Bank of Maharashtra Loses Appeal Against Guarantors

6 Sep 2024 , 11:40 AM

The National Company Law Tribunal in Mumbai has denied the Bank of Maharashtra’s attempt to commence bankruptcy proceedings against Gopal Krishna Oil Tech Industries Pvt. Ltd.’s personal guarantors.

While dismissing the application, the bankruptcy court noted that the lender approached the tribunal after the limitation period had expired.

While dismissing the lender’s application, the division bench of Justice VG Bisht and a technical member Prabhat Kumar observed that the guarantees issued by personal guarantors were invoked on April 3, 2018, and the amount due from the personal guarantees (PGs) became due and payable within 60 days of receipt of the notice and became in default of nonpayment of the amount stated in the notice after the 60-day period had expired.

“The limitation period expires on May 1, 2022,” the panel noted in its August 27 judgement. However, because the petitions against personal guarantors were filed on May 25, 2023, they are barred by the statute of limitations and dismissed as unmaintainable, the panel concluded.

Prior to the tribunal’s decision, counsel Sneha Prabhu appeared for the company’s personal guarantors, arguing that the lender’s petitions were barred by limitation because the Bank first invoked the personal guarantee in April 2018 by issuing a notice under Section 13(2) of the SARFAESI Act 2002.

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