Approval of a resolution plan does not discharge a corporate guarantor's liability under a guarantee, affirming that guarantees remain enforceable even after such approval.

JUDGMENT

ASHOK BHUSHAN, J.

This Appeal by a Suspended Director of the Corporate Debtor – Ushdev Enfitech Limited has been filed challenging the order dated 26.04.2023 Cont’d…/ passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Court-V admitting Section 7 application filed by ICICI Bank Ltd. (Respondent herein). Appellant aggrieved by the impugned order has filed this appeal. Brief facts of the case necessary to be noticed for deciding this appeal are:

(i) ICICI Bank has advanced Rs.100 Crore to Ushdev International Ltd, Principal Borrow, by way of two bilateral non-fund based facilities of INR 50 Crore each. The above two bilateral non-fund based facilities were advanced by Credit Agreement Letter dated 24.12.2014 and 14.10.2015.

(ii) A Deed of Guarantee was executed by the Corporate Debtor – Ushdev Engitech Ltd. on 10.08.2016 for securing the above credit facility extended to the Principal Borrower.

(iii) The Principal Borrower committed default and account of the Principal Borrow was declared as NPA in December, 2016.

(iv) On 16.10.2017, Corporate Guarantee of Corporate Debtor was also invoked and the Corporate Debtor was asked to make payment within 5 days.

(v) No payment having been made by the Corporate Debtor, a Section 7 application was filed by the ICICI Bank against the Corporate Debtor, who was the Corporate Guarantor, on which Company Petition (IB) 119 of 2021 was registered.

(vi) The Corporate Debtor filed its reply in the Section 7 application.

Against the Principal Borrower – Ushdev International Ltd. CIRP was initiated by order dated 14.05.2018. Revised Resolution Plan submitted by the Successful Resolution Applicant in the CIRP of the Principal Borrower was approved by the CoC which also was approved by the Adjudicating Authority on 03.02.2022.

(vii) ICICI Bank had also filed a Clarification Application before the Adjudicating Authority which application was also rejected by the Adjudicating Authority by order dated 03.02.2022.

(viii) Against the order dated 03.02.2022 passed by the Adjudicating Authority approving the Resolution Plan with respect of the Principal Borrower – Ushdev International Ltd. Company Appeal (AT) (Ins.) No.172-173 of 2022 was filed by the CoC and Company Appeal (AT)(Ins.) No. 199-200 of 2022 was filed by ICICI Bank in this Tribunal.

(ix) The above appeals challenging order dated 03.02.2022 was decided by this Tribunal by its judgment and order dated 11.03.2022. The Appeals were allowed by deleting a part of the direction of the Adjudicating Authority by which the Adjudicating Authority has directed that excluded securities are no longer enforceable.

(x) Section 7 application filed by the ICICI Bank against the Corporate Debtor was heard and admitted by order dated 26.04.2023, aggrieved by which order this Appeal has been filed.

(xi) The Adjudicating Authority after hearing the parties held that even after approval of the Resolution Plan with respect to the Principal Borrower, the security does not get discharged. Adjudicating Authority also referred to and relied on order dated 11.03.2022 passed by this Appellate Tribunal and held that the Appellate Tribunal has set aside the direction of the Adjudicating Authority that excluded securities are subsumed under Clause 3.3 (iii) (c) (h). The Adjudicating Authority also held that Section 134 of the Contract Act has no applicability in the facts of the present case. Argument of the Corporate Debtor that application is barred by time was also repelled.

2. We have heard Shri Abhijeet Sinha, learned senior counsel wit