Uv Asset Reconstruction Company ... vs Electrosteel Castings Limited

The Supreme Court examined whether Clause 2.2 of the Deed of Undertaking executed between SREI Infrastructure Finance Limited, Electrosteel Steels Limited, and Electrosteel Castings Limited constitutes a contract of guarantee under Section 126 of the Indian Contract Act, 1872. The Court analyzed the nature of the obligations of Electrosteel Castings Limited as an erstwhile promoter and obligor, and whether it stood as a guarantor for the financial facilities availed by Electrosteel Steels Limited. The NCLAT and NCLT had earlier rejected the application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, and the Supreme Court upheld these findings, clarifying the interpretation of the contractual clause in question. The judgment reinforces the distinction between a guarantee and other forms of financial undertakings in insolvency proceedings.