Resolution plan approving sponsor's unsecured shortfall undertaking does not extinguish principal borrower's secured debt or corporate guarantee liability; lenders retain Section 7 rights against them.

J U D G M E N T

ASHOK BHUSHAN, J.

These appeals have been filed by Era Infrastructure Engineering Ltd. the holding company of the corporate debtor (principal borrower and corporate guarantor) challenging the order dated 04.11.2025 passed by the adjudicating authority (National Company Law Tribunal, New Delhi Bench, Court – IV) admitting Section 7 application filed by National Asset Reconstruction Company Ltd. (NARCL), the respondent No. 2 herein against the principal borrower and the corporate guarantor. By order of the same day, intervention petition filed by the appellant i.e., INV.P. No.59/2025 in C.P. (IB) No.172/2025 and in INV.P. No.60/2025 in C.P. (IB) No.774/2025 were rejected. Aggrieved by the aforesaid orders, these appeals have been filed.

2. Background facts and sequence of the events giving rise to these appeals need to be noticed first:

i. The appellant, Era Infrastructure Engineering Ltd. (EIEL) is an Engineering Procurement and Construction Company engaged primary in Build-Operate-Transfer Infrastructure Projects.

ii. Appellant was successful bidder for the Muzaffarnagar Haridwar section from 131 KM to 211 KM of NH-58 in state of Uttar Pradesh and Uttarakhand.

iii. The Project was awarded by the National Highway Authority of India (NHAI). In compliance with NHAI, standard condition mandating incorporation of Special Purpose Vehicles (SPV), Haridwar Highways Project Ltd. (HHPL) was formed on 02.02.2010 as 100% subsidiary of the appellant to execute the Project.

iv. The financing for the Project was obtained by HHPL through consortium of lenders Axis Bank and other banks.

v. On 31.07.2010 at the request of HHPL, Axis Bank sanctioned a loan to the tune of Rs.690.60 crore for part financing of the Project – Term Loan I. Axis Bank invited Punjab National Bank (PNB) and other Banks including Bank of India to participate in part financing for the Project.

vi. A Joint Lender Forum agreed to grant additional term loan of Rs.290.48 crore as Term Loan II. Due to delay in commencement of the Project Term Loan III was sanctioned for Rs.28.6 crore.

vii. The corporate debtor executed various security documents including registration of charge before the Registrar of Companies (RoC).

viii. On 29.06.2016 a corporate guarantee was executed by Era Infrastructure (India) Ltd. (EIIL) to the Bank of India for Term Loan I, Term Loan II and Term Loan III totalling to Rs.149.48 crore.

ix. Borrower’s account was declared Non-Performing Asset (NPA). Notice under Section 13(2) was issued by the Bank of India on 03.04.2019.

x. Corporate Insolvency Resolution Process (CIRP) proceedings commenced against EIEL the appellant herein by the order of adjudicating authority 08.05.2018 on application filed by Union Bank of India. In the CIRP of the appellant a resolution plan was submitted by M/s. S.A. Infrastructure Consultants Pvt. Ltd., which plan came to be approved by the adjudicating authority on 11.06.2024.

xi. The appellant, EIEL had given a sponsor undertaking with respect to financial facility extended to SPV including HHPL.

xii. In the CIRP of the appellant, claims were filed by financial creditors including Bank of India, under which shortfall undertaking given by sponsorer i.e., appellant were also included. Claim pertaining to shortfall with respect to dues of HHPL was also filed by lenders in the CIRP of the appellant.

xiii. The lenders assigned their debt in favour of NARCL on 28.03.2024.

xiv. On 05.09.2024, an Agreement for the sharing of arbitral proceeds was executed between the appellant, assenting financial creditors including the NARCL to give effect to Part B of