# UV Asset Reconstruction Company Limited vs. Electrosteel Castings Limited

> SC judgment dated 2026-01-06. Citation: TCN-2026-SC-00089. UV Asset Reconstruction Company Limited (appellant) filed an appeal under Section 62 of the…

- **Court:** SC
- **Order date:** 6 Jan 2026
- **Citation:** TCN-2026-SC-00089
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/supreme-court-of-india/uv-asset-reconstruction-company-limited-vs-electrosteel-castings-limited-cksss

## Summary

### Background

UV Asset Reconstruction Company Limited (appellant) filed an appeal under Section 62 of the Insolvency and Bankruptcy Code, 2016 (IBC) against a judgment dated 24.01.2024 by the National Company Law Appellate Tribunal (NCLAT). The NCLAT had affirmed an order dated 24.06.2022 passed by the Adjudicating Authority (NCLT), which rejected the appellant's application under Section 7 of the Code. The NCLT's rejection was based on two grounds: (i) Electrosteel Castings Limited (ECL) was not a guarantor for financial facilities availed by Electrosteel Steels Limited (ESL), and (ii) the conversion of ESL's debt into equity under a resolution plan extinguished any liability of ECL. The central issue before the Supreme Court was the interpretation of Clause 2.2 of a Deed of

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## Facts

Electrosteel Steels Limited (ESL) availed financial assistance of INR 500 crores from SREI Infrastructure Finance Limited (SREI) pursuant to a sanction letter dated 26.07.2011.

The sanction letter stipulated only a demand promissory note and post-dated cheques as security, without requiring a personal or corporate guarantee from Electrosteel Castings Limited (ECL).

ECL, as the promoter of ESL, was required to furnish an undertaking to arrange for the infusion of funds into ESL.

On 26.07.2011, SREI issued an addendum to the sanction letter, providing for an additional security in the form of a subservient charge over movable and project assets of ESL.

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## Issues and analysis

### Issue 1: Whether Clause 2.2 of the Deed of Undertaking dated 27.07.2011 constitutes a contract of guarantee …

**Ratio:** A contract of guarantee under Section 126 of the Indian Contract Act, 1872, requires a

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**Reasoning:** The Court defined a 'Contract of Guarantee' based on Section 126 of the Act, emphasizing

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**Interpretation:** Clause 2.2 of the Deed of Undertaking is interpreted as an obligation to

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**Application:** Applying this interpretation, the Court found that ECL's obligation under

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## Parties

- **Judges:** ALOK ARAD…; Sanjay…
- **Appellants:** UV Asset Reconstru…; State Bank of…
- **Respondents:** Electrosteel…; Electrosteel…
- **Other parties:** SREI Infrastructur…; Electrosteel…

## Timeline

- **2011-07-26 — Financial Assistance &…**: ESL availed financial assistance of INR 500 crores from SREI; SREI issued sanction…
- **2011-07-27 — Deed of Unde…**: ECL executed a Deed of…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 62 — Appeal to Supreme Court](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-62)

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