NCLAT held that a Form B notice issued under Rule 7(1) does not extend the limitation period for filing a Section 95 application and dismissed the appeal as time-barred.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising Justice Ashok Bhushan (Chairperson) and Technical Member Arun Baroka, reviewed three appeals and held that a notice issued in Form B under Rule 7(1) of the 2019 Rules does not constitute an invocation of the guarantee and cannot extend the limitation period for filing a Section 95 application. As the recall notice invoking the personal guarantees was issued on 26.02.2015, the limitation period expired on 29.05.2022, rendering the Section 95 application time-barred.
The National Company Law Appellate Tribunal (NCLAT) dismissed three appeals filed by Canara Bank, challenging the order dated 16.12.2024, passed by the National Company Law Tribunal (NCLT), Division Bench, Court-1, Ahmedabad. The NCLT had rejected the Section 95 application filed by the Bank against the Personal Guarantor.
Canara Bank had extended financial facilities to M/s Nakoda Ltd. under a consortium finance arrangement, with personal guarantees provided on 22.08.2013, 09.01.2024, and 01.12.2010. A demand notice under Section 13(2) was issued on 12.03.2015 to both the Borrower and the Guarantor, requiring repayment of outstanding dues. Additionally, OA No. 417 of 2015 was filed before the Debts Recovery Tribunal (DRT) to recover Rs. 460,54,87,310/-, which remained pending adjudication. The Section 7 application filed by the Bank against the Corporate Debtor had been admitted, and the Corporate Debtor was under liquidation. The Bank contended that notice in Form B under Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019, was issued on 02.12.2023 and that the subsequent Section 95 application filed on 18.11.2024 was within the limitation period.
The NCLT, after hearing the Bank’s submissions, held that the notice issued in Form B could not extend the period of limitation. Since a recall notice invoking the personal guarantees had been issued on 26.02.2015, the limitation period had expired on 29.05.2022. Consequently, the application under Section 95 was deemed barred by limitation, leading to its rejection. Aggrieved by this decision, the Bank filed the present appeals before the NCLAT.
Before the NCLAT, the Appellant contended that the notice issued under Form B, Rule 7 of the 2019 Rules, amounted to an invocation of the guarantee, and thus, the Section 95 application was not time-barred. However, the NCLAT relied on its earlier judgment in State Bank of India v. Deepak Kumar Singhania, REEDLAW 2025 NCLAT Del 02576, decided on 28.02.2025, wherein it had categorically held that a notice issued under Rule 7(1) in Form B does not constitute an invocation of the guarantee. The Tribunal reiterated that default must exist before the issuance of the notice, and Form B alone could not extend the limitation period.
Following the precedent set in State Bank of India v. Deepak Kumar Singhania, REEDLAW 2025 NCLAT Del 02576, the NCLAT found no error in the NCLT’s order rejecting the Section 95 application. Consequently, it dismissed all three appeals filed by Canara Bank, affirming that the Section 95 application was time-barred.
Mr. Dhruvin Dssani, Advocate, represented the Appellant
Mr. Anuj Tiwari, Ms. Kanchi Ahuja, Mr. Vaibav Vats, Mr. Nilay Sengupta, Mr. Sujit Banerjee and Ms. Aroshi Pal, Advocates, appeared for the Respondents.
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