Whether an application under Section 95 of IBC, 2016 can be rejected upon the failure of the creditor in establishing due service of demand notice on the guarantor? – Union Bank of India Vs. Mr. N Sharat – NCLT Hyderabad Bench
December 13, 2024
Hon’ble NCLT Hyderabad Bench held that: (i) The sine qua non, for initiation of insolvency resolution under section 95 IB Code 2016 is the ‘due invocation’ of the personal guarantee executed by the Guarantor. (ii) When non-compliance of section 95(4) of IBC is ex facie, apparent and unequivocal, the Resolution Professional had ventured to observe that demand notice has been served on the personal guarantor and recommend the ‘admission’ of the present application, which in our considered opinion is a sheer mechanical act, without any application of mind.