Contractual liability cap in insolvency requires early tribunal determination where claim quantum may affect resolution and settlement.

Clause (33) of a corporate guarantee, which appeared to cap the guarantor's liability and exclude further interest, should be examined as a preliminary issue in the pending insolvency proceedings where the claim quantum may affect the corporate insolvency resolution process and the feasibility of settlement under Section 12-A of the Insolvency and Bankruptcy Code. The writ court did not determine the merits of the contractual claim and instead directed the National Company Law Tribunal to decide the liability-cap issue expeditiously within the insolvency forum.

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Issues: Whether the adjudicating authority should decide, as a preliminary issue, the applicability of Clause (33) of the corporate guarantee dated 10.08.2016 in the pending insolvency proceedings.

Analysis: The dispute centred on the effect of Clause (33), which on its face limited the guarantor's liability and appeared to exclude interest beyond the stipulated cap. Since the quantum of the claim could materially affect the Corporate Insolvency Resolution Process and the petitioner's ability to pursue settlement under Section 12-A of the Insolvency and Bankruptcy Code, the matter was held to require an early determination by the tribunal already seized of the insolvency proceedings. The writ court declined to enter into the merits of the claim and instead directed the tribunal to examine the issue expeditiously.

Conclusion: The preliminary issue regarding Clause (33) was directed to be decided by the National Company Law Tribunal within the stipulated time.

Final Conclusion: The writ court granted a limited procedural relief by sending the dispute on the contractual liability cap back to the insolvency forum for prompt adjudication.

Ratio Decidendi: Where the contractual ceiling on guarantor liability may affect the quantum of claim in insolvency proceedings and the feasibility of resolution or settlement, the insolvency tribunal can be directed to determine that contractual issue as a preliminary question.

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