NCLT Hyderabad: Demand Notice Sent to Last Known Address Deemed Valid Service Under IBC, Even if Returned

March 12, 2026 : The National Company Law Tribunal (NCLT), Hyderabad Bench-II, has held that dispatch of a statutory demand notice to the last known address of a personal guarantor constitutes valid service under the Insolvency and Bankruptcy Code, 2016, even if the notice is returned unserved. The Tribunal emphasised that where a guarantee agreement contains a deemed-service clause, compliance with such contractual terms satisfies statutory requirements.

The ruling came in a petition filed by Punjab National Bank under Section 95 of the Code seeking initiation of the Personal Insolvency Resolution Process against Smt. Kotimreddy Anitha, personal guarantor to Variegate Projects Private Limited.

The Tribunal noted that the financial creditor had sanctioned credit facilities amounting to ₹65 crore to the corporate debtor on 13 February 2012 under a consortium arrangement. The personal guarantor executed a Deed of Guarantee on 1 March 2012 securing repayment of the facilities. Following default, the loan account was classified as a Non-Performing Asset on 24 March 2016.

Subsequently, the bank initiated recovery proceedings before the Debts Recovery Tribunal, which culminated in a recovery certificate dated 5 April 2019 for ₹59.73 crore. The Tribunal recorded that the outstanding dues had since increased significantly due to accrued interest.

On the issue of limitation, the Bench observed that multiple One Time Settlement (OTS) proposals submitted by the corporate debtor, including the latest dated 22 August 2023, constituted acknowledgment of debt. In terms of the guarantee agreement, such acknowledgment was binding on the guarantor and effectively extended the limitation period. Accordingly, the Tribunal held that the petition filed in March 2025 was within limitation.

A central issue before the Tribunal was whether the statutory demand notice issued in Form B had been validly served. The notice dated 26 December 2024 was dispatched to the guarantor’s address as recorded in the guarantee agreement but was returned with the postal remark “addressee left without instructions.”

Addressing this, the Tribunal relied on the deemed-service clause in the guarantee agreement, which provided that any notice sent by post would be deemed received within 24 hours of dispatch. It held that such contractual stipulations are binding and enforceable.

The Bench further relied on judicial precedents, including Paresh Rastogi v. Omkara Assets Reconstruction Pvt. Ltd. and the Supreme Court’s ruling in C.C. Alavi Haji v. Palapetty Muhammed, to reiterate that service is presumed when notice is sent by registered post to the correct address. It concluded that dispatch to the last known address satisfies the requirement of valid service.

On merits, the Tribunal found that the financial creditor had successfully established the existence of debt and default exceeding ₹1 crore. It also accepted the report of the Resolution Professional recommending admission of the application.

Accordingly, the Tribunal admitted the petition under Section 95 and initiated the Personal Insolvency Resolution Process against the personal guarantor. A moratorium under Section 101 of the Code was declared for 180 days, staying all legal proceedings in respect of the debt. Mr. Anup Kumar Singh was appointed as the Resolution Professional to conduct the process.

Case Details:
Punjab National Bank v. Kotimreddy Anitha
CP (IB) No. 65/95/HDB/2025
Order dated: 12 March 2026
Coram: Shri Rajeev Bhardwaj (Member Judicial) and Shri Sanjay Puri (Member Technical)