Once CoC Agrees To Release Personal Guarantees Upon Payment, Invocation Cannot Be Directed By Adjudicating Authority: NCLAT New Delhi

The National Company Law Appellate Tribunal, Principal Bench, New Delhi, comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Member - Technical), has held that if CoC has itself agreed to release the personal guarantees upon completion of payment under the Resolution Plan, no directions can be issued to invoke such guarantees. Brief Background The appeal was filed challenging the observations made in paragraphs 28 & 39 of the order dated 27.03.2025 passed by the adjudicating authority. By the impugned order, the adjudicating authority approved the resolution plan submitted by the appellant. Although the resolution plan was approved, the observations made in paragraphs 28 & 39 directed the invocation of personal guarantees to maximize asset recovery, irrespective of the terms of the approved plan. Contention of the Parties The appellant argued that the approved resolution plan clearly stipulates that the personal and corporate guarantees, as well as third-party assets, will be released upon making the full payment under the plan. Also, the letter by the CoC communicates that the guarantee would be released upon complete implementation of the plan. They highlighted that the resolution plan has been approved by the 100% CoC and argued that the observations made in paragraphs 28 & 39 are contrary to the approved resolution plan and unsustainable. In support of the appellant, the respondent also submitted that the said observation by the adjudicating authority is not necessary. Observations of the NCLAT The tribunal observed that there was no question of invocation of personal guarantee as observed in the two paragraphs of the impugned order. The bench noted that the resolution plan explicitly provided for the release of guarantees only upon full implementation and payment. The tribunal further held that the observations made by the adjudicating authority in paragraphs 28 & 39 of the impugned order were inconsistent with the Resolution Plan. It was observed that when the CoC itself has agreed to release the personal guarantees after receiving the payment under the plan, invocation of guarantee does not arise. The bench disposed of the appeal by deleting the observations made in paragraphs 28 & 39 of the impugned order. Case Name: Mukesh Goel v. Santanu Brahman & Anr. Case No.: Company Appeal (AT) (Ins) No. 1192 of 2025 & I.A. No. 4654, 4658 of 2025 Bench: Justice Ashok Bhushan (Chairperson) and Barun Mitra (Member - Technical) For Appellant: Mr. Diwakar Maheshwari, Mr. Shreyas Edupuganti and Mr. Karan B., Advocates. For Respondent: Mr. Dipankar Das, Advocate for Respondent no.2. Order Date: 11.08.2025 Click Here To Read/Download Order

Once CoC Agrees To Release Personal Guarantees Upon Payment, Invocation Cannot Be Directed By Adjudicating Authority: NCLAT New Delhi

Mohd.Rehan Ali

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