The court affirms that under continuing corporate guarantees, multiple invocations are permissible for ongoing defaults, allowing the second invocation post-bar period as a valid cause of action.

JUDGMENT

(3rd July, 2025)

INDEVAR PANDEY, MEMBER (T)

The present appeal arises out of the judgment and final order dated 16.06.2023 passed by the National Company Law Tribunal, (Adjudicating Authority) Mumbai Bench in CP (IB) No. 144/MB/2023, whereby the Section 7 petition under Insolvency and Bankruptcy Code, 2016 (‘Code’) filed by the IDBI Bank Ltd./(Appellant), against ARM Infra & Utilities Pvt. Ltd. the Corporate Guarantor/(Respondent), was dismissed. The Appellant had sought initiation of Corporate Insolvency Resolution Process (CIRP) under the Code, on account of a default of Rs.193.82 crore by the Principal Borrower Siti Networks Ltd., whose liabilities were secured by unconditional and irrevocable corporate guarantees executed by the Respondent.

2. The Adjudicating Authority vide the impugned judgement held that the date of default fell within the “prohibited period” (i.e., between 25.03.2020 and 25.03.2021) under Section 10A of the Code, and therefore rejected the petition as non-maintainable. Aggrieved by the said dismissal, the Appellant has preferred the instant appeal under Section 61 of the code, challenging the erroneous interpretation of the default date and the applicability of Section 10A to the facts of the case.

Brief Facts of the Case

3. The brief facts of the case are given below:

i. On 24.11.2008, IDBI Bank Ltd. (Appellant) sanctioned a Cash Credit facility of Rs.25 crore in favour of Wire and Wireless (India) Ltd., which was later renamed as Siti Networks Ltd., (the Principal Borrower. The purpose of the facility was to meet working capital requirements, secured by a first pari-passu charge on movable and immovable assets, and a corporate guarantee from Zee Entertainment Enterprises Ltd.

ii. Subsequently, on 09.12.2009, two separate facilities were extended—

(a) a renewed Working Capital Facility (Rs.50 crore limit, including CC/STL and LC components), and

(b) a Rupee Term Loan (RTL) of Rs.75 crore—for capital expenditure and working capital augmentation. Security was provided by Zee Entertainment Enterprises Ltd., with Board Resolutions supporting the transactions. The working capital facility was further renewed and enhanced, including a CMS limit of Rs.2 crore, under an overall credit exposure of Rs.62 crore on 09.03.2011.

iii. On 29.05.2012, the Appellant sanctioned enhanced credit facilities of Rs.150 crore (Rs.50 crore Fund-Based and Rs.100 crore Non-Fund- Based), along with a Letter of Exchange Risk (LER) limit of Rs.5 crore and continued CMS limits of Rs.2 crore. A fresh Board Resolution was passed by the Principal Borrower confirming acceptance of terms.

iv. The facility structure was further renewed and raised by the appellant on 26.12.2014 on 26.12.2014. the Respondent, ARM Infra & Utilities Pvt. Ltd., executed a Corporate Guarantee dated 31.12.2014 in favour of the Appellant, covering the entire facility obligations of the Principal Borrower. This was supported by resolutions from the Respondent’s Board of Directors.

v. On 11.02.2016, the Appellant further renewed the sanction facilities including enhanced term loans and working capital exposure. In relation thereto, the Respondent executed another Corporate Guarantee dated 29.02.2016, reinforcing its undertaking to repay the dues of the Principal Borrower in case of default. These facilities were further revised and continued on 19.07.2017 and 19.12.2018.

vi. On 31.12.2018, a joint Revival Letter was executed by both the Princi