Borrower cannot claim non-service of notice if change of address is not informed to creditor: NCLAT

The NCLAT New Delhi Bench has held that a borrower or personal guarantor cannot plead non-service of demand notices or other communications when such documents are sent to the address available with the creditor, if the borrower has failed to notify the creditor about a change of address.

In the present case, an appeal was filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC) against the order of the NCLT Chandigarh Bench, which had admitted an application under Section 95 of the IBC against the personal guarantor and proceeded ex-parte.

The Appellant contended that the creditor had not placed any material on record to establish service of a demand notice and that the application filed by the Respondent was premature. It was further argued that no report under Section 99 had been served by the Resolution Professional, despite such statement being made in the service affidavit.

The Respondent, however, submitted that the Appellant was well aware of the proceedings, had even responded to messages sent by the Resolution Professional, and had deliberately avoided participation. It was further argued that the Appellant had failed to disclose his change of address and was attempting to misuse the plea of non-service to delay proceedings.

The Appellate Tribunal observed that a borrower cannot take advantage of their own failure to inform the creditor about change of address. In the present case, the Appellant had been “playing hide & seek” with the bank and had gone incognito, thereby disentitling himself from any relief.

The Tribunal also rejected the submission that Omakara Assets, as an assignee of the debt from the Stressed Assets Stabilisation Fund (SASF), could not maintain the application under Section 95. Referring to Section 5(3) of the SARFAESI Act, it noted that an assignee steps into the shoes of the assignor and is vested with all rights in respect of the debt.

Concluding that the Appellant had acted with deliberate intent to avoid proceedings and mislead the Tribunal, the NCLAT dismissed the appeal.

Sh. Sumeet Juneja vs. Stressed Assets Stabilisation Fund (SASF) & Ors. 

Company Appeal (AT) (Insolvency) No. 2169 of 2024