The National Company Law Tribunal (NCLT) Delhi dismissed an appeal filed by the personal guarantors of M/s VCRM Petrochemicals Pvt. Ltd., holding that the insolvency applications were filed within the limitation period under Section 19 of the Limitation Act, 1963. The Tribunal affirmed that the Liquidator could initiate proceedings under Section 95(4) of the Insolvency and Bankruptcy Code (IBC), 2016, against the personal guarantors.
UCO Bank had initiated insolvency proceedings under Section 95 of the IBC against Nishu Goel and Ajay Goel, who had provided personal guarantees for financial facilities extended to M/s VCRM Petrochemicals Pvt. Ltd. The deed of guarantee was executed on May 31, 2017, and the borrower’s account was declared a non-performing asset (NPA) on March 31, 2018, leading to the issuance of a notice under Section 13(2) of the SARFAESI Act, 2002.
Following partial debt recovery through asset sales on November 15, 2019, and the failure of the Corporate Insolvency Resolution Process (CIRP) to result in a resolution plan, the company was ordered into liquidation. Continued default and insufficient recovery prompted UCO Bank to file insolvency applications against the personal guarantors.
UCO Bank argued that partial repayments extended the limitation period under Section 19 of the Limitation Act, 1963, validating the timely filing of the insolvency applications. The personal guarantors contended that the applications were time-barred under Article 137 of the Limitation Act, citing the Supreme Court’s ruling in B.K. Educational Services Pvt. Ltd. v. Parag Gupta and Associates, and claimed that payments made under legal proceedings should not extend the limitation period.
The Tribunal ruled in favor of UCO Bank, holding that part-payments reset the limitation period under Section 19 of the Limitation Act, making the applications timely. Dismissing the respondents’ arguments, the Tribunal admitted the insolvency applications under Section 95 of the IBC, imposed a moratorium on the debts of the personal guarantors, and directed the Resolution Professional to proceed with negotiations while allowing the guarantors to submit repayment plans under Section 105 of the IBC.
UCO Bank vs. Smt. Nishu Goel
IB-355/ND/2024
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