# In the matter of Seeta Shah vs. ICICI Bank Limited

> NCLAT judgment dated 2024-07-02. Citation: TCN-2024-NCLAT-00357. This case involves an appeal against an order dated 26.04.2023 passed by the Adjudicating…

- **Court:** NCLAT
- **Order date:** 2 Jul 2024
- **Citation:** TCN-2024-NCLAT-00357
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/seeta-shah-vs-icici-bank-limited-94cbd3d8

## Summary

### Background

This case involves an appeal against an order dated 26.04.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Court-V, which admitted a Section 7 application filed by ICICI Bank Ltd. The appeal was filed by a Suspended Director of the Corporate Debtor, Ushdev Enfitech Limited, challenging the order. The core issue revolves around whether the approval of a Resolution Plan for the Principal Borrower (Ushdev International Ltd.) extinguishes the liability of the Corporate Guarantor (Ushdev Engitech Ltd.) to ICICI Bank, particularly concerning a corporate guarantee dated 10.08.2016. ICICI Bank had advanced Rs.100 Crore to Ushdev International Ltd, the Principal Borrower, through two bilateral non-fund based facilities of INR 50 Crore

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## Facts

ICICI Bank advanced Rs.100 Crore to Ushdev International Ltd (UIL), the Principal Borrower, through two non-fund based facilities of INR 50 Crore each, under credit agreements dated 24.12.2014 and 14.10.2015. Ushdev Engitech Ltd (UEL), the Corporate Debtor, provided a corporate guarantee dated 10.08.2016 to secure this credit facility. UIL defaulted, and its account was declared NPA in December 2016. ICICI Bank invoked the corporate guarantee on 16.10.2017, demanding payment from UEL. A Section 7 application was filed by ICICI Bank against UEL, leading to Company Petition (IB) 119 of 2021. A Resolution Plan for UIL was approved by the Adjudicating Authority on 03.02.2022. ICICI Bank also filed a clarification application, which was rejected on the same date. Appeals

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## Issues and analysis

### Issue 1: Whether the approval of the Resolution Plan for the Principal Borrower, Ushdev International Ltd., …

**Ratio:** The approval of a Resolution Plan does not ipso facto discharge a guarantor's liability.

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**Reasoning:** The Tribunal relied on several Supreme Court judgments, including Lalit Kumar Jain vs.

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**Interpretation:** The interpretation of Section 31 of the IBC and its impact on guarantor's

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**Application:** In this case, the Resolution Plan explicitly stated that the excluded

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## Parties

- **Judges:** Ashok Bh…; Barun M…
- **Appellants:** Seeta…
- **Respondents:** Ushdev Engitech…; ICICI Bank…

## Timeline

- **2014-12-24 — Credit Agreeme…**: ICICI Bank advanced loan facility…
- **2015-10-14 — Credit Agreeme…**: ICICI Bank advanced loan facility…

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