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The NCLAT allowed the appeal, setting aside the impugned order that dismissed the Section 7 application for initiation of CIRP. The Tribunal held that the date of default under the corporate guarantee was not confined to the initial invocation within the Section 10A prohibited period, as the guarantee was a continuing, irrevocable, on-demand guarantee under Section 129 of the Indian Contract Act, 1872. Multiple successive invocations were permissible, and the second invocation, made after the Section 10A period, was based on an updated computation of dues, including additional liabilities. Since the default persisted beyond the exclusion period and the debt remained unpaid, the Section 7 application filed thereafter was maintainable.
The NCLAT allowed the appeal, setting aside the impugned order that dismissed the Section 7 application for initiation of CIRP. The Tribunal held that the date of default under the corporate guarantee was not confined to the initial invocation within the Section 10A prohibited period, as the guarantee was a continuing, irrevocable, on-demand guarantee under Section 129 of the Indian Contract Act, 1872. Multiple successive invocations were permissible, and the second invocation, made after the Section 10A period, was based on an updated computation of dues, including additional liabilities. Since the default persisted beyond the exclusion period and the debt remained unpaid, the Section 7 application filed thereafter was maintainable.
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