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MudhitMadanlal Gupta vs Supreme Constructions And Developers Private Limited - (NATIONAL COMPANY LAW APPELLATE TRIBUNAL) (26 Jul 2023)

When the Guarantee requires invocation of guarantee deed, default on the guarantor shall be the date, when corporate guarantee has been invoked

MANU/NL/0660/20223

Insolvency

Present Appeal has been filed against the Order by which Section 7 Application filed by the Appellant has been rejected as barred by Section 10A of the Insolvency and Bankruptcy Code, 2016 (IBC). Corporate Debtor is corporate guarantor whose guarantee was invoked by the Appellant by notice dated 16.10.2020. The Adjudicating Authority taking into consideration the notice invoking guarantee held that the default on the part of the Corporate Debtor fell between 10 A period hence, dismissed the Application as barred by time.

Learned Counsel for the Appellant challenging the Order contends that, the Adjudicating Authority committed error in accepting the date of default as 16th October, 2020 whereas date of default was 2nd July, 2019 as has been noted by the Adjudicating Authority itself.

When the Financial Creditor has invoked the corporate guarantee of the corporate guarantor by the notice dated 16th October, 2020 and asked the corporate guarantor to make the payment within seven days from the receipt of the notice, the default has occurred during the Section 10A period and the default dated 2nd July, 2019 which is default alleged against the Principal Borrower cannot be put to a default for corporate guarantor. Liability of corporate guarantor although is coextensive of the Principal Borrower but when the Guarantee requires invocation of the guarantee deed, default on the guarantor shall be the date, when corporate guarantee has been invoked.

There is no error in the Order of the Adjudicating Authority dismissing Section 7 application as barred by time. Dismissal of Section 7 Application shall not preclude the Appellant to take other recourse in accordance with law. Appeal dismissed.

Tags : DEFAULT   TIME PERIOD   APPLICABILITY  

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