J U D G E M E N T

(12 .05.2026)

NARESH SALECHA, MEMBER (TECHNICAL)

1. There are two appeals in the present case. We are taking both the appeals together. The appeals have been filed by the Appellants i.e., Amit Bhatnagar and Sumit Bhatnagar, who are the Personal Guarantors of M/s Diamond Power Transformers Ltd. (“Corporate Debtor”), under Section 61 of the Insolvency and Bankruptcy Code, 2016 (‘Code’) against the Order dated 23.10.2024 ("Impugned Order") passed by the National Company Law Tribunal, Ahmedabad Bench ("Adjudicating Authority") in Company Petition (IB) No. Company Petition (IB) No. (IB)/200(AHM) 2024 with IA/1072(AHM)2024 and Company Petition (IB)/199(AHM) 2024 with IA/1068(AHM)2024.UCO Bank, who is the Financial Creditor of the Corporate Debtor, is the Respondent No.1/Respondent Bank, herein. CS & IP Amrish Gandhi, who is the Resolution Professional of Mr. Amit Bhatnagar and Mr. Sumit Bhatnagar, is Respondent No. 2, herein. Indian Overseas Bank, who was the other Financial Creditor of the Corporate Debtor in addition to Respondent No.1 /UCO Bank, is the Intervenor in both the appeals.

2. We will refer both UCO Bank- Respondent No. 1 and Indian Overseas Bank-Intervenor, as “Consortium Banks”, since their cause and grounds are same, hereinafter.

3. The Appellants submitted that the Consortium Banks extended a credit facility of Rs. 40 crores to the Corporate Debtor (DPTL) on 15.10.2011, which was renewed on 29.06.2013. Pursuant thereto, a Consortium Agreement dated 31.03.2015 was executed for an aggregate credit facility of Rs. 114.60 crores. The Appellants contended that despite the explicit terms of the said Consortium Agreement, the Consortium Banks failed to disburse Rs. 24 crores to the Corporate Debtor (DPTL). This non-disbursement amounted to a unilateral variation in the essential terms of the Consortium Agreement and a breach of the obligations assumed by the Consortium Banks thereunder.

4. The Appellants submitted that the Deed of Guarantee dated 31.03.2015 executed by the Appellants and Diamond Power Infrastructure Ltd. (DPIL) (Corporate Guarantor) in favour of the Consortium Banks was predicated entirely upon the Consortium Agreement and the promised disbursement of the full Rs. 114.60 crores. The Appellants contended that the failure to disburse Rs. 24 crores constituted a material alteration in the terms of the contract between the creditor and the principal debtor without the consent of the sureties. Consequently, the Appellants stands fully discharged from all liability under the Deed of Guarantee in terms of Section 133 of the Indian Contract Act, 1872, and the Adjudicating Authority was duty-bound to recognise the same while examining the petition under Section 95 of the Code.

5. The Appellants submitted that the account of the Corporate Debtor (DPTL) was declared NPA on 30.07.2016, leading to admission of Company Petition (IB) No. 28 of 2017 under Section 10 of the Code on 06.07.2017 and subsequent order of liquidation dated 19.03.2018 in IA No. 92 of 2018. Separately, the lead bank of the Consortium (Bank of India) initiated proceedings under Section 7 against the Corporate Guarantor (DPIL), resulting in admission into CIRP on 24.08.2018. The Appellants contended that the Consortium Banks filed its claim before the Resolution Professional of DPIL, which was accepted and crystallised on the strength of the corporate guarantee furnished by DPIL for the dues of the Corporate Debtor (DPTL). The said claim were dealt with and satisfied in full under the approved Resolution Plan.

6. The Appellants submitted that the Resolution Plan of the Corporate Guarantor (DPIL) was approved by the Committee of Creditors on 06.01.2022 with 89.46% voting share and thereafter allowed by the Adjudicating Authority on 20.06.2022 in CP (IB) No. 137 of 2018. The Consortium Banks, being a member of the Committee of Creditors, actively participated and accorded its consent to the Resolution Plan, which expressly dealt with and ext