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of <h1>Delhi HC directs NCLT to decide Corporate Guarantee Clause 33 applicability within four weeks for CIRP proceedings</h1> <h3>SEETA SHAH Versus RESERVE BANK OF INDIA & ANR.</h3> Delhi HC disposed of writ petition seeking action against respondents regarding Corporate Guarantee clause interpretation. Court found clauses 1-32 of ... Invocation of writ jurisdiction of this Court - seeking initiation of an appropriate writ against the respondents - legal purport of Clause (33) of the Corporate Guarantee dated 10.08.2016 - HELD THAT:- On a careful perusal of clause (1) to (32) of Corporate Guarantee, it prima facie appears that there is no question of provision for interest, while calculating the aforesaid Corporate Guarantee except to the extent of the amount provided therein. Be that as it may, the NCLT is only seized of the matter and it is competent to decide upon the quantum of the claims that would impact the entire CIRP proceedings, including but not limited to the valuation of the Resolution Plans and the ability of the petitioner to settle the proceedings under Section 12-A of the IBC. The present writ petition is disposed of with direction to the NCLT to decide the preliminary issue as regards applicability of Clause (33) of the Corporate Guarantee dated 10.08.2016 within four weeks of hearing fixed on 22.08.2024 for an effective CIRP proceedings at its end. The petition is disposed off. 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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