Delhi HC directs NCLT to decide Corporate Guarantee Clause 33 applicability within four weeks for CIRP proceedings

Delhi HC disposed of writ petition seeking action against respondents regarding Corporate Guarantee clause interpretation. Court found clauses 1-32 of Corporate Guarantee dated 10.08.2016 prima facie showed no interest provision except specified amounts. HC held NCLT competent to determine claim quantum affecting CIRP proceedings, including resolution plan valuation and petitioner's Section 12-A settlement ability under IBC. Court directed NCLT to decide preliminary issue regarding applicability of Clause 33 within four weeks of 22.08.2024 hearing for effective CIRP proceedings.

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Issues:
1. Invocation of writ jurisdiction seeking appropriate writ against respondents for enforcement of Corporate and Personal Guarantees.
2. Dispute regarding Corporate Guarantee dated 10.08.2016 and demands made by ICICI Bank.
3. Interpretation of Clause (33) of the Corporate Guarantee and its impact on the liability of the guarantor.
4. Jurisdictional conflict between seeking directions from RBI and the powers of NCLT in ongoing insolvency proceedings.

Analysis:
1. The petitioner invoked the writ jurisdiction seeking directions against the respondents, including RBI, to enforce Corporate and Personal Guarantees. The petitioner sought guidelines for enforcement in Circulars and directions for an inquiry into the affairs of ICICI Bank. The court noted the petitioner's role as a guarantor for a loan taken by a Corporate Debtor from ICICI Bank and subsequent invocation of the Corporate Guarantee by the bank.

2. The Corporate Guarantee dispute arose when ICICI Bank declared the borrower's account as NPA and invoked the guarantee. The borrower entered CIRP, leading to a Resolution Plan approved by NCLT. ICICI Bank also initiated CIRP against the petitioner for failing to honor the Guarantee Deed. The petitioner's appeals were unsuccessful, leading to the current petition seeking directions against RBI.

3. The interpretation of Clause (33) of the Corporate Guarantee was crucial, limiting the guarantor's liability to a specific amount. The petitioner argued that ICICI Bank's actions, including inflated interest rates, exceeded the guarantee's terms. The court examined the clause and noted its impact on the guarantor's financial liability, emphasizing the NCLT's authority to decide on claims in CIRP proceedings.

4. The jurisdictional conflict between seeking directions from RBI and NCLT's powers in ongoing insolvency proceedings was addressed. The court disposed of the writ petition, directing NCLT to decide on the applicability of Clause (33) within four weeks to facilitate effective CIRP proceedings. The decision aimed to resolve the dispute regarding the guarantee and its impact on the insolvency proceedings, emphasizing the NCLT's authority in such matters.

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