Mumbai, Feb 16: The Mumbai bench of the National Company Law Tribunal (NCLT) has rejected an insolvency application filed by the State Bank of India (SBI) against Rajesh Gaurishankar Poddar, director and former chairman-cum-managing director of Loha Ispaat Limited, who had stood as a personal guarantor for Rs 287.30 crore in loans availed by the company.
SBI sought insolvency under IBC
SBI had approached the tribunal seeking initiation of insolvency proceedings against Poddar in his capacity as personal guarantor under the Insolvency and Bankruptcy Code (IBC).
The bank contended that Loha Ispaat Limited had availed various credit facilities and that Poddar had executed a deed of personal guarantee, later amended through supplemental deeds, securing repayment of principal, interest and other dues.
According to the bank, the company’s account was classified as a non-performing asset (NPA) on August 28, 2014. The guarantee was invoked through a notice dated February 13, 2017, demanding payment of Rs 287.30 crore.
The corporate debtor was admitted into the Corporate Insolvency Resolution Process in April 2017 and subsequently ordered into liquidation in April 2018. SBI later issued a demand notice in June 2021 claiming dues of Rs 599.47 crore and filed the application in July 2021.
Guarantor challenges plea on limitation and invocation
However, Poddar opposed the plea, arguing that the application was barred by limitation. He submitted that the alleged default occurred on February 28, 2017, and that the three-year limitation period expired on February 27, 2020. The insolvency application, filed in July 2021, was therefore time-barred.
He further contended that there was no valid invocation of the guarantee, no proper recall notice issued by SBI in its individual capacity and no record of default filed with an information utility. He also questioned the genuineness and computation of the claimed amount.
Tribunal cites failure to prove valid invocation
In its order, the tribunal noted that while it was an established fact that the personal guarantor had furnished guarantees for credit facilities extended to the corporate debtor, the applicant bank had failed to establish proper invocation of the guarantee in accordance with its terms.
The bench observed that the recall notice dated February 13, 2017, had been issued by an advocate on behalf of a consortium of banks, of which the applicant bank was not a member. Despite multiple opportunities, SBI did not place on record the principal deed of guarantee and instead relied only on supplemental deeds.
The tribunal held that the bank had failed to establish the terms of the guarantee and had not furnished sufficient documents to substantiate valid invocation.
Application held time-barred
The NCLT further held that even otherwise, the application was barred by limitation. The three-year period from the date of default expired in February 2020, and no material was produced to show that the limitation period had been extended. Accordingly, the tribunal dismissed the application.
CBI case against Poddar
Poddar is already facing criminal charges in a case registered against him by the Central Bureau of Investigation (CBI). The CBI had earlier registered an FIR against Loha Ispaat Limited and Poddar for allegedly defrauding an SBI-led consortium of banks to the tune of Rs 1,017.93 crore.
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According to the CBI, between 2012 and 2017, the company and its then management allegedly conspired to cheat SBI and other consortium banks, including Bank of India, Canara Bank, Punjab National Bank and Bank of Maharashtra, by availing working capital limits, term loans and non-fund-based limits of around Rs 812 crore and siphoning funds through fictitious transactions with suspicious and non-existent entities.
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