State Bank Of India vs Shri Bernard John

that the Petition was barred by limitation, since NPA classification occurred on 28.05.2016, and no balance confirmation had been signed by the Respondent beyond 31.03.2012, nor was the guarantee revived thereafter;

that the documents in support of the Petition and the RP's Report were not duly certified and verified in terms of Rules 23 and 26 of Part III of the National Company Law Tribunal Rules, 2016 read with Rule 10(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016;

that the affidavit in support of the RP's Report was not duly stamped under the Indian Stamp Act, 1899, as applicable in Madhya Pradesh;

that Mr. Mahesh Kumar Verma, Assistant General Manager of the Applicant Bank, was not competent to sign and verify the Petition, since the Letter of Authority in his favour was signed by the Deputy General Manager, allegedly not empowered under Regulation 76 and 77 of the SBI General Regulations, 1955;

that the statement of accounts filed with the Petition was not a “certified copy” in terms of Section 2(8) read with Section 2A of the Bankers' Books Evidence Act, 1891; and

on merits, that the guarantee and security documents were inadequately stamped and unregistered and hence inadmissible/unenforceable, and that the Respondent was entitled to defences under Sections 23, 126, 128, 133, 135, 140, 141 and 145 of the Indian Contract Act, 1872, including that the guarantee had lost its efficacy after 31.03.2012 and had never been invoked.

The Demand-cum-Recall Notice dated 30.09.2016, addressed to the Corporate Debtor and to the personal guarantors including the Respondent, constituted a valid and unequivocal invocation of the Deed of Guarantee, and default crystallised on 07.10.2016 upon expiry of the seven-day notice period;

the balance sheets of the Corporate Debtor for FY 2016-17 to FY 2019-20 contained clear and unequivocal acknowledgment of the debt owed to the Applicant, and remained valid notwithstanding that they were signed by suspended directors during CIRP, since the statutory obligation to sign financial statements under Sections 129 and 134 of the Companies Act, 2013 survives suspension of the Board's powers under Section 17(1)(b) of the Code;

by virtue of Section 128 of the Indian Contract Act, 1872 and Clauses 12 and 19 of the Deed of Guarantee dated 31.03.2015 (which deem any acknowledgment by the borrower to be binding upon, and made on behalf of, the guarantor), the acknowledgments in the Corporate Debtor's balance sheets validly extended limitation as against the Respondent as well;

the exclusion of the period from 15.03.2020 to 28.02.2022 pursuant to the Hon'ble Supreme Court's Suo Motu orders in In Re: Cognizance for Extension of Limitation, Suo Motu W.P. (C) No. 3 of 2020, further extended limitation, and the Petition, filed in October 2021, was well within limitation; and

the Demand-cum-Recall Notice dated 30.09.2016 also constituted valid invocation of the personal guarantee of the Respondent, and the decision in State Bank of India v. Deepak Kumar Singhania, Company Appeal (AT) (Insolvency) No. 191 of 2025, relied upon by the Respondent, was distinguishable and inapplicable to the facts of the present case.

that the documents filed in support of the Petition and the RP's Report are not duly certified and verified in terms of Rule 23(2) of the National Company Law Tribunal Rules, 2016 and Rule 10(1) of the Adjudicating Authority Rules, 2016, being uncertified photocopies not verified from the originals;

that the affidavit in support of the RP's Report is not duly stamped under the Indian Stamp Act as applicable in Madhya Pradesh, and therefore has no evidentiary value;

that Mr. Mahesh Kumar Verma was not competent to sign and verify the Petition, the Letter of Authority in his favour having been signed by the Deputy General Manager, who, it is contended, is not empowered under Regulation 76(1) of the SBI General Regulations, 1955 to issue such authority, in the absence of a Gazette Notification on record;

that the copy of the account statement filed with the Petition does not satisfy the requirements of a “certified copy” under Section 2(8) read with Section 2A of the Bankers' Books Evidence Act, 1891;

that the guarantee and security documents are inadequately stamped under the Indian Stamp Act as applicable in Madhya Pradesh and are therefore inadmissible in evidence, and that the security documents, being unregistered under the Registration Act, 1908, are unenforceable; and

that, in any event, the guarantor's liability is only secondary to that of the principal debtor; that the guarantee, unrevived after 31.03.2012, has lost its efficacy; that its execution amounted to duress within the meaning of Section 23 of the Contract Act; and that it stands discharged on account of variation of the terms of lending under Section 133 and composition under Section 135 of the Contract Act.

As noted above, this Tribunal, vide order dated 25.11.2021, appointed Mr. Rahul Anand as the Resolution Professional. Upon appointment, the RP issued a notice to the Respondent on 27.11.2021 seeking details, proof of repayment and other relevant information as contemplated under Section 99(2) of the Code, which notice was returned undelivered/refused on 02.12.2021.

The RP thereafter examined the Petition and the material on record, including the Deed of Guarantee dated 31.03.2015, the Demand-cum-Recall Notice dated 30.09.2016, and the balance sheets of the Corporate Debtor for FY 2016-17 to 2019-20 acknowledging the debt due to the Applicant, and submitted his Report dated 06.12.2021 under Section 99 of the Code, recommending that the Petition be admitted under Section 100 of the Code, having found that the requirements of Sections 95 and 99 of the Code stood satisfied and that the Respondent had furnished no proof of repayment of the debt claimed.

We have heard Ld. Counsel for the Applicant and Ld. Counsel for the Respondent, and have perused the pleadings, the written submissions filed by the parties, the Report of the Resolution Professional, and the Judgment of the Hon'ble NCLAT dated 17.10.2025 in Company Appeal (AT) (Ins.) No. 1742 of 2024.

At the outset, we note that this matter is before us on remand from the Hon'ble NCLAT, which, by its Judgment dated 17.10.2025, set aside the earlier order of this Tribunal dated 16.07.2024 and categorically held, after due consideration of the rival contentions and the material on record, that (i) the Petition is within limitation, and (ii) the personal guarantee of the Respondent stands validly invoked. These findings, having attained finality upon dismissal of the Respondent's further challenge before the Hon'ble Supreme Court, are binding upon this Adjudicating Authority and cannot be reopened or re-agitated in these proceedings. We respectfully adopt and follow the said findings.

Consequently, we hold that:

the demand-cum-recall notice dated 30.09.2016 crystallised the default of the Respondent on 07.10.2016;

the balance sheets of the Corporate Debtor for FY 2016-17 to FY 2019-20 contain valid and binding acknowledgments of the debt as against the Respondent, in terms of Section 18 of the Limitation Act, 1963, read with Clauses 12 and 19 of the Deed of Guarantee dated 31.03.2015 and Section 128 of the Indian Contract Act, 1872;

the period from 15.03.2020 to 28.02.2022 stands excluded in computing limitation, in terms of the Hon'ble Supreme Court's Suo Motu orders in Re: Cognizance for Extension of Limitation, Suo Motu W.P. (C) No. 3 of 2020, and the Petition, filed in October 2021, is well within limitation; and

the demand-cum-recall notice dated 30.09.2016 constitutes valid invocation of the personal guarantee of the Respondent.

We now examine the remaining objections raised by the Respondent, which were not the subject matter of adjudication before the Hon'ble NCLAT.

The Petition is supported by an affidavit of the authorised officer of the Applicant Bank affirming the correctness of its contents and the documents relied upon. The Respondent has, at no stage, disputed the genuineness of the underlying transactions – namely, the sanction and disbursement of credit facilities, the execution of the successive Deeds of Guarantee, or the occurrence of default. In the absence of any specific denial of the authenticity of the documents on merits, or demonstration of prejudice occasioned by the alleged non-certification, we are of the view that this is a technical objection which does not go to the maintainability of the Petition, more so in proceedings under a time-bound, summary Code such as the IBC. The objection is accordingly rejected.

RP's Report: Any deficiency in stamping of an affidavit is a curable defect and does not affect the substantive rights of the parties or the maintainability of the Petition, particularly where, as here, the facts stated in the Report are independently corroborated by the Deed of Guarantee, the demand-cum-recall notice and the balance sheets of the Corporate Debtor already on record. The objection is rejected.

A Letter of Authority dated 07.09.2021 has been issued in favour of Mr. Mahesh Kumar Verma, Assistant General Manager (SMGS-V) of the Applicant Bank, under Regulation 76(1) of the SBI General Regulations, 1955 read with Section 50 of the SBI Act, 1955, and the Petition has been affirmed by way of affidavit sworn by the said officer. The Respondent has not placed any material on record to demonstrate that the officer issuing the said Letter of Authority lacked competence to do so, or that the delegation of authority under the applicable Gazette Notification does not extend to institution of proceedings of the present nature. The objection is accordingly rejected.

Objection as to compliance with the Bankers' Books Evidence Act, 1891: The existence of debt and default in the present case does not rest solely on the statement of accounts filed by the Applicant but stands independently established through the Deed of Guarantee dated 31.03.2015, the demand-cum-recall notice dated 30.09.2016, the proceedings before the Debts Recovery Tribunal, and the balance sheets of the Corporate Debtor, all of which have been considered by the Hon'ble NCLAT while affirming the debt and default. The technical objection as to the form of the bank statement does not, therefore, detract from the debt and default already established, and is rejected.

Objection as to stamping/registration of the guarantee and security documents: Any deficiency in stamping of the Deed of Guarantee or the security documents, even if assumed, would at best render such documents liable to impounding and payment of deficit stamp duty and penalty; it does not extinguish or discharge the underlying debt, particularly where execution of the Deed of Guarantee dated 31.03.2015 is not disputed. Non-registration of the security documents, if any, may affect enforceability of the security interest created thereby but does not affect the existence of the debt or the personal liability of the Respondent as guarantor. These objections do not constitute a bar to admission of the Petition.

Objections under the Indian Contract Act, 1872: Clause 8 of the Deed of Guarantee dated 31.03.2015 expressly declares the guarantee to be a continuing one, valid for all amounts due and payable and not affected by any variation of the credit facilities within the overall sanctioned limit. The clause 8 of Deed of Guarantee dated 31.03.2015 is produced below:

Clauses 12 and 19 further render the Respondent's liability co-extensive with, and bound by, the acknowledgments and admissions of the principal borrower – a position consistent with Section 128 of the Indian Contract Act, 1872 and affirmed in State Bank of India v. Indexport Registered, (1992) 3 SCC 159, and Syndicate Bank v. Channaveerappa Beleri, (2006) 11 SCC 506. The Clauses 12 and 19 of Deed of Guarantee dated 31.03.2015 is produced below:

The Section 128 of the Indian Contract Act, 1872 is produced below:

The Respondent has neither pleaded with particularity, nor placed any material on record to establish, any specific variation in the terms of lending, any composition or arrangement between the Applicant and the Corporate Debtor resulting in discharge of the guarantee, or any circumstance amounting to duress or undue influence vitiating free consent at the time of execution of the guarantee. These being bald and unsubstantiated pleas, we find no merit in the same, and the objections are rejected.

We further note that the Report of the Resolution Professional dated 06.12.2021, after due examination of the Petition in terms of Sections 95 and 99 of the Code, recommends admission of the Petition, having found the requirements of the Code satisfied and the Respondent to have furnished no proof of repayment despite notice. We find no reason to disagree with the said recommendation.

Accordingly, having regard to (i) the binding findings of the Hon'ble NCLAT on limitation and invocation of the personal guarantee, (ii) rejection of the Respondent's remaining procedural and substantive objections for the reasons recorded above, and (iii) the Report of the Resolution Professional recommending admission, we are satisfied that the Petition is complete in all respects and that the requirements of Section 100 of the Insolvency and Bankruptcy Code, 2016 stand fulfilled. The Petition is fit for admission. Ordered accordingly.

a. The Petition bearing CP (IB) No. 53(MP) of 2021, filed under Section 95 of the Insolvency and Bankruptcy Code, 2016, is hereby ADMITTED under Section 100 of the IBC.

b. The Personal Insolvency Resolution Process (PIRP) in respect of Shri Bernard John, the Respondent/Personal Guarantor herein, is hereby initiated with effect from the date of this Order.

c. Mr. Rahul Anand, Resolution Professional (already appointed vide order of this Tribunal dated 25.11.2021)(AFA valid till 31^st December 2026), is hereby confirmed as the Resolution Professional for the conduct of the PIRP of the Respondent, with directions to carry out all functions, duties and responsibilities assigned under the Code, the Personal Guarantors Rules, and the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019.

d. The moratorium under Section 101 of the IBC shall come into effect from the date of this Order and shall remain operative for the period of the PIRP, subject to the conditions and exceptions provided under the Code, and shall cease to have effect at the end of the period of one hundred and eighty days beginning with the date of admission of the Petition, or on the date this Adjudicating Authority passes an order on the repayment plan under Section 114 of the Code, whichever is earlier.

e. The Resolution Professional shall cause a public announcement of the initiation of the PIRP in terms of Section 102 of the IBC and Regulation 6 of the PIRP Regulations, within three (3) days from the date of this Order.

f. The Applicant is directed to deposit a sum of Rs. 50,000/- (Rupees Fifty Thousands only), towards his fees and expenses, within one week of this Order, subject to adjustment/reimbursement in accordance with the Code and the Regulations framed thereunder.

g. The Respondent/Personal Guarantor shall, upon receipt of the public announcement, submit a Statement of Affairs to the Resolution Professional within the period prescribed under the Code and the Regulations.

h. The Resolution Professional is directed to submit a status report to this Tribunal on the progress of the PIRP within thirty (30) days of this Order.

A copy of this Order shall be communicated to the Resolution Professional, the Applicant/Financial Creditor, and the Respondent/Personal Guarantor forthwith.