Hypothecator Assuming Borrower’s Dues Is Corporate Guarantor, Insolvency Lies With Borrower’s NCLT: NCLAT Principal Bench

The National Company Law Appellate Tribunal upheld insolvency admission of four Imagine group companies as corporate guarantors, holding that hypothecation and loan documents together formed a contract of guarantee.

The National Company Law Appellate Tribunal (NCLAT) has held that a company which hypothecated its assets and, under the loan documents, became jointly and severally liable for the borrower’s dues is a corporate guarantor, and that its insolvency can be pursued under Section 60(2) of the Insolvency and Bankruptcy Code, 2016 (IBC) before the Tribunal handling the borrower [Bindu Kapoor v. Mamta Binani & Ors., 2026-juristway.com-3396-NCLAT(New Delhi-[PB])-IBC].

Justice Yogesh Khanna, Officiating Chairperson, wrote the judgment for a Bench with Barun Mitra and Ajai Das Mehrotra, Members (Technical). The suspended director of Imagine Estate Private Limited and three group companies challenged a common order of the National Company Law Tribunal (NCLT), New Delhi dated 7 Apr 2026. The principal borrower, Bliss House Private Limited, was already in corporate insolvency resolution process before the same Bench.

The appellant argued that the companies, registered in Mumbai, had signed only hypothecation deeds, not guarantees, and that a guarantee must be tripartite. Their liability, she said, was limited to the hypothecated assets.

The NCLAT noted that the loan agreement of 29 Mar 2019 listed the company as a hypothecator, defined obligors to include hypothecators, and made all obligors jointly and severally liable. The hypothecation deed reiterated that the company assumed those obligations and was to be read with the loan agreement.

Holding that substance, not nomenclature, decides, it found that the documents read together formed a tripartite arrangement amounting to a contract of guarantee. It relied on Punjab National Bank v. Shri Vikram Cotton Mills (1970), cited by the appellant herself, for the principle that a guarantee may be inferred from several agreements. It added that the appellant had signed both documents as common director.

Section 60(2) requires proceedings against a guarantor to be heard where the borrower’s insolvency is pending, so the Mumbai registered office did not matter. The company was also directly liable for about ₹596 crore of its own loans, which it did not dispute. The appeals were dismissed.

2026-juristway.com-3396-NCLAT(New Delhi-[PB])-IBC