ICICI Bank Ltd. Vs Seeta Neeraj Shah (NCLAT Delhi)
The National Company Law Appellate Tribunal (NCLAT), Delhi, examined an appeal challenging an order of the Adjudicating Authority which had capped the liability of a corporate guarantor at ₹25 crore under a guarantee deed. The dispute arose from a credit facility extended to a borrower, for which a corporate guarantee was executed. Upon default, the lender invoked the guarantee and filed its claim during insolvency proceedings. While the Resolution Professional admitted a total claim of ₹67.98 crore, comprising ₹25 crore as principal guarantee liability and ₹42.98 crore as default interest, the Adjudicating Authority restricted the entire liability to ₹25 crore based on a non-obstante clause in the guarantee agreement.
The core issue before the Tribunal was whether the liability cap of ₹25 crore under the guarantee covered both the principal liability and default interest, or whether default interest constituted a separate obligation.
The Tribunal analysed the guarantee deed and noted that Clause 3(a) imposed liability on the guarantor to discharge the principal debt up to ₹25 crore, while Clause 3 separately provided for payment of default interest in case of delay in fulfilling guarantee obligations. Clause 33, containing a non-obstante provision, limited the guarantor’s liability to ₹25 crore.
