The date of default by the Guarantor shall arise only when demand is issued by the Bank to the Corporate Guarantor – J.C. Flowers Asset Reconstruction Pvt. Vs. Deserve Exim Pvt. Ltd. – NCLAT New Delhi
In this case, the issue before the NCLAT is whether the default on the part of the Corporate Debtor i.e. Corporate Guarantor can be on any date prior to when the guarantee was invoked is the question to be considered.
NCLAT referred judgment in Pooja Ramesh Singh vs. State Bank of India (2023) ibclaw.in 280 NCLAT and held that:
(i) The Guarantee Deed contemplates demand by the bank, hence, unless demand is made by the bank to the Corporate Debtor, no default can be said to have been committed by the Corporate Guarantor.
(ii) The date of default by the Guarantor shall arise only when demand is issued by the Bank to the Corporate Guarantor. The fact that the Corporate Guarantor has given indemnity to the Bank also shall operate only after default is committed by the Guarantor. Indemnity can be enforced against the Corporate Guarantor but it cannot itself change the date of default on part of the Guarantor.
