The National Company Law Appellate Tribunal (NCLAT) has upheld an order passed by the NCLT, directing insolvency proceedings against a personal guarantor of Mumbai-based Nyka Steel.
A two-member bench of the appellate tribunal upheld a February 3, 2026 order of the National Company Law Tribunal (NCLT), Mumbai, which had admitted UCO Bank’s plea to initiate insolvency proceedings against Asif Ahmed Siddique.
Section 95 of the Insolvency and Bankruptcy Code (IBC), 2016 allows creditors to start insolvency proceedings against debtors, which includes personal guarantors and partnership firms.
Nyka Steel is already undergoing a Corporate Insolvency Resolution Process (CIRP) before the NCLT.
The petitioner had argued that no fresh deed of personal guarantee was executed for the April 12, 2018 sanction letter renewing and enhancing credit facilities to the corporate debtor, and that his guarantee covered only loans sanctioned in 2013 and 2017.
He also contended that the contractual exposure under the Deeds of Guarantee was capped at ₹40 crore and the liability of the guarantor could not have been enlarged beyond the terms of the contract.
The bank had issued demand notices in September 2023 and November 2024, raising claims of ₹51.76 crore and ₹96.23 crore, respectively.
The NCLAT, however, held that while the Deed of Guarantee dated December 12, 2017, capped the principal liability at ₹40 crore, it separately provided for interest at 12.70% per annum from the date of demand, meaning the total outstanding could exceed the capped amount.
The tribunal also noted that the petitioner had himself signed the April 2018 renewal of credit facilities, and since his 2017 guarantee was a continuing one, it could not be argued that it excluded the 2018 sanction.
Rejecting the appellant’s other contentions, the NCLAT held that a lender’s failure to first pursue RBI’s rehabilitation framework for MSMEs does not extinguish an existing default or bar insolvency proceedings under the IBC.
It also held that the moratorium under Section 14 of the IBC does not extend to personal guarantors, citing the Supreme Court’s ruling in the case of State Bank of India vs V. Ramakrishnan. It said that a guarantor’s liability survives even after approval of a resolution plan, per the apex court’s verdict in Lalit Kumar Jain vs Union of India.
“The appeal has no merits and is accordingly dismissed without issuance of any formal notice,” said the bench comprising Officiating Chairperson Justice Yogesh Khanna and Technical Member Ajai Das Mehrotra.
Published – August 15, 2026 09:48 pm IST
