NCLT Mumbai Admits Insolvency Petition Against Frost International's Personal Guarantor Over ₹285 Cr. Dues

The National Company Law Tribunal at Mumbai has recently admitted Indian Bank's insolvency petition against Nipun Verma, a personal guarantor for Frost International Limited, after rejecting his objection that the claim was time-barred.

A bench of Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar held that the petition was filed within limitation. The tribunal said limitation was saved both by the Supreme Court's Covid extension orders and by a subsequent acknowledgement of debt in the borrower's audited accounts.

"Since the said acknowledgement has taken place before the extended period of limitation (after excluding COVID period), fresh limitation would run from 19.11.2022", the bench observed.

Indian Bank had extended credit facilities totalling Rs 328 crore to Frost International as part of a banking consortium. Verma executed a deed of personal guarantee on May 12, 2014.

After the borrower defaulted, the account was classified as a non-performing asset on June 30, 2018. The bank first invoked the guarantee through a notice dated July 4, 2018, demanding payment within 15 days. The dues remained unpaid.

Verma argued that the insolvency petition, filed in March 2024, was beyond the three-year limitation period. He also claimed that the statutory demand notice had not been served on him.

Rejecting these objections, the tribunal held that the Covid period from March 15, 2020 to February 28, 2022 had to be excluded while computing limitation, extending the outer date to July 4, 2023. It also relied on Frost International's audited financial statements for the year ending March 31, 2020, signed on November 19, 2022, which acknowledged the debt owed to Indian Bank.

The bench said a guarantor's liability is co-extensive with that of the borrower, and such acknowledgement binds the guarantor as well. It also held that the demand notice was validly served at the address mentioned in the guarantee deed. The tribunal admitted the petition and appointed Pramod Kumar Ramesh Ladda as the resolution professional.

For Financial Creditor: Advocates Vaishali Bhilare and Somesh Talle

For Personal Guarantor: Advocates Malhar Zatakia and Neil Moondra