Continuing guarantee remains enforceable despite debt renewal or variation unless expressly revoked by the guarantor.

The Appellant is the Personal Guarantor (PG) for loans totaling ₹42 crores availed by the Corporate Debtor (CD), M/s Global Infonet Distribution Pvt. Ltd., from the State Bank of India (SBI) via a Guarantee Deed dated 25.09.2012.

SBI renewed credit facilities in 2016 and 2018.

Following the CD's default and the initiation of CIRP by another creditor, SBI issued a demand notice to the Appellant on 24.06.2021 and previously invoked the guarantee via a SARFAESI notice on 09.11.2018.

SBI filed an application under Section 95 of the IBC.

The NCLT, New Delhi, vide order dated 22.03.2024, accepted the Resolution Professional's (RP) report recommending the initiation of the Insolvency Resolution Process against the Appellant.

The Appellant challenged this, alleging the debt was barred by limitation and that subsequent renewals of credit facilities constituted "novation" which discharged his original 2012 liability.

Whether the subsequent renewal of credit facilities and fresh sanction letters without a new personal guarantee deed constituted a "novation" of contract under Section 62 of the Contract Act, thereby discharging the guarantor.

Whether the insolvency application filed under Section 95 of the IBC was barred by limitation.

The court applied Section 128 of the Indian Contract Act, 1872, regarding the co-extensive liability of a surety.

It relied on Section 129 and 130 concerning "continuing guarantees" and Section 62 regarding the "novation" of contracts.

The court followed the precedent in H.R. Basavaraj v. Canara Bank [2010 (12) SCC 458], which holds that a guarantor can waive rights under Chapter 8 of the Contract Act and remains liable under a continuing guarantee despite variations in terms if the deed so provides.

It also cited Sita Ram Gupta v. Punjab National Bank [AIR 2008 SCC 2416] regarding the inability to revoke a continuing guarantee arbitrarily.

Regarding limitation, it applied the principles of the Suo Motu Writ Petition (Civil) No. 3/2020 which suspended limitation periods during the COVID-19 pandemic.

The Tribunal analyzed the 2012 Guarantee Deed, specifically Clause 8, which explicitly defined the guarantee as "continuing" for all future advances and fresh facilities.

It further observed that under Clause 14, the Appellant had voluntarily waived the right to be discharged due to variations in loan terms or extensions of time.

Consequently, the subsequent sanction letters in 2016 and 2018 were deemed mere "renewals" of existing facilities rather than a "novation" (substitution) of the original contract under Section 62 of the Contract Act.

The Tribunal noted that the Appellant never revoked the guarantee in writing prior to its invocation.

On the issue of limitation, the Tribunal determined that the "default" was triggered by the SARFAESI notice dated 09.11.2018; factoring in the Supreme Court’s COVID-19 limitation tolling period, the application filed on 11.08.2021 was well within the three-year statutory window.

The court held that since the guarantee was "continuing" and the Appellant consented to variations in loan terms within the deed, the liability remained enforceable despite renewals of the credit facility.

The court further held that the application was within the limitation period as it was filed within three years of the invocation of the guarantee, excluding the pandemic relief period.

All pending I.A.s were closed.