{"id":378739,"date":"2026-03-18T14:00:22","date_gmt":"2026-03-18T08:30:22","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=378739"},"modified":"2026-03-18T13:44:42","modified_gmt":"2026-03-18T08:14:42","slug":"nclt-hyderabad-invocation-of-personal-guarantee-nclt-section-95-ibc","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2026\/03\/18\/nclt-hyderabad-invocation-of-personal-guarantee-nclt-section-95-ibc\/","title":{"rendered":"NCLT: Demand Notice under Form B not valid invocation of personal guarantee under S. 95 IBC"},"content":{"rendered":"<style>\n.animate-charcter{background-image: linear-gradient(-225deg, #231557 0%, #44107a 29%, #ff1361 67%, #fff800 100%); background-size: 200% auto; -webkit-background-clip: text; -webkit-text-fill-color: transparent; animation: textclip 0s linear infinite;}\n@keyframes textclip {to {background-position: 200% center;}}\n<\/style>\n<div style=\"text-align: justify; line-height: 150%;\">\n<p><span style=\"font-weight: bold;\">National Company Law Tribunal, Hyderabad Bench:<\/span> In an application filed under Section <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0001549834\" target=\"_blank\">95<\/a>, <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002802178\" target=\"_blank\">Insolvency and Bankruptcy Code, 2016<\/a> (IBC) by <span style=\"font-weight: bold;\">Bank of Baroda (Financial creditor)<\/span> seeking initiation of personal insolvency resolution process (PIRP) against the personal guarantor of Vijay Home Appliances Ltd., the Bench of Rajeev Bhardwaj, Member (Judicial), and Sanjay Puri, Member (Technical), held that in the absence of valid invocation of the guarantee in terms of the deed, the application was not maintainable and dismissed the petition. The Court noted that,<\/p>\n<p class=\"animate-charcter\" style=\"margin-bottom: 3%; margin-left: 36pt; font-style: italic;\">&#8220;Form B serves only as a procedural requirement under Section <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0001549834\" target=\"_blank\">95<\/a> of the <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002802178\" target=\"_blank\">IBC<\/a> and, by itself, cannot create any liability. The liability of the Personal Guarantor does not arise from this notice alone, and it cannot be treated as a proper invocation.&#8221;<\/p>\n<h3>Background<\/h3>\n<p style=\"margin-bottom: 3%;\">In the matter in hand, the financial creditor, Bank <span style=\"font-weight: bold;\">of Baroda<\/span> had sanctioned credit facilities amounting to Rs 15 crores to the company in 2009 and 2011. These facilities were later reviewed and enhanced. Personal guarantor signed multiple deeds of guarantee between 2009 and 2013, agreeing to repay the Bank &#8220;on demand&#8221; if the company failed to discharge its loan liability.<\/p>\n<p style=\"margin-bottom: 3%;\">In 2016, the company&#8217;s loan account was classified as a non-performing asset (NPA). Thereafter, insolvency proceedings corporate insolvency resolution Process (CIRP) were initiated against the company in 2019, and in 2020, the company was ordered to be liquidated.<\/p>\n<p style=\"margin-bottom: 3%;\">Following the liquidation of the company, the Bank issued a statutory demand notice in Form B on 6 August 2020 to the personal guarantor, calling upon him to pay the outstanding amount of over Rs 13 crores.<\/p>\n<p style=\"margin-bottom: 3%;\">Feeling aggrieved by the non-payment, the financial creditor filed an present application under Section <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0001549834\" target=\"_blank\">95<\/a>, <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002802178\" target=\"_blank\">Insolvency and Bankruptcy Code, 2016<\/a> seeking initiation of Personal Insolvency Resolution Process against the personal guarantor.<\/p>\n<h3>Issue<\/h3>\n<p style=\"margin-bottom: 3%;\">Whether the issuance of a statutory demand notice in Form B under Rule 7(1), <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-9000339180\" target=\"_blank\">Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019<\/a> (2019 Rules), by itself, satisfies the contractual requirement of invocation of an on-demand personal guarantee, in the absence of a separate invocation strictly in accordance with the deed of guarantee?<\/p>\n<h3>Analysis, Law, and Decision<\/h3>\n<p style=\"margin-bottom: 3%;\">The Tribunal noted that the <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002780400\" target=\"_blank\">Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002<\/a> <span style=\"color: #0a0a0a;\">(SARFAESI)<\/span> notice dated 2 February 2017, relied upon by the financial creditor, was addressed solely to the corporate debtor and was merely copied to the personal guarantor. Mere marking of the demand notice in Form B under Rule 7(1) to the personal guarantor does not constitute an invocation of personal guarantee. The notice neither called upon the personal guarantor to discharge any liability nor referred to the deed of guarantee. Therefore, this notice cannot be treated as a valid invocation of the guarantee.<\/p>\n<p style=\"margin-bottom: 3%;\">The Tribunal emphasised that although the liability of the principal borrower and guarantor is co-extensive, the guarantor&#8217;s liability flows strictly from the contract of guarantee. Where the deed stipulates that liability arises &#8220;on demand&#8221;, a specific written demand in accordance with the terms of the deed is a condition precedent.<\/p>\n<p style=\"margin-bottom: 3%;\">The Tribunal further noted that Rule 3(1)(<span style=\"font-style: italic;\">e<\/span>) of the 2019 Rules defines a &#8220;guarantor&#8221; as a debtor in respect of whom the guarantee has been invoked and remains unpaid. In the absence of invocation in accordance with the deed, no debt could be said to have become due from the personal guarantor.<\/p>\n<p style=\"margin-bottom: 3%;\">The Tribunal dismissed the application under Section <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0001549834\" target=\"_blank\">95<\/a> <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002802178\" target=\"_blank\">IBC<\/a> as not maintainable holding that no valid invocation of the personal guarantee had been affected in accordance with the terms of the deed.<\/p>\n<p style=\"margin-bottom: 3%;\">[<span style=\"font-weight: bold; color: #632423;\"><span style=\"font-style: italic;\">Bank of Baroda<\/span> v. <span style=\"font-style: italic;\">Katmula Srinivasa Reddy<\/span>, <a href=\"http:\/\/www.scconline.com\/DocumentLink\/avGqY2BL\" target=\"_blank\">2026 SCC OnLine NCLT 519<\/a>, decided on 29-1-2026<\/span>]<\/p>\n<hr\/>\n<p>Advocates who appeared in this case:<\/p>\n<p style=\"margin-left: 18pt;\"><span style=\"font-weight: bold;\">For the Petitioner:<\/span> S. Sathinarayanan (Dr.)<\/p>\n<p style=\"margin-left: 18pt;\"><span style=\"font-weight: bold;\">For the Respondent:<\/span> Aakanksha Nehra<\/p>\n<p style=\"margin-left: 18pt;\"><span style=\"font-weight: bold;\">For the Resolution Professional:<\/span> Krishna Mohan and Sreenivasa Rao<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p style=\"font-style: italic;\">NCLT examined whether a statutory Form B notice under R. 7(2) of the 2019 Rules, without a distinct contractual demand, can give rise to liability under an on-demand guarantee.<\/p>\n","protected":false},"author":67527,"featured_media":378742,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,11],"tags":[100786,100787,100785,9821,31565,45951,87369],"class_list":["post-378739","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-tribunals_commissions_regulatorybodies","tag-form-b-notice","tag-insolvency-against-personal-guarantor","tag-invocation-of-guarantee","tag-maintainability","tag-nclt-hyderabad","tag-personal-guarantor","tag-section-95-ibc"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.4 (Yoast SEO v26.4) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>NCLT on invocation of personal guarantee under Section 95 IBC | SCC Times<\/title>\n<meta name=\"description\" content=\"Hyderabad NCLT examines whether 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Venkata Ramakrishna Badarinath, Judicial Member, and Veera Brahma Rao Arekapud, Technical Member held that a guarantor cannot enjoy the right of subrogation enunciated in the Contract Act, 1872, when the payment made by the guarantor regards the debt for which the\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Financial Creditor","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/06\/NCLT.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/06\/NCLT.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/06\/NCLT.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/06\/NCLT.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/06\/NCLT.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":251773,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/07\/27\/personal-guarantor\/","url_meta":{"origin":378739,"position":3},"title":"NCLT | Personal Guarantor not liable to be prosecuted under S. 95 IBC where corporate debtor concerned is not under corporate insolvency resolution process","author":"Bhumika Indulia","date":"July 27, 2021","format":false,"excerpt":"National Company Law Tribunal, Mumbai:\u00a0Coram of H.V. Subba Rao, Judicial Member and Chandra Bhan Singh, Technical Member dismissed an interlocutory application filed against a personal guarantor under Section 95 (\"application by creditor to initiate insolvency resolution process\") of the Insolvency and Bankruptcy Code, 2016, finding that the Corporate Debtor concerned\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"National Company Law Tribunal","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/10\/NCLT.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/10\/NCLT.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/10\/NCLT.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/10\/NCLT.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/10\/NCLT.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":262217,"url":"https:\/\/www.scconline.com\/blog\/post\/2022\/02\/22\/can-application-filed-under-s-951-read-with-s-601-ibc-be-rejected-on-ground-that-no-corporate-insolvency-resolution-process-was-pending-against-corporate-debtor-nclat-addresses\/","url_meta":{"origin":378739,"position":4},"title":"Can application filed under S. 95(1) read with S. 60(1) IBC be rejected on ground that no Corporate Insolvency Resolution Process was pending against Corporate Debtor? 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National Company Law Appellate Tribunal, New Delhi (NCLAT): The Coram of Justice Ashok Bhushan (Chairperson) and Dr Alok Srivastava (Technical\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"NCLAT","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/02\/NCLAT_New.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/02\/NCLAT_New.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/02\/NCLAT_New.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/02\/NCLAT_New.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/02\/NCLAT_New.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":277011,"url":"https:\/\/www.scconline.com\/blog\/post\/2022\/11\/08\/interim-moratorium-under-s-96-ibc-in-respect-of-one-of-the-guarantors-would-not-ipso-facto-apply-against-a-co-guarantor-delhi-hc-stays-suit-in-view-of-bar-under-s-96-ibc\/","url_meta":{"origin":378739,"position":5},"title":"Interim moratorium under S. 96 IBC in respect of one of the guarantors would not ipso facto apply against a co-guarantor; Delhi HC stays suit in view of bar under S.96 IBC","author":"Prachi Bhardwaj","date":"November 8, 2022","format":false,"excerpt":"Delhi High Court: In two separate suits filed seeking recovery of amount from the defendants, being ex- promoters and personal guarantors of debt of Bhushan Steel Limited, now renamed as Tata Steel Limited, Amit Bansal J., stayed the proceedings in the present suit against defendants in view of the clear\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Delhi High Court","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/07\/delhi_high_court.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/07\/delhi_high_court.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/07\/delhi_high_court.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/07\/delhi_high_court.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/07\/delhi_high_court.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]}],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/378739","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/users\/67527"}],"replies":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/comments?post=378739"}],"version-history":[{"count":0,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/378739\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media\/378742"}],"wp:attachment":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media?parent=378739"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/categories?post=378739"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/tags?post=378739"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}