor began from the date of expiry of the 60-day notice period following this invocation in 2009.

4. Application Barred by Limitation: The bench concluded that the right to sue accrued in late 2009. The petition (CP 111/KB/2025) was filed on 04.04.2025, nearly 15 years later, which far exceeded the three-year limitation period prescribed under Article 137 of the Limitation Act, 1963. Therefore, the application was time-barred.

The tribunal concurred with the findings and recommendation of the Resolution Professional, Ms. Sangeeta Poddar, who had also concluded the debt was time-barred and recommended rejecting the application.

Penalties / Settlements / Directions

The tribunal did not impose any monetary penalties or disgorgement orders. The primary directive was the dismissal of the insolvency petition itself. The specific orders were:

  • I.A. (IB) No. 1797/KB/2025 (filed by the Resolution Professional) was allowed and disposed of.
  • C.P.(IB) No. 111/KB/2025 (the main insolvency petition filed by UCO Bank) was dismissed.
  • I.A. (IB) No. 1664/KB/2025 (the application filed by the personal guarantor seeking dismissal) was allowed and disposed of.

Corrective Actions & Future Obligations

The order does not prescribe any specific corrective actions, audits, or future compliance obligations for UCO Bank or the personal guarantor. The ruling is a final dismissal of the insolvency proceeding on technical (limitation) grounds.

Final Ruling & Enforcement

The final ruling of the NCLT Kolkata Bench was to dismiss the insolvency resolution process application (CP 111/KB/2025) filed by UCO Bank against Mr. Makhan Lal Saraf. The dismissal is immediate and final based on the application being barred by the law of limitation. This outcome prevents UCO Bank from pursuing the insolvency of the personal guarantor under the IBC for this particular debt based on the 2009 invocation. The bank's recourse, if any, would remain within the ongoing DRT proceedings (O.A. No. 402 of 2011).