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2022 (9) TMI 1010 - AT - Insolvency and BankruptcyMaintainability of Insolvency Petition against the Guarantor - novation in a contract of Guarantee - novation made without any reference to the Guarantor Company - discharge’ of the Guarantor or not - whether the Appellant/Guarantor is liable to pay the amount when the Guarantee was initially invoked on 03.03.2015? - whether the Learned Adjudicating Authority was justified in admitting the Section 7 Application? - time limitation. HELD THAT:- The OTS has been signed by the Appellant, Clause 3 of the Deed of Guarantee, and also Clauses 5, 9 & 10 of the Deed of Guarantee, having invoked the Guarantee on 03.03.2015, the question of invoking the Guarantee again, as per law, does not arise. Addressing the question of Limitation, reliance placed on the Judgement of the Hon’ble Supreme Court in Dena Bank (now Bank of Baroda) Vs. C. Shivkumar Reddy & Anr., [2021 (8) TMI 315 - SUPREME COURT], in which the Hon’ble Supreme Court has clearly laid down that on issuance of a Recovery Certificate, fresh cause of action would arise to initiate proceedings under Section 7 of the Code. Further Clauses 9 & 10 of the Deed of Guarantee specify that the Guarantee is a continuing one. It a fit case to consider the Recovery Certificate which has been issued by the Hon’ble DRT, Mumbai on 25.04.2016 and the second OTS dated 12.03.2018 and the part payment which has been made on 28.03.2018 read together with the warrant of attachment dated 20.06.2019 and the date of filing of the Petition dated 17.03.2022 we observe that the Section 7 Petition is not barred by Limitation. The OTS is not a novation of the original debt but is only to be construed as Terms of Settlement offered and agreed upon by the Borrower to discharge its liability. The Guarantor is a direct beneficiary of the OTS. Having signed and accepted OTS proposal, the Appellant cannot now turn around and take a stand that the liability is not co-extensive or that the Guarantee was invoked only in 2013. This argument is not tenable as it is held that (a) it is a continuing Guarantee and (b) that it is not required for a continuing Guarantee to be invoked twice in these facts of the matter when the liability is co-extensive. Appeal dismissed.
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