Personal Guarantors Cannot Revive Appeals After OTS Fails Due to Their Own Default: NCLAT

The National Company Law Appellate Tribunal (NCLAT) at Delhi has recently refused to restore appeals filed by three personal guarantors after a ₹4.60 crore One-Time Settlement (OTS) with Indian Bank failed. The tribunal held that the guarantors could not rely on the liberty granted in an earlier order to take advantage of their own default.

“Certainly the appellants or principal borrower who appears to be at fault by not honoring the OTS may not take the advantage of their own wrong,” the bench observed.

The bench of Judicial Member Justice Mohammad Faiz Alam Khan and Technical Member Naresh Salecha was dealing with restoration applications filed by personal guarantors Arun Singh, Rohit Singh, and Brijesh Kumari. They had earlier challenged orders admitting insolvency resolution proceedings against them as personal guarantors of RGV Infra Project Pvt. Ltd.

The appeals were dismissed as infructuous on October 16, 2025, after Indian Bank accepted the OTS, with liberty to revive them if the settlement failed. Under the ₹4.60 crore OTS, ₹46 lakh was paid upfront, but the remaining instalments were not paid.

The bank rejected the settlement and initiated bankruptcy proceedings against the guarantors. The NCLT admitted the application on February 13, 2026. The guarantors then sought restoration of their appeals, but Indian Bank opposed the pleas, arguing that the revival liberty did not cover their own default

It could not be invoked when the applicants themselves failed to comply with the settlement terms.

The tribunal noted that the original appeals had been dismissed on the guarantors' own submission that the settlement had taken place and the OTS had been accepted.

The OTS also required the guarantors to withdraw their appeals after its sanction. If the settlement failed, they were required to extend full cooperation in the sale of EM Properties under SARFAESI.

The bench observed that the liability of the principal borrower and guarantors was co-extensive. It held that the revival liberty was meant for a situation where the settlement failed because of a default by the bank, not because the borrower or guarantors failed to honour the OTS.

The NCLAT ultimately dismissed all three restoration applications, holding that they had no substance.