Choose your seat in the courtroom

One judgment.
Three seats.

The group’s flagship was rescued and its lenders were paid under the plan. So why do the brothers still owe ₹122 crore? Watch the collapse in the Gallery, trace the guarantee at the Bar, and time the limitation clock at the Bench.

Amit Bhatnagar v. UCO Bank & Ors.

Comp. App. (AT) (Ins) Nos. 2038 & 2039 of 2024 · NCLAT, Principal Bench, New Delhi · 12.05.2026 · Justice Mohammad Faiz Alam Khan, Member (Judicial) & Naresh Salecha, Member (Technical) (per Salecha, Member (Technical))

5 MIN

Seat one

Start with the story. Climb when you want the rule behind it.

Provisions IBC ss. 95 & 99 · Contract Act ss. 128 & 133 · Limitation Act s. 18Question Does the corporate guarantor’s rescue plan free the personal guarantors?Outcome “We do not find any error in the impugned orders. Both the appeals fail and stand rejected.” · Para 51

Seat one · five minutes · the story

The Gallery

Two banks, three promises, one rescue — and the two promises the rescue never touched.

Two brothers sign for the family company. Diamond Power Transformers Ltd. (DPTL) of Vadodara borrows from a consortium of UCO Bank and Indian Overseas Bank — ₹40 crore in 2011, growing into a ₹114.60-crore consortium agreement by 31 March 2015. The same day, Amit and Sumit Bhatnagar sign a personal Deed of Guarantee for it all. Paras 3, 30–31.

The company falls. Repayments stop and the account turns NPA in July 2016. The company itself asks to be put into insolvency, is admitted in June 2017, and is ordered into liquidation on 19 March 2018. No rescue plan is ever approved for the borrower. Paras 31, 40.

The banks open every door. In April 2018 they invoke the brothers’ guarantees and, within the week, sue in the Debts Recovery Tribunal. Separately, the group’s flagship — Diamond Power Infrastructure Ltd. (DPIL), which had guaranteed DPTL’s dues as corporate guarantor — is pushed into its own insolvency in August 2018. Paras 5, 30, 32.

A decree nobody challenges. On 6 February 2020 the DRT, Ahmedabad fixes the debt: ₹109.11 crore with 14.25% interest and 2% penal interest, against the company and both brothers, with two months to pay. No appeal is filed — the figure becomes final. Paras 18, 32, 39(e), 48–49.

The flagship is rescued. DPIL’s resolution plan is approved on 20 June 2022, and the buyer pays the banks their admitted claims. The brothers point to bonds of ₹49.97 crore and a letter which, they say, accepted the payout as “full and final settlement”. Surely, they think, the story ends here. Paras 6–7, 21.

The knock on the door. January 2024: a demand notice for ₹116.15 crore lands — on the brothers personally. Petitions under section 95 follow in May, and on 23 October 2024 the NCLT, Ahmedabad admits them, opening the insolvency process against each brother. Paras 7, 23, 30.

★

The appeals fail. On 12 May 2026 the NCLAT dismisses both appeals. The plan rescued DPIL — not the brothers: their guarantees were never dealt with in it, the decree’s interest is still unpaid, and that same decree gave the banks a fresh limitation clock. The debt, computed at ₹122.19 crore to 31 March 2024, may be pursued. Paras 37, 39–41, 48–51.

Six expressions this page uses

Personal guarantor — a person (here, each brother) who promises the bank that the company’s debt will be paid.

Corporate guarantor — a company (DPIL) that gives the same promise for another company’s debt.

NPA — a non-performing asset: the bank’s classification once loan repayments stop.

Recovery certificate — the DRT’s decree quantifying the debt and ordering its recovery; here ₹109.11 crore plus interest.

Resolution plan — the approved rescue of an insolvent company; it binds creditors for that company’s debts.

Limitation — the time limit for suing; three years here, restarted by a decree or an acknowledgment of the debt.

Self-checkIf the banks were paid under DPIL’s plan, why do the brothers still owe?

The plan paid the banks’ admitted claim — ₹52 crore, exclusive of interest — in DPIL’s own insolvency. It never dealt with the brothers’ personal guarantees, and the DRT’s unchallenged decree, with its 14.25% interest and 2% penal interest, kept running. What the plan left unpaid survives against the guarantors. Paras 34, 40, 44, 48–49.

Move to the Bar

One rescue, three obligors, two limitation clocks. Which promises survived the plan — and for how much?

Take a seat at the Bar →

Seat two · twelve minutes · the argument

The Bar

Fix the clock around the decree, then read the plan for what it never said.

Bar · 1

Four questions the decision answers

Were the section 95 petitions barred by limitation — default in 2016, guarantees invoked in 2018, petitions filed only in 2024? Paras 38–39.

Did the approved resolution plan of the corporate guarantor (DPIL) — and the banks’ paid-out claims in its CIRP — extinguish the personal guarantors’ liability? Paras 38, 40–48.

Are section 95 proceedings against personal guarantors maintainable during or after the CIRP of the corporate debtor or the corporate guarantor? Para 45.

What weight does an unchallenged DRT decree carry in a section 95 petition? Paras 48–49.

The appellants also pleaded discharge under s. 133 of the Contract Act (the allegedly undisbursed ₹24 crore). The Tribunal recorded that plea (Paras 3–4, 19) but framed and decided only two issues — limitation and full discharge (Para 38). This judgment is not an authority on material alteration.

Bar · 2

Two maps of the same debt

Our reading of the mechanism · select a box, arrow or badge for its paragraph reference. On small screens, swipe the chart sideways.

The arithmetic that decided it: the admitted claim paid in DPIL’s CIRP was ₹52 crore, exclusive of interest. The DRT decree runs at ₹109.11 crore plus 14.25% interest and 2% penal interest from 12.04.2018 — ₹122.19 crore by 31.03.2024. The gap between those two numbers is what the brothers still answer for (Paras 34, 37, 48).

Bar · 3

The holdings — our reading, then the Court

Five propositions to take into the briefOur reading is this page’s interpretation; The Court is verbatim, with paragraph numbers from the judgment.

Holding 1 · Q2 · A plan for the guarantor company does not release the personal guarantors

Our readingThe brothers’ liability runs with the borrower’s under s. 128 of the Contract Act. A plan approved in someone else’s insolvency — borrower or co-guarantor — is not payment by them, and does not discharge them.

The Court · Para 41“We observe that it is a settled position of law that the liability of the personal guarantor remains co-extensive with that of the principal debtor and is not extinguished merely by reason of the approval of a Resolution Plan in the insolvency proceedings of the corporate debtor or the corporate guarantor.”

Holding 2 · Q2 · What the plan paid is credited; what it left unpaid survives

Our readingThe payout under DPIL’s plan answered the admitted claim of ₹52 crore — exclusive of interest. The interest and penal interest under the DRT decree remained due, so the balance stayed alive against the guarantors.

The Court · Para 44“Thus, even where a Resolution Plan results in partial recovery, the remaining unpaid debts survive and the guarantors continue to remain liable for the unpaid portion as applicable in the present case”

The Court · Para 48“On the face of it, the arguments of the Appellants sound quite attractive. However, the fact remains that the payment to the Consortium Banks are not fully covered especially interest and do not cover due amount as awarded by DRT Ahmedabad.”

Holding 3 · Q2 · Filing a claim in the guarantor’s CIRP is not full satisfaction

Our readingThe banks lodged (and were paid on) claims in DPIL’s CIRP. That participation did not convert the plan payout into satisfaction of the whole debt, or bar recovery of the balance from other obligors.

The Court · Para 45“The filing and admission of claims in the CIRP of the corporate guarantor does not amount to full satisfaction of the debt and does not bar the recovery of the remaining dues from other obligants, including the personal guarantors.”

Holding 4 · Q3 · Section 95 remains open during or after a related CIRP

Our readingInsolvency of the borrower or of a co-guarantor is no procedural bar: the creditor may move against the personal guarantors under s. 95 while those processes run or after they close.

The Court · Para 45“We observe that proceedings under Section 95(1) of the Code against personal guarantors are fully maintainable even after or during the CIRP of the corporate debtor or the corporate guarantor…”

Holding 5 · Q1 & Q4 · An unchallenged decree resets the limitation clock

Our readingCounted from invocation (06.04.2018), time would have run out on 06.04.2021. But the DRT’s decree of 06.02.2020 crystallised the debt and restarted the three years, and the Supreme Court’s COVID extension (15.03.2020–28.02.2022) stretched the window further — so the May 2024 petitions were in time.

The Court · Para 39(e)“Thus, the period of Limitation stood extended for three years w.e.f. order dated 06.02.2020 to 05.02.2023 in terms of section 18 of the Limitation Act, 1963. The decree of guarantee by DRT, Ahmedabad gives a fresh lease to the limitation and a new cause of action to the Applicant.”

The Court · Para 49“We also take into consideration the DRT Ahmedabad’s order has not been challenged by the Appellants, thus, the DRT’s order has attained finality based on which the Consortium Banks invoked Section 95 applications before the Adjudicating Authority.”

Disposition is not a new rule: both appeals were dismissed with no order as to costs (Para 51). The Tribunal did not re-fix the recoverable amount, decide what the brothers’ insolvency process will yield, or adjudicate the s. 133 material-alteration plea as a framed issue (Para 38). The propositions above explain why the two grounds actually pressed — limitation and full discharge — failed (Para 50).

Bar · 4

Why the Court got there

Our readingThe foundation is Lalit Kumar Jain: a resolution plan’s approval binds creditors for the company being resolved, but it is not a discharge of the guarantor by the creditor’s voluntary act (Para 42).

The Court · Para 42 · on Lalit Kumar Jain (SC)“…the approval of a Resolution Plan under Section 31 of the Code does not operate as a discharge of the guarantor’s liability and that the liability of the guarantor continues to remain co-extensive with that of the principal debtor.”

Our readingA haircut accepted in one insolvency is not a receipt for the balance. The Tribunal invoked the Calcutta High Court’s Gouri Shankar Jain for the creditor’s right to the shortfall, and the Supreme Court’s BRS Ventures — No. 8 in this series — for the rule that settling with one obligor leaves the others bound (Paras 43–44).

The Court · Para 43 · on Gouri Shankar Jain (Cal HC)“…the approval of a Resolution Plan and the acceptance of a haircut by the financial creditors does not impair or extinguish the creditor’s right to recover the balance amount from the guarantor.”

The Court · Para 44 · on BRS Ventures (SC)“…recovery of part of the debt or settlement with one obligant does not extinguish the liability of the other obligants and that the creditor retains the full right to recover the balance debt from the remaining obligants, including the personal guarantor.”

Our readingOn the facts, everything turned on two silences: no plan was ever approved for the borrower itself, and DPIL’s plan nowhere dealt with these personal guarantees. The banks had therefore retained their rights — and the decree quantified exactly what remained.

The Court · Para 40“The approval of Resolution Plan for the Corporate Guarantor (“DPIL”) (Diamond Power Infrastructure Limited) to the Corporate Debtor (Diamond Power Transformers Limited) has no bearing on the rights of the banks against the Appellants as no resolution plan has even been approved for the Corporate Debtor/DPTL and the Corporate Debtor is under liquidation.”

Move to the Bench

The banks can proceed. But what exactly did this judgment decide — and what does it only appear to decide?

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Seat three · the limits of the precedent

The Bench

Keep the settlement, the silence and the clock in three separate columns.

Bench · 1

Three over-readings to stop

Over-reading 01

“Full and final” for the guarantor’s plan means final for everyone.

The error: treating the acknowledgment of the plan payout, or a No Dues Certificate issued in DPIL’s CIRP, as a universal discharge of the loan.

The move: fix whose liability the plan extinguished and what it actually paid. Here it paid the ₹52-crore admitted claim and nowhere dealt with the personal guarantees (Paras 33–34, 40). A plan that expressly deals with the guarantee is a different case.

Over-reading 02

The limitation clock died in 2021.

The error: counting three years from default (2016) or invocation (2018), and stopping there.

The Court · Para 39(e)“The decree of guarantee by DRT, Ahmedabad gives a fresh lease to the limitation and a new cause of action to the Applicant.”

The move: plot every crystallising event — decree, acknowledgment, the COVID exclusion — before calling a guarantee claim dead (Paras 39(c)–(f)). Equally, where there is no decree or acknowledgment, this case does not revive a stale claim.

Over-reading 03

Personal guarantors now pay regardless of what the banks received.

The error: reading co-extensive liability as permission to recover the same money twice.

The Court · Para 44 · on BRS Ventures (SC)“…the creditor retains the full right to recover the balance debt from the remaining obligants, including the personal guarantor.”

The move: the word is balance. What survived here was the unpaid component — principally the DRT-awarded interest (Paras 34, 48). Demand the ledger of actual receipts before conceding quantum.

Bench · 2

Both edges of the authority

For the creditor bank

Keep the guarantee alive through the group’s insolvencies

Start from the deed and the decree. The guarantee, its invocation, and the unchallenged DRT adjudication anchor both debt and default (Paras 30, 32, 49).
Show the plan’s silence. Where the plan never dealt with the personal guarantees, the rights against the guarantors were retained (Paras 33, 40).
Cite the co-extensive line. Para 41, with Lalit Kumar Jain (Para 42) and BRS Ventures (Para 44), answers the discharge objection.
Prove the clock, do not assume it. Decree + s. 18 + the COVID extension carried limitation past the filing date; lay the dates out (Paras 39(c)–(f)).

For the personal guarantor

Narrow the claim to what this judgment actually permits

Read the plan’s own words. This case turned on silence. A plan that expressly deals with and extinguishes the guarantee stands on different ground — negotiate for that clause at the plan stage (Paras 33, 40).
Audit the ledger. Only the unpaid balance survives. Reconcile the claimed interest against every actual receipt before conceding ₹122 crore (Paras 34, 44, 48).
Attack the fresh-lease premise. The limitation holding rests on an unchallenged decree plus the COVID exclusion. No decree, no acknowledgment in time — no fresh clock (Paras 39(e), 49).
Keep distinct defences framed as issues. The s. 133 material-alteration plea was recorded but never decided as an issue here; do not let this case be cited against a genuine alteration defence (Paras 3–4, 19, 38).

Bench · 3

Test the argument in your own brief

Can the bank proceed against the personal guarantor on this reasoning?Assume a corporate loan with a personal guarantee, and a resolution plan approved for the borrower or a co-guarantor. Answer all four; the result addresses this judgment’s objections, not the whole section 95 petition.

1. Does debt remain unpaid after crediting everything actually received under the plan?Count principal and the adjudicated interest, not the admitted claim alone — Paras 34, 44, 48.

2. Does the plan expressly deal with — and extinguish — the personal guarantee?Silence preserved the banks’ rights here — Paras 33, 40.

3. Is the filing within three years of the latest decree or acknowledgment (with any COVID exclusion)?The fresh lease ran from the DRT decree — Paras 39(d)–(f).

4. Is the guarantor’s objection based only on the plan’s approval or claims filed in the guarantor’s CIRP?A distinct defence needs its own analysis — Paras 38, 45.

Pending

Answer the four questions to see how Amit Bhatnagar applies.

An argument check, not a prediction of admission. It does not decide the adequacy of the s. 99 report, disputed quantum or material-alteration defences. Paragraphs refer to the judgment.

Continue the series No. 11 · Archana Deepak Wani v. Indian Bank →