NCLT Rejects Bank of Maharashtra’s Bid to Sue Personal Guarantors of Gopal Krishna Oil Tech Industries

The National Company Law Tribunal (NCLT) in Mumbai has dismissed Bank of Maharashtra’s request to start insolvency proceedings against the personal guarantors of Gopal Krishna Oil Tech Industries Pvt. Ltd.

Reason for Dismissal:

The tribunal, led by Justice VG Bisht and technical member Prabhat Kumar, stated that the bank’s request was made after the allowed time period had expired.

• The personal guarantees were invoked on April 3, 2018.
• The guarantors were required to pay within 60 days of receiving the notice, after which the default occurred.
• The limitation period to file a claim ended on May 1, 2022.
• However, the bank filed the petition on May 25, 2023, which is over a year past the deadline.

Arguments Against the Bank’s Claim:

• Sneha Prabhu, the lawyer representing the personal guarantors, argued that the bank’s petitions were too late. She noted that the initial notice under Section 13(2) of the SARFAESI Act was issued in April 2018.
• Even after considering an extension due to the COVID-19 pandemic, the petitions were still beyond the allowed time frame.
• Additionally, the former promoter of Gopal Krishna Oil Tech Industries argued that changes in the company’s structure and new guarantees from new directors made them no longer liable as personal guarantors.

Based on these arguments, the tribunal ruled the bank’s petitions were not valid and dismissed the case.