Continuing guarantee and limitation principles upheld: unilateral revocation and restructuring did not discharge liability, and unfair remarks were expunged.

A continuing and irrevocable guarantee, especially where the contract waives objection to variance in the principal debt, is not discharged by the guarantor's unilateral revocation or by later restructuring consistent with the facility terms. The guarantor remained liable for the outstanding obligation, and the insolvency application was held within limitation because the liability was co-extensive with the principal debtor, acknowledgments and continuing liability affected limitation, and the applicable exclusion period applied. Adverse remarks against the resolution professional were unsustainable because they rested on an incorrect factual assumption and were made without a fair opportunity to explain, so they were ordered to be expunged.

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Issues: (i) Whether the personal guarantor's unilateral revocation of the guarantee discharged liability for future transactions; (ii) whether subsequent restructuring and revised facility terms amounted to a novation or otherwise discharged the guarantor; (iii) whether the insolvency application against the personal guarantor was barred by limitation; and (iv) whether adverse observations made against the resolution professional were liable to be expunged.

Issue (i): Whether the personal guarantor's unilateral revocation of the guarantee discharged liability for future transactions.

Analysis: The guarantee deeds were construed as irrevocable, unconditional and continuing in nature. Their terms showed that the guarantor had undertaken liability for present and future obligations and had not reserved any right of unilateral withdrawal. The creditor had not accepted any revocation. A personal guarantor cannot escape liability merely by issuing unilateral letters when the contract of guarantee expressly continues until discharge of the underlying dues.

Conclusion: The unilateral revocation did not discharge the guarantor and the challenge to enforceability on that ground failed.

Issue (ii): Whether subsequent restructuring and revised facility terms amounted to a novation or otherwise discharged the guarantor.

Analysis: The guarantee terms specifically waived the protection otherwise available against variance in the principal contract. The later restructuring documents and revival arrangements did not establish a novation defeating the guarantee. The contractual stipulations preserved the guarantor's liability notwithstanding alterations in facility terms, and the Court treated the guarantee as continuing across the subsequent amendments. On the facts, the later arrangements did not extinguish liability; at most, the guarantor remained bound to the extent of the outstanding obligation under the continuing contractual framework.

Conclusion: The subsequent amendments did not discharge the guarantor and did not amount to a novation terminating liability.

Issue (iii): Whether the insolvency application against the personal guarantor was barred by limitation.

Analysis: The liability of the guarantor was treated as co-extensive with that of the principal debtor, and acknowledgments made by the corporate debtor were held to operate for limitation purposes against the guarantor under the contractual terms and the Limitation Act. The demand notice issued to the guarantor and the later procedural steps were considered in the context of continuing liability, acknowledgment of debt, and exclusion of time spent in bona fide proceedings. The petition was found to have been filed within time, including on account of the applicable limitation principles and the pandemic-related exclusion period.

Conclusion: The insolvency application was not barred by limitation.

Issue (iv): Whether adverse observations made against the resolution professional were liable to be expunged.

Analysis: The adverse remarks were founded on an incorrect factual assumption taken from a tabulated chronology in the resolution professional's report. The report itself carried a disclaimer as to the source of the chronology, and no opportunity had been afforded to clarify the error before serious remarks were made. The absence of a hearing on the point rendered the remarks unsustainable under the principles of natural justice.

Conclusion: The adverse observations against the resolution professional were liable to be expunged.

Final Conclusion: The impugned order could not be sustained on the issues decided, and the appeals succeeded with restoration of the insolvency proceedings and deletion of the adverse remarks against the resolution professional.

Ratio Decidendi: A continuing and irrevocable guarantee, especially one containing an express waiver against variance, is not discharged by unilateral revocation or by subsequent restructuring terms consistent with the contract, and limitation against the guarantor may be governed by acknowledgment and the continuing nature of the obligation; adverse judicial remarks made without affording a fair opportunity to explain cannot stand.

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