Piyush Rastogi vs M/S Omkara Assets Reconstruction Pvt. ...

IN THE MATTER OF: Paresh Rastogi 14/1, Jopling Road Lucknow - 226001 ...Appellant

Versus

1. M/Omkara Assets Reconstruction Pvt. Ltd. No.9, M.P. Nagar First, Street, Kongu Nagar Extension, Tirupur Tamilnadu, India - 641607 ...Respondent No.1

2. Mr. Umesh Gupta Resolution Professional 221-A/19, Ground Floor Onkar Nagar - B, Tri Nagar New Delhi - 110035 ...Respondent No.2

With Company Appeal (AT) (Insolvency) No. 2054 of 2024

IN THE MATTER OF: Piyush Rastogi 14/1, Jopling Road Lucknow - 226001 ...Appellant

Versus

1. M/Omkara Assets Reconstruction Pvt. Ltd. No.9, M.P. Nagar First, Street, Kongu Nagar Extension, Tirupur Tamilnadu, India - 641607 ...Respondent No.1

2. Mr. Umesh Gupta Resolution Professional 221-A/19, Ground Floor Onkar Nagar - B, Tri Nagar New Delhi - 110035 ...Respondent No.2 With Company Appeal (AT) (Insolvency) No. 2117 of 2024

IN THE MATTER OF: Deepak Rastogi 27/18, Raja Ram Mohan Roy Marg Lucknow - 226001 ...Appellant

Versus

1. M/Omkara Assets Reconstruction Pvt. Ltd. No.9, M.P. Nagar First, Street, Kongu Nagar Extension, Tirupur Tamilnadu, India - 641607 ...Respondent No.1

2. Mr. Umesh Gupta Resolution Professional 221-A/19, Ground Floor Onkar Nagar - B, Tri Nagar New Delhi - 110035 ...Respondent No.2

Present: For Appellant : Mr. Sumesh Dhawan, Ms. Swastika Kumari and Mr. Sagar Thhakar, Advocates

For Respondent : Mr. Satendra Rai and Mr. Pareesh Virmani, Advocates for R-1. Mr. Vishal Ganda, Ms. Charmi Khurana, Mr. Anshit Aggarwal and Mr. Umesh Gupta, Advocates for RP.

ORDER

(Hybrid Mode)

[Per: Arun Baroka, Member (Technical)]

The present Appeal is filed challenging Orders dated 19th September,

2024 passed by the 'Adjudicating Authority' (AA1) (National Company Law

Tribunal, New Delhi Bench, Court-III) in CP (IB) No. IB-655(ND)/2022 and IA-

319/2024 by which initiation of Personal Insolvency Resolution Process(PIRP)

1 AA- Adjudicating Authority Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 2 of 46 it has been ordered against the Appellant. Similar PIRP2 has been ordered by

the AA in CP (IB) No. IB-656(ND)/2022 and IA-521/2024 against which

appeal CA (AT) (Ins.) 2054/2024 has been filed and for PIRP ordered by the

AA in CP (IB) No. IB-652(ND)/2022 and IA-335/2024 appeal in CA (AT) (Ins.)

2117/2024 has been filed.

Brief facts relevant for the Appeal

2. Facts necessary to be noticed for deciding this appeal are:

Sanction Letter- issued in favour of Andes Town Sept. 10, 2014 Planners Pvt. Ltd ("Corporate Debtor") and Rohtas Projects Ltd ("Co- Borrower") for a project loan of Rs. 90 crores by Omkara Assets Reconstruction Private Limited "Financial Creditor" or "Respondent No.1" - earlier Dewan Housing Finance Corporation Ltd.-DHFL and subsequently Piramal Capital & Housing Finance Limited.

The Loan was secured by way of irrevocable personal guarantees.

Following documents exchanged between the Sept. 29, 2014 Corporate Debtor, the Co-borrower and the Financial Creditor:

a. Hypothecation Deed- charge created on all receivables from sale of units in Rohtas Plumeria & Summit.

2 PIRP-Personal Insolvency Resolution Process Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 3 of 46 b. Pledge Letter- for 99.99% shares of the Corporate Debtor c. Loan Agreement - for Rs. 90 Crores d. Escrow Agreement e. Deed of Guarantee- executed by Mr. Paresh Rastogi and Mr. Piyush Rastogi both being directors of Corporate Debtor along with Mr. Pankaj Rastogi and Mr Deepak Rastogi in favour of Respondent No. 1- Omkara.

Date of Default- the Corporate Debtor along with May 2018 the Co-borrower committed default in repaying the loan.

Recall Notice- was issued by the Respondent No.1 Jan. 2, 2020 to all four guarantors wherein the Deed of Guarantee was invoked by the Respondent No. 1 and further called upon the guarantors to pay the outstanding amount of Rs. 108,19,72,155/- as on December 30, 2019, within 15 days.

Notice invoking Guarantee on the last known Feb. 15, 2021 address- by the Respondent No.1 for Rs. 133,14,26,737/- as on January 31, 2021.

Record of Default- submitted by the Respondent March 11, 2022 No. 1 to National E-Governance Services Limited ("NESL").

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 4 of 46 Demand Notice- issued under Section 95(4)(b)3 of May 10, 2022 the Code by the Respondent No. 1 to all the guarantors via courier, on the last known address and email for Rs. 161,92,58,947/- as on May 9, 2022

Company Petition (IB) No. 655/ND/2022 July 18, 2022 ("Company Petition"), filed before the Adjudicating Authority under Section 95 of the Code.

Limited Notice of Company Petition- issued by Sept. 7, 2022 the Adjudicating Authority.

Affidavit of service- filed by the Respondent No. 1 Sept. 27, 2022 stating: Speed Post: Petition not delivered as

"Addressee left without instructions". E-mail: Petition delivered vide e-mail dated September 26, 2022.

Section 7 against the Corporate Debtor- admitted March 2, 2023 by the Adjudicating Authority.

3 Section 95-Application by creditor to initiate insolvency resolution process.

"......

(4) An application under sub-section (1) shall be accompanied with details and documents relating to-

(a) the debts owed by the debtor to the creditor or creditors submitting the application for insolvency resolution process as on the date of application;

(b) the failure by the debtor to pay the debt within a period of fourteen days of the service of the notice of demand; and.."

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 5 of 46 Appointment of Resolution Professional- by the Dec. 13, 2023 Adjudicating Authority. Respondent No. 2 was appointed as RP.

Report under Section 994 of the Code- filed by the Jan. 16, 2024 Respondent No.2 recommending the initiation of Insolvency Process.

Reply by the Appellant - raising objections Feb. 13, 2024 related to delivery of demand notice, recall notice, etc:

o The Recall Notice, Invocation Notice and Demand Notice, was not delivered on the Appellant;

o There were various discrepancies in the report filed by the RP u/s 99 of the Code.

o The Appellant had not acknowledged the liability to pay the debt;

o Corporate Debtor is already undergoing CIRP, wherein resolution plan is being considered by the members of the committee of creditors.

Adjudicating Authority passed the Impugned Sept. 19, 2024 Order.

Submissions of the Appellant - Personal Guarantor:

3. DHFL issued a notice dated 02.01.2020 inter alia, to the Corporate

Debtor, Co-Borrower and the Appellant to re-pay the alleged outstanding

4 Section 99(1) in Insolvency and Bankruptcy Code, 2016 The resolution professional shall examine the application referred to in section 94 or section 95, as the case may be, within ten days of his appointment, and submit a report to the Adjudicating Authority recommending for approval or rejection of the application.

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 6 of 46 amount of Rs. 108,19,72,155/-, as on 30.12.2019, within 15 days.

Pertinently, the said notice was not received by the Appellant. That the Loan

Recall Notice, purportedly dated 02.01.2020, was never served upon the

Appellant-PG. Respondent No. 1-FC has failed to provide any proof of service

of this notice within the petition. The absence of a delivery receipt or any other

credible evidence confirming its service indicates that the appellant was not

notified of the Loan Recall Notice and, therefore, was deprived of the

opportunity to respond or take any necessary action in relation to the same.

4. DHFL issued a purported notice dated 15.02.2021 for invocation of the

Guarantee Deed, calling upon, the Appellant to re-pay the alleged outstanding

amount of Rs. 133,14,26,737/-, as on 31.01.2021, within 15 days.

Pertinently, the said notice was not received by the Appellant. The Invocation

of Guarantee Notice, dated 15.02.2021, was submitted via an additional

affidavit, accompanied by a photocopy of the alleged speed post receipt.

However, no delivery report has been provided as evidence. Merely producing

a speed post receipt does not suffice to establish proper service without the

corresponding proof of delivery. The absence of such a delivery report

demonstrate that the appellant never received the notice.

5. DHFL was merged into Piramal with effect from 30.09.2021. On

03.11.2021, the name of DHFL was changed to 'Piramal Capital and Housing

Finance Limited'. On 10.05.2022, alleged demand notice ("Demand Notice")

under Section 95(4)(b) of the IBC was issued by Piramal inter-alia calling upon

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 7 of 46 the Appellant to pay an amount Rs. 161,92,58,947/- outstanding as on

09.05.2022. Admittedly, the purported demand notice was returned with

remark "addressee shifted from given address". The alleged Demand Notice,

dated 10.05.2022, issued under Section 95(4)(b) of the IBC, 2016, was

purportedly sent via Blue Dart courier, with the courier receipt and tracking

details submitted through an additional affidavit. However, a review of the

tracking information reveals that the notice was never delivered to the

appellant. This failure to deliver the demand notice represents a critical lapse

in fulfilling the procedural requirements under the IBC, 2016, as it deprived

the appellant of the opportunity to respond or address the matter prior to the

filing of the petition.

6. On 18.07.2022, the Petition was filed by Piramal under Section 95(1) of

IBC, 2016 seeking initiation of Insolvency Resolution Process against the

Appellant for the alleged default of an amount of Rs. 1,619,258,947/- as on

09.05.2022. That The petition itself, filed on 18.07.2022, was also not served

on the appellant. The tracking report for the service of the petition indicates

"address left without instruction", which confirms that the appellant did not

receive a copy of the petition. That the Counsel of the appellant has informed

him that one matter is filed against him as she found in the cause list of the

Hon'ble NCLT and thereafter on instruction she has appeared and the copy

of petition was served on her email by the counsel of the RP on 8th February,

2024. That it is evident from the above this lack of service further compounds

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 8 of 46 the appellant's inability to participate in the proceedings in a fair and

informed manner, violating the principles of natural justice.

7. The Appellant filed its objections to the report filed by the Resolution

Professional: (a) The Recall Notice, Invocation Notice and Demand Notice, was

not delivered on the Appellant; (b) There were various discrepancies in the

report filed by the RP u/s 99 of the Code.; (c) The Appellant had not

acknowledged the liability to pay the debt; (d) Corporate Debtor is already

undergoing CIRP, wherein resolution plan is being considered by the

members of the committee of creditors.

8. It is contended that the Adjudicating Authority erroneously issued the

Impugned Order on 19.09.2024 without considering settled legal principles

and in contravention of the mandatory provisions of Section 957 of the Code.

This includes improper service of the demand notice on the Appellant and an

inaccurate report filed by the Resolution Professional (RP) under Section 99

of the Code, read with Rule 7 (1)5 of IRPPG Rules6. The Appellant contends

that the Impugned Order was issued without due consideration of established

legal principles and in violation of Section 95 of the Code. Specifically, the

demand notice was not properly served on the Appellant, as required under

5

7. Application by Creditor.- (1) A demand notice under clause (b) of sub-section (4) of section 95 shall be served on the guarantor demanding payment of the amount of default, in Form B.

6 IRPPG Rules : The Insolvency and Bankruptcy (Application to Adjudicating Authority for

Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 9 of 46 Section 95(4)(b)7 of the Code, read with Rule 7(1) of the IRPPG Rules. The

Respondent has failed to provide any documentary evidence proving that the

alleged demand notice was ever served upon the Appellant. In the absence of

such proof, the Petition is not maintainable, as it does not satisfy the

fundamental requirement of Section 95(4)(b) of the IBC, which mandates the

issuance of a demand notice in Form B.

9. Furthermore, there is no record substantiating the issuance of the

demand notice. Although Respondents No. 1 and No. 2 (RP) referred to a

purported demand notice dated 10.05.2022, allegedly sent via email and

courier (as mentioned in Para 3.4 of the RP's report), no supporting

documents or proof of service have been provided. Since it is evident that no

demand notice was issued to the Appellant, the Petition filed by the

Respondent is legally unsustainable. Additionally, the alleged notice was sent

to an email ID, rahulk@rohtasprojects.com, which does not belong to the

Appellant, rendering the service of notice legally ineffective.

10. The Petition is also not maintainable as Respondent No. 1 never

invoked the guarantee. There is no evidence on record to establish that the

7 Section 95-Application by creditor to initiate insolvency resolution process.

"......

(4) An application under sub-section (1) shall be accompanied with details and documents relating to-

(a) the debts owed by the debtor to the creditor or creditors submitting the application for insolvency resolution process as on the date of application;

(b) the failure by the debtor to pay the debt within a period of fourteen days of the service of the notice of demand; and.."

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 10 of 46 Appellant received the alleged demand notices/letters dated 02.01.2020 and

15.02.2021, purportedly issued to invoke the guarantee. In the absence of

such invocation, no default arises on the part of the Appellant, and he cannot

be held liable for the demand raised by Respondent No. 1 concerning the

guarantee extended to the Corporate Debtor. As per Rule 3(1)(e) of the IRPPG

Rules8, a guarantee must be invoked for an individual to qualify as a

guarantor and be subjected to insolvency proceedings. In this case, no

personal guarantee has been invoked, and there is no evidence of delivery of

the alleged demand/guarantee invocation notice dated 02.01.2020. A

guarantee constitutes a debt only when it is invoked, making the guarantor

liable thereafter. In this regard, reliance is placed on Edelweiss Asset

Reconstruction Company v. Orissa Manganese and Minerals Limited &

Others (Company Appeal No. 437/2018), wherein it was held that ".. the

admission of the principal debtor to CIRP does not mean that the debt stands

proved as against the Guarantor in a Section 7 proceeding against the

Corporate Guarantor automatically...". The Respondent has, therefore, failed

in establishing compliance of subsection (4)(a) and (b) of section 95 I&B Code,

2016. As such the "debt" as claimed under the Guarantee Deed does not

"exist" as on the date of filing of the Petition under Section 95 of IBC.

8 Rule 3(1)(e) of The Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 provides that "guarantor" means a debtor who is a personal guarantor to a corporate debtor and in respect of whom guarantee has been invoked by the creditor and remains unpaid in full or part;

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 11 of 46

11. In light of the foregoing, it is evident that essential documents--

including the alleged Loan Recall Notice, Invocation of Guarantee Notice,

Demand Notice under Section 95(4)(b) of the IBC, 2016, and the petition

itself--were either not served on the Appellant or their service has not been

adequately proven. The lack of clear evidence of service for these crucial

documents deprived the Appellant of a fair and reasonable opportunity to

respond. This procedural lapse raises serious concerns regarding compliance

with the mandatory requirements of the IBC, 2016, and undermines the

Appellant's right to participate in the proceedings.

12. The presumption of service under Section 27 of the General Clauses

Act applies only when the notice is dispatched via registered post. In the

present case, since the alleged demand notice was not sent through registered

post, no such presumption of service can be drawn against the Appellant.

13. The Adjudicating Authority's conclusion in the Impugned Order--that

the alleged non-service of the demand notice does not absolve the Personal

Guarantor from liability under the Deed of Guarantee--is contrary to well-

settled legal principles and violates the mandatory provisions of Section 95 of

the Code.

Submissions of the Respondent No. 1- Omkara Assets Reconstruction Pvt Ltd

14. The Recall Notice, Invocation Notice, and Demand Notice were issued

to the last known address of the Appellant - Personal Guarantor as per the

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 12 of 46 terms of the Guarantee Deed. The Appellant - Personal Guarantor had

provided its address in the Guarantee Deed as 803, Rohtas Court, Lucknow

("Given Address"). Since the Appellant - Personal Guarantor never updated

its address with the Respondent No. 1 (or Piramal or DHFL), this remained

the last known address. Clause 22 of the Guarantee Deed explicitly states

that all communications, including a Notice of Demand, sent to the address

provided in the Guarantee Deed or the last known address shall be considered

sufficient service. Therefore, by agreeing to Clause 22, the Respondent

acknowledged that service of any communication or Notice of Demand at the

Given Address or last known address would be deemed valid, allowing the

Applicant to proceed accordingly. In compliance with this, the Respondent

No.1 - Omkara sent the Recall Notice, Invocation Notice, and Demand Notice

to the Given Address, which remained the last known address of the Appellant

- Personal Guarantor as per the Guarantee Deed. Notably, the Given Address

appears to have been used by the Appellant - Personal Guarantor for

transactions with other banking and financial institutions as well. Even in

the Objections, the Appellant - Personal Guarantor has not claimed that the

Given Address does not belong to them or that any updated address was

provided to the Respondent No. 1 (or Piramal or DHFL). Furthermore, the

address mentioned in the affidavit supporting the Objections is not that of

the Appellant - Personal Guarantor but rather of the Borrower, who is

undergoing CIRP under the IBC.

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 13 of 46

15. Furthermore, a First Information Report (FIR No. RC0062022A0014)

dated 11.04.2022 was registered by police station ACB, Lucknow, based on a

complaint filed by Canara Bank, Lucknow, wherein the Appellant - Personal

Guarantor's address was recorded as 803, Rohtas Road, Lucknow--the Given

Address.

16. Thus, the issuance of the Recall Notice, Invocation Notice, and Demand

Notice to the Given Address constitutes valid service in accordance with the

Guarantee Deed. Consequently, the Appellant - Personal Guarantor's

objections regarding non-service of the notices are baseless, contradict the

terms of the Guarantee Deed, and should be rejected outright.

17. Respondent No. 1 - Omkara asserts that sending the Recall Notice,

Invocation Notice, and Demand Notice to the last known address constitutes

valid service. As previously stated, these notices were sent to the Given

Address, as recorded in the Guarantee Deed. It is well settled in law that

service of notice at a party's last known address is deemed valid.

18. Pursuant to the Adjudicating Authority's directions, a copy of the

Petition was also sent to the Appellant - Personal Guarantor via email on

26.09.2022 and by speed post to the Given Address. The speed post was

undelivered with the remark "addressee left without instructions," but the

Petition was successfully served via email. Despite receiving the Petition, the

Respondent has not made any payment towards the outstanding dues.

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 14 of 46

19. The Hon'ble High Court of Madras in St. Alfred Education Trust Vs.

Kone Elevator India Pvt. Ltd., MANU/TN/7775/2023, held that if the notice

is sent to the correct and last known address of the defendant, the same has

to be deemed to be served, whether it is actually served or not. The Hon'ble

Supreme Court in Alavi Haji v. Palapetty Muhammed, [(2007) 6 SCC 555]

(Para 14), also made similar observations.

20. In this case, the Demand Notice was sent to the Given Address, as per

the Guarantee Deed, which was also the last known address. Although the

postal service returned the notice with remarks "addressee shifted from the

given address," it was also sent via email. Hence, in light of established legal

principles, the Demand Notice is deemed to have been served on the Appellant

- Personal Guarantor.

21. Respondent No. 1 - Omkara further contends that the Personal

Guarantor never notified any change of address. The Appellant - Personal

Guarantor has not asserted any change in the Given Address or that they had

moved. If the Given Address had changed, the Appellant - Personal Guarantor

was responsible for informing the Applicant. Since no such intimation or

updated address was provided, the Appellant - Personal Guarantor cannot

now claim that the Recall Notice, Invocation Notice, or Demand Notice was

not delivered when they were sent to the Given Address.

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 15 of 46

22. The Appellant has not acknowledged liability for the debt and asserts

that they are not obligated to pay. However, the Appellant has not denied

executing the Guarantee Deed, which secures the repayment obligations of

the Borrower and Co-Borrower. Clause 1 of the Guarantee Deed clearly states

that in the event of default by the Borrower or Co-Borrower, the Appellant

shall be liable to pay the defaulted amount. Therefore, the Appellant's claim

of non-liability is baseless and should be dismissed.

23. The Borrower is already undergoing CIRP, with a resolution plan under

consideration by the Committee of Creditors (CoC). The Appellant - PG's

argument that the ongoing CIRP should bar the Petition is without merit and

contradicts settled legal principles. This is settled by Hon'ble Supreme Court

in Lalit Kumar Jain v. Union of India, [(2021) 9 SCC 321] wherein it was

held that approval of a resolution plan does not ipso facto discharge a

personal guarantor (of a corporate debtor) of her or his liabilities under the

contract of guarantee. Further, the National Company Law Appellate

Tribunal, New Delhi, in the matter of Mohan Kumar Garg vs. Omkara

Assets Reconstruction Pvt. Ltd. & Anr. being Company Appeal (AT)

(Insolvency) No.993 of 2023, had held that the simultaneous proceedings

in respect of the guarantor as well as the borrower can be proceeded with.

24. Hence, it is a settled principle of law that simultaneous proceedings can

be initiated against the borrower as well as the guarantor. Furthermore, it is

submitted that the Respondent No1- Omkara has not received the

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 16 of 46 outstanding amount, either in part or in full. Hence, the contention of the

that since borrower is already undergoing CIRP, wherein resolution plan is

being considered by the members of the COC, the Petition ought not be

proceeded with, is contrary to the settled principles of law.

Submissions of Respondent No. 2-Resolution Professional (R2-RP)

25. With respect to the objections raised by the Appellant - PG on non-

service of statutory demand notice, the Respondent No. 2-RP has examined

the demand notice dated May 10, 2022, attached to the Company Petition,

which was sent to the Appellant's last known address. The same address was

used to serve the order and report by the Respondent No. 2, leading to the

Appellant's appearance before the Adjudicating Authority. During the due

diligence, the Respondent No. 2 confirmed that this address was provided by

Respondent No. 1-FC for Know Your Customer ("KYC") purposes, establishing

it as the correct address.

26. Furthermore, it is submitted that Respondent No. 1 filed an affidavit of

compliance pursuant to the order of the Adjudicating Authority dated

September 7, 2022, placing on record the tracking receipt of the demand

letter.

27. The law pertaining to the service on the address i.e., Last Known

Address, of the Respondent being a valid service has been upheld by Hon'ble

Supreme Court of India- Alavi Haji v. Palapetty Muhammed [(2007) 6

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 17 of 46 SCC 555] and also by Hon'ble High Court of Madras- St. Alfred Education

Trust Vs. Kone Elevator India Pvt. Ltd. [OSA No. 251 of 2020].

28. The Appellant had raised objections on the Report sent to the same Last

Known Address used for the demand notice. Therefore, the Appellant cannot

approbate and reprobate for the same, accordingly, the claim that Respondent

No. 1 did not invoke the guarantee is baseless and frivolous. Therefore, they

cannot claim improper service while acknowledging receipt of other

documents. As per Clause 22 of the Guarantee Deed, Respondent No. 1 was

required to serve the demand notice to the address provided by the Appellant

or the last known address, which was duly complied. However, it is settled

law that any address change must be communicated by the Appellant, which

was not in the present case. Therefore, the objection raised by the Appellant

that all requirements for filing of the Section 99 Report has not been satisfied

is completely baseless and frivolous.

29. The debt was due, and the Appellant's failure to pay led to the initiation

of the petition under Section 95 of the Code. Respondent No. 2 - Resolution

Professional, filed a report under Section 99 of the Code recommending

acceptance of the petition. The report was prepared in compliance with

Section 99, ensuring the Company Petition was examined in accordance with

the law under Sections 95 and 99(6)(a) of the Code.

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 18 of 46

30. Regarding the Appellant's claim that Section 95 requirements were not

met, Respondent No. 2 reviewed all documents, including those submitted via

email on January 3, 2024. Despite multiple attempts to engage the Appellant,

they remained unresponsive and only raised objections later, causing

unnecessary delays. The Appellant has not disputed the debt, the guarantee,

or the last known address but only alleged non-delivery of the demand notice,

which is unfounded.

31. Respondent No. 2- RP ensured to serve the copy of the order requesting

the Appellant to put forward his case, objection and contentions to

substantiate their case. However, there was no response. The contents of the

objections filed by the Appellant has not denied the due debt amount.

Therefore, the statement that the acknowledgement has not been given is

untenable in the eyes of the law. The averment made by the Appellant

regarding the same is unacceptable.

32. Respondent No. 2- RP has verified the documents pertaining to the

NESL report wherein the default has been recorded in respect of the Corporate

Debtor, co-borrower(s) and other co-guarantors. It is pertinent to mention

that the law in case of personal guarantor is clear that there is no pre-

requisite of filing of record of default in respect of the personal guarantor with

the information utility. The said requisite is only present in case of the

Corporate Insolvency Resolution Process i.e., at the time of filing of the

petitions under Section 7, Section 9 and Section 10 of the Code, as per the

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 19 of 46 circular bearing no. "No. "IBBI/IU/59/2023" dated June 16, 2024, by the

IBBI. Therefore, the contentions raised by Appellant pertaining to the record

of default is not acceptable and is frivolous in nature.

33. Further Respondent No. 2- RP has filed I.A No. 283 of 2025 under

Section 114(1), read with Sections 115(2) and 106 of the Code, before the

Adjudicating Authority, seeking termination of the Appellant's Insolvency

Resolution Process, liberty for creditors to file a bankruptcy application under

Chapter IV of the Code, and discharge from duties due to following reasons:

i) Absence of a viable repayment plan under Section 105 of the Code, which constitutes rejection under Section 114(1). The NCLAT in Sudip Dutta v. Prashant Jain (Company Appeal (AT) (Ins) No. 1494 of 2024) held: "No Repayment Plan having been submitted, the Adjudicating Authority rightly granted creditors liberty to file a Bankruptcy Application under Section 115(2)."

ii) The Appellant's failure to present a repayment plan or relevant details prevented Respondent No. 2 from submitting a report under Section 106 of the Code.

34. The Termination Application was listed before the Adjudicating

Authority on January 17, 2025, which issued the following directions:

"Issue notice to the Respondents. Learned Counsel appearing for the Respondent No. 2 accepts notice and seeks time to file objections. One week time granted. The Applicant is directed to serve notice along with a copy of this application to the Respondent No. 1 by all modes and file proof and affidavit of service, within one week. The Respondent No. 1 is directed to file reply affidavit, within one week after receipt of the notice. List the matter on 19.02.2025."

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 20 of 46 Appraisal

35. Heard all sides and perused the materials on record.

36. A Loan Agreement dated September 29, 2014, was entered into between

M/s. Andes Town Planners Pvt. Ltd. ("Borrower/Corporate Debtor"), M/s.

Rohtas Projects Ltd. ("Co-Borrower") and M/s. Dewan Housing Finance

Corporation Limited. ["Financial Creditor" or "Respondent No.1" being

Omkara Assets Reconstruction Private Limited which was earlier Dewan

Housing Finance Corporation Ltd. and subsequently Piramal Capital &

Housing Finance Limited]. Further to the sanction letter dated September

10, 2014 a loan of Rs. 90 crores which was approved and sanctioned to the

Corporate Debtor. The Loan was secured by way of irrevocable personal

guarantees. A deed of guarantee dated 29/09/2014 ("Deed of Guarantee")

was issued by Mr. Paresh Rastogi, Mr. Piyush Rastogi, Mr. Pankaj Rastogi,

Mr. Deepak Rastogi in favour of DHFL, giving an unconditional and

irrevocable guarantee to jointly and severally repay on demand, all amounts

that are due and payable under the facility, including interest, default/penal

interest and all other charges, expenses and monies payable under the Loan

Agreement.

37. Prayers sought in CA (AT) (Insol) 2053/2024 are:

"a) Allow the present appeal;

b) Set aside the Impugned Order dated 19.09.2024 passed by the Ld. Adjudicating Authority initiating Personal Insolvency Process against the Appellant.

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 21 of 46

c) Pass such other or further order(s)/ direction (s) as the Hon'ble Appellate Authority deems fit in the facts and circumstances of the case."

Since the facts and issues are similar in CA (AT) (Ins.) 2053/2024, CA (AT)

(Ins.) 2054/2024 and CA (AT) (Ins.) 2117/2024, they are being taken up

together with facts of the CA (AT) (Ins.) No. 2053/2024 being the lead matter.

Same prayers are made in the other two appeals and the Appellants in three

appeals are severally and jointly personal guarantors for the loan to the CD,

therefore, this analysis will apply to three appeals; so we are dealing them

together.

38. In short, it is claimed by the Appellant that the report filed by the

Resolution Professional under Section 99 of the Insolvency and Bankruptcy

Code, 2016 (IBC) has not considered the following:

"(a) That the Recall Notice, Invocation Notice and Demand Notice, was not delivered upon the Appellant;

(b) There were various discrepancies in the report filed by the RP u/s 99 of the Code.

(c) The Appellant had not acknowledged the liability to pay the debt;

(d) Corporate Debtor is already undergoing CIRP, wherein resolution plan is being considered by the members of the committee of creditors."

39. Appellant-PG contends that the rationale behind Section 95(4)(a) of the

IBC mandates the submission of documents establishing: (a) the debts owed

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 22 of 46 by the debtor to the applying creditor(s) as of the application date; (b) the

debtor's failure to repay the debt within fourteen days of being served with

the demand notice; and (c) relevant evidence substantiating such default or

non-repayment. It is claimed that the essential documents--including the

alleged Loan Recall Notice, Invocation of Guarantee Notice, Demand Notice

under Section 95(4)(b) of the IBC, 2016, and the petition itself--were either

not served on the Appellant or their service has not been adequately proven.

The lack of clear evidence of service for these crucial documents deprived the

Appellant of a fair and reasonable opportunity to respond. This procedural

lapse raises serious concerns regarding compliance with the mandatory

requirements of the IBC, 2016, and undermines the Appellant's right to

participate in the proceedings.

40. From the materials on record the issues which emerge in the case are:

a. whether there was valid service of Loan Recall Notice,

Invocation Notice, and Demand Notice

b. whether statutory requirements under various sections of the

Code particularly Sections 95 and 99 have been complied or

not

c. whether invocation of the Guarantee has happened or not in

the instant case which would have made the proceedings

against the Appellants non-maintainable.

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 23 of 46

41. We first delve into the issue of Validity of Service of Notices. From the

materials on record we find that the Respondents had sent the Loan Recall

Notice, Invocation Notice, and Demand Notice to the Given Address recorded

in the Guarantee Deed. Appellant contends that the notices were either not

served or not adequately proven to be served. Clause 22 of the Guarantee

Deed explicitly states that all communications, including a Notice of Demand,

sent to the address provided in the Guarantee Deed or the last known address

shall be considered sufficient service. The relevant clause is reiterated below:

"22. The Guarantors agree that all the communications including a Notice of Demand posted under the Certificate of Posting at the above stated or last known address of the Guarantors shall be sufficient service of such communication on or Notice of Demand on him and DHFL shall be entitled to proceed on the basis that the said communication or Notice of Demand Posted under the Certificate of Posting has been duly received by the Guarantor at the end of the normal period after which such communication or Notice of Demand be ordinarily delivered by Postal Authorities."

42. Now we note the addresses as contained in the Guarantee deed as APB

page 233 which is extracted as below:

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 24 of 46

43. Therefore, by signing the guarantee deed, the Appellants-PG had agreed

to Clause 22, and they had acknowledged that service of any communication

or Notice of Demand at the Given Address or last known address would be

deemed valid.

44. Further, it is to be noted that the Appellant/Personal Guarantor has

been using 3 different addresses, which are as follows:

Before Hon'ble NCLT Before Hon'ble NCLAT

Reply Appeal Rejoinder

27/18, Raja Ram 14/1, Jopling Road, 803, Rohtas Court, Mohan Roy Marg, Lucknow - 226001 Lucknow - 2226001 Lucknow - 2226001 (Pg. 34 of Appeal) (Pg. 1 of Rejoinder) (Pg. 858 of Appeal)

And the Respondents had served on the last known addresses. Under these

circumstances, these appeals don't commend us on the count of validity of

service.

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 25 of 46

45. The Hon'ble Supreme Court of India- CC Alavi Haji v. Palapetty

Muhammed (supra) has held that-

"14. This Court has already held that when a notice is sent by registered post and is returned with a postal endorsement "refused"

or "not available in the house" or "house locked" or "shop closed" or "addressee not in station", due service has to be presumed. ..."

[emphasis supplied]

46. In another judgment of Hon'ble Apex Court in Greater

Mohali Area Development Authority and Ors. Vs. Manju Jain

and Ors. (2010) 9 SCC 157 the Hon'ble Apex Court held as under:

"...

a. In C.C. Alavi Haji v. Palapetty Muhammed [(2007) 6 SCC 555: (2007) 3 SCC (Cri) 236] this Court reiterated a similar view that Section 27 of the General Clauses Act, 1897 and Section 114 Illustration (f) of the Evidence Act, give rise to a presumption that the service of a notice has been effected when it is sent to the correct address by registered post. This Court held as under: (SCC p. 564, para 14) "14. Section 27 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. ... Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business."

b. This Court has reiterated a similar view in Gujarat Electricity Board v. Atmaram Sungomal Poshani [(1989) 2 SCC 602 : 1989 SCC (L&S) 393 : (1989) 10 ATC 396 : AIR 1989 SC 1433] , CIT v. V.K.

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 26 of 46 Gururaj [(1996) 7 SCC 275: 1996 SCC (L&S) 579: (1996) 33 ATC 269] , Poonam Verma v. DDA [(2007) 13 SCC 154], Sarav Investment & Financial Consultancy (P) Ltd. v. Llyods Register of Shipping Indian Office Staff Provident Fund [(2007) 14 SCC 753: (2009) 1 SCC (Cri) 935], Union of India v. S.P. Singh [(2008) 5 SCC 438 :

(2008) 2 SCC (L&S) 1] , Municipal Corpn., Ludhiana v. Inderjit Singh [(2008) 13 SCC 506] and V.N. Bharat v. DDA [(2008) 17 SCC 321: AIR 2009 SC 1233] ...."

[Emphasis Supplied]

47. Such like situations have been noted in the legal precedents--including

St. Alfred Education Trust v. Kone Elevator India Pvt. Ltd. (supra) and

Alavi Haji v. Palapetty Muhammed (supra) -- which have been relied upon

by the Respondents. The Hon'ble High Court of Madras herein St. Alfred

Education Trust (supra) held:

"21. In the light of the communications exchanged between the parties, the aforesaid conclusion reached by the learned Judge, in our view, is perfectly correct. In the suit, the respondent/plaintiff has taken all efforts to serve summons on the appellant/defendant. It is settled law that if the notice is sent to the correct and last known address of the defendant, the same has to be deemed to be served, whether it is actually served or not. In the present case, summons have been served to the correct and last known address of the appellant. It is not the case of the appellant that summons have been sent to a wrong address. Further, the appellant has not informed about their change of business place. In such circumstances, it can be inferred that summons have been duly served on the appellant, but they failed to contest the suit. Therefore, the application filed by the appellant in the year 2019 to set aside the ex parte decree dated 24.04.2009,

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 27 of 46 after a decade, was rightly dismissed by the learned Judge, by the order impugned herein, which need not be interfered with, at the hands of this court."

[Emphasis Supplied]

48. In another case the Hon'ble High Court of Delhi in Ajay Ahuja v.

Subhiksha Trading Services Ltd., [reported at 2011 (121) DRJ 137]

provides us guidance. Even though this was a case of Transfer of Property

Act, 1882 - being similar to Rule 3(g) of the PG Application Rules. Herein,

while examining Section 106(4) of the Transfer of Property Act, 1882, viz. the

requirement of affixing the notice in case the same was not served, held that

by sending the notice on the correct address, which was returned back with

remarks "shifted", and "left without instructions" the requirement of Section

106 of the Transfer of Property Act, 1882 was met. The relevant paragraphs

are:

"14. The next question which comes up for consideration in this case is as to whether the notice, whereby the tenancy of the defendant was sought to be terminated by the plaintiffs, can be said to have been duly issued to/served on them. Admittedly, the notice was not actually received by the defendant-company either at its corporate of L; at the suit premises. The notice sent by courier was received back with the remarks "shifted", whereas the notice sent by registered post at the suit premises was received back with the remarks "on repeated visits premises found locked". As noted earlier, the notice sent at the registered office of defendant-company was also sent with the remarks 'left without instructions".

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 28 of 46

15. The contention of the learned counsel for the plaintiff is that the plaintiffs did whatever they could possibly have done to serve the notice upon the defendants and if the defendants chose to lock the suit premises and either shift its registered office or altogether stop its functioning and close down its operations and its registered office, without any intimation to the plaintiffs, that would amount to deliberate avoidance to receive the notice and consequently constitute a valid service.

19. In the case before this Court also, it was for the defendant- company, if it decided to lock the suit premises which it had been taken on rent from the plaintiffs, to make necessary arrangements for service of the letters, etc that could be sent to it, either by instructing the postal authorities to re-direct those letters to another address or to make some other arrangement for receipt of letters, etc. on its behalf. Same would be the position with respect to the registered office of the defendant- company, if it had decided to change its registered office or to altogether close down its operations as well as its registered office, without shifting the same to another place, (though as long as a company exists, it must have a registered office), it ought to have either provided an alternative address to the postal authorities for re-directing its. letter to that address or should have made some alternative arrangement for receipt of letters, etc. sent to its registered office. Another option available to the defendant-company was to give public notice communicating its new address to the public at large and/or to all those with whom it had transacted any business, including its debtors and creditors as well as the landlords of the premises which it had taken on rent. If the defendant-company decided not to adopt any of these courses available to it, the plaintiffs cannot be blamed for non-receipt of the notice by the defendant- company. The plaintiffs did the best they could have done by

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 29 of 46 sending notice by registered post not only at the suit premises, but also at the registered office of the defendant-company and in these circumstances, the statutory presumption under Section 27 of General Clauses Act with respect to service of notice sent by registered post cannot be denied to the plaintiffs.

20. I, therefore, have no hesitation in holding that by sending the notice dated 11th November, 2009 which was returned back with the remarks "shifted" "on repeated visits premises found locked" and "left without instructions" the plaintiffs have duly complied with the requirement of Section 106 of Transfer of Property Act."

[emphasis supplied]

49. Pertinently, the term 'post', as entailed in Section 27 of the General

Clauses Act, has been enlarged to include `speed post' and 'courier' as well.

The said position of law has been enunciated by the Hon'ble High Court of

Jharkhand in Milan Poddar v. CIT, reported at (2013) 357 ITR 619. The

relevant paragraphs are as follows:

"19. In SIL Import, USA v. Exim Aides Silk Exporters (1999) 97 Comp Cas 575 (SC); AIR 1999 SC 1609, it was contended in the context of section 138 of the Negotiable Instruments Act that notice by fax was not valid. Rejecting the aforesaid contention, the hon'ble Supreme Court has held as under:

'Francis Bennion in Statutory Interpretation has stressed the need to interpret a statute by giving "allowances for any relevant changes that occurred, since the Act's passing, in law, social conditions, technology, the meaning of words, and other matters".

For the need to update legislations, the courts have the duty to use interpretative process to the fullest extent permissible

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 30 of 46 by the enactment. The following passage at page 167 of the above book has been quoted with approval by a three-judge Bench of this court in State v. S. J. Choudhary (1996) 2 SCC 428:

It is presumed that Parliament intends the court to apply to on ongoing Act a construction that continuously updates its wording to allow for changes since the Act was initially framed (an updating construction). While it remains law, it is to be treated as always speaking. This means that in its application on any date, the language of the Act, though necessarily embedded in its own time, is nevertheless to be construed in accordance with the need to treat it as current law."

So, if the notice envisaged in clause (b) of the proviso to section 138 was transmitted by fax it would be compliance with the legal requirement'.

.......

a.In view of the aforesaid principles, the phrase 'registered post' appearing in section 27 of the General Clauses Act needs to be construed on a construction that continuously updates its sweep to allow for changes after the said Act: was passed. It has been observed at page 99 of Maxwell on The Interpretation of Statues (supra) that 'Provisions regarding the giving of notice often receive a liberal interpretation'. The aforesaid observations have been cited, with approval, by the hon'ble Supreme Court in V. Raja Kumari v. Subbarama Naidu [2005] AIR 2005 SC 109. We, therefore, hold that the phrase 'registered post' " in the said section 27 would take within its sweep not only 'speed post' but also all other mails forming part of established system of mails in which their receipt and movement are recorded to assure their safe delivery. So, if a notice envisaged in section 143(2) of the Income-tax Act or for

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 31 of 46 that matter in any other section is posted well in time by 'speed post', it would be sufficient compliance with the legal requirement of sending it by 'registered post' and its service would be deemed to be effected at the time at which the letter would be delivered in the ordinary course of post."

[Emphasis Supplied]

50. Basis Section 27 of General Clauses Act, 1897, the service of the notice

gets affected when it is sent to the correct address by registered post. Unless

and until the contrary is proved by the addressee, service of notice is deemed

to have been effected at the time at which the letter would have been delivered

in the ordinary course of business. Under these conditions the arguments of

the Appellant-PG cannot be accepted that service of demand notice was not

affected.

51. All above judgments support the case of the Respondents that support

the proposition that notice served to the last known or registered address is

deemed effective even if the recipient does not physically receive it. The

Appellant's failure to update his address cannot now be used to invalidate

such service.

52. We may also note the meaning of service in Insolvency and Bankruptcy

(Application to Adjudicating Authority for Insolvency Resolution Process for

Personal Guarantors to Corporate Debtors) Rules, 2019, which is provided at

Rule 3(g):

"...

3(g). "serve" means sending any communication by any means, including registered post, speed post, courier or

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 32 of 46 electronic form, which is capable of producing or generating an acknowledgement of receipt of such communication:

Provided that where a document cannot be served in any of the modes, it shall be affixed at the outer door or some other conspicuous part of the house or building in which the addressee ordinarily resides or carries on business or personally works for gain;"

53. Further the Respondent No.1- Omkara had sent the Recall Notice,

Invocation Notice and Demand Notice to the Appellant on the address provided

in the Guarantee Deed, being the last known address provided by the Appellant

in terms of Clause 22 of the Guarantee Deed. The Appellant has not claimed

that the address on which the Recall Notice, the Invocation Notice and the

Demand Notice were sent was incorrect or does not belong to the Appellant.

Also, the Appellant has not claimed that any fresh address was provided to the

Respondent No.1 (or Piramal or DHFL), hence the address mentioned in the

Guarantee Deed remained the last known address of the Appellant as provided

to the Respondent No.1. It is also noted that address on the memo of parties is

the same which was in the invocation notice and also the demand notice. This

was the last known address as provided in the Guarantee Deed and shall be

deemed to have been served as per Section 27 of the General Clauses Act,

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 33 of 46 18979. It is claimed by the Appellant-PG that Section 27 of the General Clauses

Act, 1897, creates a presumption that a notice properly addressed, prepaid,

and sent via registered post is deemed to be served at the time it would

ordinarily be delivered. It contends that the presumption under Section 27 is

rebuttable and not conclusive. If the addressee provides credible evidence of

non-receipt or non-delivery, the presumption can be displaced. The absence of

a postal acknowledgment receipt or tracking information indicating non-

delivery. But in the facts and circumstances of the case this rebuttal is not

credible and is without merit and cannot be accepted.

54. The claim of the Appellant that the Since the invocation notice and the

demand notice were issued in accordance with the provisions of the Guarantee

Deed and which constitutes a separate contract between the parties; therefore,

the claim of the Appellant-PG is not maintainable.

55. Therefore, the grounds raised by the Appellant- PG on validity of service

are without merits and are not acceptable and doesn't provide any support to

the Appeal. Accordingly, the arguments of the Appellant that service of various

notices have not been done cannot be accepted.

9 27. Meaning of service by post.--Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression "serve" or either of the expressions "give" or "send" or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 34 of 46

56. Now we delve into the issue of Compliance with Statutory Requirements

as contained in the code along with Rules. It is to be noted that Respondent

No. 2 - Resolution Professional, filed a report under Section 99 of the Code

recommending acceptance of the petition and this report was prepared in

compliance with Section 99. From the material on record we find that the

Company Petition was examined in accordance with the law under Sections 95

and 99(6)(a) of the Code. The RP has listed the compliance of various provisions

which are once again reproduced for clarity as follows:

Provisions Compliances

Section 95(4)(a) of the Respondent No. 2 duly verified the Code: Details and following documents:

documents relating to the 1. Demand Notice - dated May 10, 2022, debts owed by the debtor to issued by Respondent No.1 the creditor or creditors 2. Loan Agreement- dated September submitting the application 29, 2014.

3. Deed of Guarantee- signed by the Appellant.

Section 95(4)(b) of the Respondent No.1 served the Demand Code: Details and Notice in Form B, upon the Appellant in documents relating to the terms of Rule 3(g) proviso of the Personal failure by the debtor to pay Insolvency Rules which was duly the debt within a period of received by the Appellant. Neither any fourteen days of the service reply was received by Respondent No.1 of the notice of demand to the said Demand Notice within 14 days as per the Regulations mentioned in the Code nor any repayment was made by the Appellant.

Section 95(4)(c) of the 1. Demand Notice - dated May 10, 2022, Code: Details and issued by Respondent No.1.

documents relating to 2. Loan recall notice- dated January 02, relevant evidence of such 2020, issued by the Respondent No. 1 default or non-repayment of to the Corporate Debtor and debt Appellant.

3. Loan Agreement- dated September 29, 2014

4. Loan Agreement- dated September 29, 2014.

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 35 of 46

5. Deed of Guarantee- signed by the Appellant.

Section 95(5) of the Code: Basis a perusal of the Company Petition, The creditor shall also it was understood that a copy of the provide a copy of the Company Petition was sent to Appellant application made under vide an e-mail. Further it is submitted sub-section (1) to the debtor that from the perusal of the order dated September 7, 2022, passed by this Adjudicating Authority, it appears that a limited notice was issued to the Appeal.

Section 99 (2) of the Code: Respondent No. 2 informed the Appellant the debtor to prove via: repayment of the debt a) Letter dated December 23, 2023 and claimed as unpaid by the the tracking report of the said letter. creditor. b) E-mails dated December 28, 2023, and January 04, 2024, apprising Appellant about the initiation of IR Process against him and further called upon to prove the repayment of debt claimed as unpaid by the Respondent No.1.

Section 99 (3) of the Code: From the perusal of the Petition, it was Where the debt is registered observed that debt due i.e., recoverable with the IU, the debtor shall from the Appellant is registered with the not be entitled to dispute NeSL. the validity of such debt.

Section 99 (4) of the Code The information provided by Respondent read with Section 99(6)(b). No. 1 along with the Petition was exhaustive. Moreover, Respondent No. 1 provided the information and / or given the explanation sought by the Respondent No. 2.

Circular bearing no. "No. The Respondent No. 2 has duly complied "IBBI/II/66/2024" dated with the circular and served the copy of February 12, 2024 the Report on the debtor as well as the creditors.

57. From the materials on record, we find that the despite multiple

attempts to engage with the Appellant, they remained unresponsive and only

raised objections later which appear more to cause delays rather participating

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 36 of 46 in resolution process. Respondent No. 2- RP ensured the Appellant- PG was

given an opportunity to present their case, but no response was received. The

Appellant has not disputed the debt, the guarantee, or the last known address

but only alleged non-delivery of the demand notice, which is unfounded. Only

claim of lack of acknowledgment of notices etc is legally untenable and

unacceptable. As noted earlier it was the duty of the Appellant to notify any

change in their address, if any. Regarding the Appellant's claim that Section

95 requirements were not met, Respondent No. 2 reviewed all documents,

including those submitted via email on January 3, 2024.

58. We also note that the Respondent No.1 - Omkara had sent the Recall

Notice, Invocation Notice, and Demand Notice to the Given Address, which

remained the last known address of the Appellant-PG as per the Guarantee

Deed. It is to be noted that the same address was used by the Appellant-PG

for transactions with other banking and financial institutions as well. Even

in the Objections, the Appellant-PG had not claimed that the same address

does not belong to them or that any updated address was provided to the

Respondent No.1-FC (or Piramal or DHFL). Furthermore, the address

mentioned in the affidavit supporting the Objections is not that of the

Appellant-PG but rather of the Borrower, who is undergoing CIRP under the

IBC. Furthermore, a first information report (FIR No. RC0062022A0014)

dated 11.04.2022 was registered by police station ACB, Lucknow, based on a

complaint filed by Canara Bank, Lucknow, wherein the Appellant-PG's

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 37 of 46 address was recorded as 803, Rohtas Road, Lucknow--the Given Address.

Thus, the issuance of the Recall Notice, Invocation Notice, and Demand Notice

to the Given Address constitutes valid service in accordance with the

Guarantee Deed. Consequently, the Respondent's objections regarding non-

service of the notices are found to be contradict the terms of the Guarantee

Deed, and cannot be accepted.

59. Furthermore, it is to be noted that pursuant to the directions of the

Adjudicating Authority a copy of the Petition was also sent to the Appellant

via email on 26.09.2022 and by speed post to the Given Address. The speed

post was undelivered with the remark "addressee left without instructions,"

but the Petition was successfully served via email. Despite receiving the

Petition, the Respondent has not made any payment towards the outstanding

dues.

60. It is also noted that all notices issued by the Respondent No.2 - RP have

been sent by speed post and undelivered with the remark "addressee left

without instructions". The Appellant has not claimed that this address does

not belong to them or they have changed the address but the only ground

which has been taken is that the loan recall notice, invocation of guarantee

notice, demand notice and petition itself were either not served on the

appellant or their service has not been satisfactorily proven. It also claims

that there is absence of clear evidence of service of these essential documents.

So, the Appellant did not a fair and reasonable opportunity to respond these

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 38 of 46 notices. In the facts and circumstances of the case, we find that Appellant

has not disputed the address and not claimed that he has updated his

address. Furthermore, as per Clause 22 of the Guarantee Deed, it was

sufficient service at the last known address. It is to be noted that same

address was being used for various other communications like FIR filed by

Canara Bank against the Appellant and even in the affidavit filed in this

appeal at page 10 of APB the address is noted to be the same as on which all

the correspondence has been happening. This address of 803, Rohtas Court,

Lucknow - 226001 has also been noted in various places in the APB [ e.g.

page 269 in CA (AT) (Ins.) No. 2053/2024].

61. From the materials on record, we find that the Resolution Professional's

report, prepared under Section 99 of the IBC, substantiates that the

procedural requirements under Section 95--specifically the issuance and

service of the Demand Notice in the prescribed manner--have been met. The

evidence of service, including speed post receipts and email transmissions,

supports the contention that the statutory process was duly followed. The

Appellant's argument that the non-receipt of the notices undermines the

proceedings is not borne out by the documentary record.

62. In the above background, the contentions of the Appellant-PG for non-

compliance of statutory requirements are devoid of merits and are rejected.

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 39 of 46

63. Now we delve into the issue of Invocation of the Guarantee and Liability

of the Appellant. It is claimed by the Appellant that the guarantee was not

properly invoked. The Guarantee Deed provides that liability arises upon the

occurrence of default by the borrower, and the subsequent actions taken by

the financial institution were in line with the contractual obligations. It is

claimed that the guarantee becomes a debt once the said guarantee is

invoked, wherein after the guarantor becomes liable. The Appellant has

placed reliance upon Edelweiss Asset Reconstruction Company v Orissa

Manganese and Minerals Limited and others (supra) wherein it has been

held that:

"A contract of guarantee matures in to a binding obligation only upon its invocation. Contract of Guarantee is an autonomous contract and the admission of the principal debtor to CIRP does not mean that the debt stands proved as against the Guarantor in a Section 7 proceeding against the Corporate Guarantor automatically. The guarantee has to be invoked and the debt and default proved separately in the proceeding against the Guarantor."

(Emphasis is supplied) The Appellant does not get any support from Edelweiss Asset Reconstruction

Co. v. Orissa Manganese and Minerals Ltd. (supra), as the existence of a

Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor

does not preclude the initiation or continuation of proceedings against the

Personal Guarantor. This principle has been upheld in decisions such as

Lalit Kumar Jain v. Union of India (supra) by the Hon'ble Apex Court,

wherein it was held that even if the resolution plan is approved, the same

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 40 of 46 does not discharge the personal guarantor. The relevant portion of the

judgement is reiterated hereunder:

"125. In view of the above discussion, it is held that approval of a resolution plan does not ipso facto discharge a personal guarantor (of a corporate debtor) of her or his liabilities under the contract of guarantee. As held by this Court, the release or discharge of a principal borrower from the debt owed by it to its creditor, by an involuntary process i.e. by operation of law, or due to liquidation or insolvency proceeding, does not absolve the surety/guarantor of his or her liability, which arises out of an independent contract."

(Emphasis is supplied)

64. Further, this Tribunal in the matter of Mohan Kumar Garg vs.

Omkara Assets Reconstruction Pvt. Ltd. & Anr (supra), had held that the

simultaneous proceedings in respect of the guarantor as well as the borrower

can be proceeded with. The relevant portion of the judgment is reiterated

hereunder:

"8. Insofar as submission of the Appellant that simultaneous proceeding cannot be initiated against the Principal Borrower and the Corporate Guarantee, the Adjudicating Authority has adequately answered the said issue and referred to relevant judgments. Learned counsel for the Respondent has relied on subsequent judgment of this Tribunal in "Edelweiss Asset Reconstruction Co. Ltd. vs. Gwalior Bypass Projects Ltd., Company Appeal (AT) (Ins.) No. 1186 of 2019", "State Bank of India vs. Mr. Animesh Mukhopadhyay, Company Appeal (AT) (Ins.) No. 186 of 2021" and "Kanwar Raj Bhagat vs. Gujarat Hydrocarbons and Power SEZ Ltd. & Anr., Company Appeal (AT) (Ins.) No. 1096 of 2020" taking the view that simultaneous proceedings against the Principal Borrower and the Corporate Guarantor can be Initiated.

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 41 of 46

9. We are of the view that law is well settled that proceeding under Section 7 can be initiated against both the Principal Borrower and Corporate Guarantor and there is no inhibition in proceeding against the Corporate Guarantor although proceeding against Principal Borrower under Section 7 was admitted. We are of the view that no error has been committed by the Adjudicating Authority in admitting Section 7 application against the Corporate Guarantor. There is no merit in the Appeal. Appeal is dismissed."

(emphasis supplied)

65. Therefore, it is a settled position of law that simultaneous proceedings

can be initiated against the borrower as well as the guarantor. As the

Respondent No1- Omkara has not received the outstanding amount, either in

part or in full, hence, the contention of that since borrower is already

undergoing CIRP, wherein resolution plan is being considered by the

members of the COC, the Petition ought not be proceeded with, is bereft of

any justification and needs to be rejected.

66. Basis the material on record the AA has come to the conclusion that

the Objections raised by the Personal Guarantor are not tenable and AA was

satisfied with the grounds/reasons given by the Resolution Professional the

initiation of the Personal Insolvency Resolution Process against the Personal

Guarantor. The relevant portion of the order is being reproduced as follows:

"17. The Ld. Counsel for the Personal Guarantor submitted that service of demand notice is mandatory and is a pre-requisite for filing application under Section 95(1) of the IBC, 2016 and in the present case, the Applicant/Financial Creditor claimed to serve the demand notice to the Respondent in Form B however, no notice has been served to the Respondent/Personal Guarantor and therefore the present Application is liable to be dismissed.

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 42 of 46

18. The Ld. Counsel for the Resolution Professional submitted that the Applicant/Financial Creditor served the demand notice at the documents available with the Applicant/Financial Creditor and therefore it cannot be said that the demand notice was not served at all. However, neither any reply was received by the Financial Creditor to the said notice within 14 days as per the Regulations mentioned in the Code nor any repayment was made by the Personal Guarantor. Hence, the Financial Creditor was constrained to file the present application against the Personal Guarantor.

19. On 07.09.2022, this Adjudicating Authority was pleased to issue limited notice in the present application filed against the Personal Guarantor, in view of the judgment of Hon'ble NCLAT dated 12.08.2021 in the matter of Mr. Ravi Ajit Kulkarni Vs. State Bank of India (Company Appeal (AT) (Insolvency) No. 316 of 2021. The Applicant/Financial Creditor duly complied the order dated 07.09.2022 and filed the proof and Affidavit of service dated 03.10.2022

20.Further, the Resolution Professional took step to inform the Personal Guarantor to furnish necessary information/ documents with regard to repayment of debt. Thereafter, the Resolution Professional obtained the latest information of the Personal Guarantor through the applicant/Financial Creditor. The Resolution Professional sent a letter dated 23.12.2023 to Personal Guarantor on 26.12.2023. However, the letter sent on 26.12.2023 has been returned with the remarks 'Addressee left without instructions'.

21. Be that as it may the Personal Guarantor has not denied that pursuant to the Sanction of the credit facilities by the Applicant/Financial Creditor in favour of the Corporate Debtor, the Personal Guarantor executed the various documents which were duly accepted by the Corporate Debtor and the Personal Guarantor.

22. We have also noticed that the Personal Guarantor has not raised any objection with regard to non-compliance of Principles of Natural Justice by the Resolution Professional while submitting the report in terms of Section 99 of the Code, 2016.

23. We are therefore of the considered view that the non-service of demand notice as alleged by the Personal Guarantor will not absolve

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 43 of 46 the Personal Guarantor from discharging its liability under the Deed of Guarantee.

24. We are therefore not inclined to accept the submissions made by Ld. Counsel appearing for the Personal Guarantor that non- service of demand notice would result in the dismissal of the application filed under Section 95 of the Code, 2016.

25. We find that the Notices were issued to the Personal Guarantor as well as the Financial Creditor and the report was served by the Resolution Professional. On a perusal of the report, we find that the Resolution Professional has given reasonable opportunity following the principle of Natural Justice and has taken into consideration the various documents and has come to a conclusion that the Personal Insolvency Resolution Process be initiated against the Personal Guarantor...."

[Emphasis Supplied]

67. The Appellant questions the finding of the Adjudicating Authority in the

Impugned Order that the non-service of demand notice as alleged by the

Personal Guarantor will not absolve the Personal Guarantor from discharging

its liability under the Deed of Guarantee. In the facts and circumstances of

the case, we find that both Respondents have taken all steps to ensure that

sufficient opportunity is provided to them. The Appellant-PG has not

acknowledged liability for the debt and asserts that they are not obligated to

pay. Facts and materials on record reveal that, the Appellant-PG has not

denied executing the Guarantee Deed, which binds him with joint and severe

responsibility of repayment, in case of non-payment by the Borrower and Co-

Borrower. Clause 1 of the Guarantee Deed clearly states that in the event of

default by the Borrower or Co-Borrower, the Appellant-PG shall be liable to

pay the defaulted amount. Therefore, the Appellant's claim of non-liability is

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 44 of 46 without merit and is dismissed. Further Appellant-PG has also been

participating in the proceedings for resolution under the Code. It had

sufficient opportunity to submit the repayment plan, but it did not file any

Repayment plan. Respondent No.2-RP was, therefore, constrained to file I.A

No. 283 of 2025 under Section 114(1) ("Termination Application") read with

Sections 115(2) and 106 of the Code, before the Adjudicating Authority,

seeking the closure of the Insolvency Resolution Process of the Appellant,

liberty for creditors to file a bankruptcy application under Chapter IV of the

Code, and discharge from duties as there was absence of a viable repayment

plan under Section 105 of the Code from the Appellant tantamount to

rejection of repayment plan under Section 114(1) of the Code. In view of the

non-presentation of the Repayment Plan or any relevant details by the

Appellant, the Respondent No.2 was constrained from submitting its report

under Section 106 of the Code. Termination Application is pending before the

Adjudicating Authority.

Conclusion

68. In view of the above, it we conclude that:

o The notices in question were sent to the last known address as

stipulated in the Guarantee Deed, and such service is deemed valid

under established legal principles.

o The Resolution Professional has satisfactorily demonstrated

compliance with the requirements of Sections 95 and 99 of the IBC.

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 45 of 46 o The Appellant's contentions regarding non-service and the alleged

deficiencies in the report are without merit, as the burden of

updating one's address lies with the Appellant.

o The simultaneous CIRP against the Corporate Debtor does not

interfere with the obligations of the Personal Guarantor under the

Guarantee Deed.

Orders

69. For the reasons stated above, we don't find any infirmity in the orders

of the Adjudicating Authority and the Appeals CA (AT) (Ins.) No. 2053/2024,

CA (AT) (Ins.) No. 2054/2024 and CA (AT) (Ins.) No. 2117/2024 are dismissed.

The impugned Order dated 19th September 2024 is hereby upheld, and the

Insolvency Resolution Process against the Appellant shall proceed

accordingly. No orders as to costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical) New Delhi.

March 18, 2025.

Pawan

Company Appeal (AT) (Insolvency) Nos. 2053, 2054 and 2117 of 2024 46 of 46