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Indian Contract Act

UV ARC v. Electrosteel Castings 2026 INSC 14 - Contract Act - 'See To It' Guarantee

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Indian Contract Act 1872 - Section 126- ‘See to it’ guarantee in English Common Law refers to an obligation upon the guarantor to ensure that principal debtor itself, performs its own obligation and the guarantor, therefore, is in breach as soon as principal debtor fails to perform. However, a ‘See to it’ guarantee does not include an obligation to enable the principal debtor to perform its own obligation. Such an 13 arrangement would not be a guarantee under Section 126 of the Act.(Para 22)

Indian Contract Act 1872 - Section 126- For an obligation to be construed as a guarantee under Section 126 of the Act, there must be a direct and unambiguous obligation of the surety to discharge the obligation of the principal debtor to the creditor - An undertaking to infuse funds into a borrower, so that it may meet its obligations cannot, by itself be equated with the promise to discharge the borrower’s liability to the creditor. A mere Covenant to ensure financial discipline or infusion of funds does not satisfy the statutory requirements of Section 126 of the Act. (Para 20)

Indian Contract Act 1872 - Section 126 - Essential ingredients of a guarantee: (a) existence of principal debt, (b) default by the principal debtor and (c) a promise by the surety to discharge the liability of the principal debtor upon such default. Thus, a guarantee is a promise to answer for the payment of some debt, or the performance of some duty, in case of failure of another party, who is in the first instance, liable to such payment or performance . A guarantee is a security in the form of right of action against a third party. In order to constitute a guarantee there has to be a specific undertaking or unambiguous affirmation to discharge the liability of a third person in case of their default. A guarantee is governed by principles of construction generally governing other documents . A guarantee being a mercantile contract, the Court does not apply to it merely technical rules but construes it so as to reflect what may fairly be inferred to have been the parties’ real intention and understanding as expressed by them in writing and to give effect to it rather than not. (Para 17-18)

Pleadings - pleadings must be read as a whole and cannot be read selectively out of context or in isolation. (Para 24)

Case Info


Case Details

  • Case name and neutral citation:
    • UV Asset Reconstruction Company Limited v. Electrosteel Castings Limited — 2026 INSC 14.
    • Electrosteel Castings Limited v. UV Asset Reconstruction Company Limited — neutral citation not explicitly shown; same date and bench.
  • Coram: Justice Sanjay Kumar and Justice Alok Aradhe.
  • Judgment date: January 06, 2026.

Caselaws and citations referred

  • Moschi v. Lep Air Services Ltd., 2 WLR 1175 (per Lord Diplock).
  • Associated British Ports v. Ferryways, [2009] EWCA Civ 189.
  • Shanghai Shipyard Co. Ltd. v. Reignwood International Investment (Group) Co. Ltd., [2021] EWCA Civ 1147.
  • Mumbai International Airport Pvt. Ltd. v. Golden Chariot Airport and Ors., (2010) 10 SCC 422 (paras 43–50).
  • Nagindas Ramdas v. Dalpatram Ichharam and Ors., (1974) 1 SCC 242 (para 27).
  • Yes Bank Ltd. v. Zee Entertainment Enterprises Ltd. and Ors., 2020 SCC OnLine Bom 11763 (paras 50, 53, 59, 62, 67).
  • United Breweries (Holding) Ltd. v. Karnataka State Industrial Investment and Development Corporation Ltd. and Others, 2011 SCC OnLine Kar 4012 (paras 6, 9).
  • Aditya Birla Finance Ltd. v. Siti Networks, 2023 SCC OnLine Del 1290 (paras 26, 237, 238).
  • Conley (Re), ex p Trustee v Barclays Bank Ltd., (1938) 2 All ER 127, at 130–131 (CA).
  • Eshelby v. Federated European Bank Ltd., (1932) 1 KB 254.
  • Kamla Devi v. Thakhratmal Land, AIR 1964 SC 859.
  • Perrylease Ltd v Imecar AG, (1987) 2 All ER 378.
  • Committee of Creditors of Ushdev International Ltd. v. Subodh Kumar Agarwal (NCLAT), Company Appeal (AT) (Ins) No. 172–173 of 2022.
  • Lalit Kumar Jain v. Union of India, (2021) 9 SCC 321.
  • Commissioner of Income Tax v. Rathi Graphics Technologies Ltd., 2015 SCC OnLine Delhi 14470.
  • Forbes v. Git & Ors., 1921 SCC OnLine PC 102 (paras 8–11).
  • Radha Sundar Dutta v. Mohd. Jahadur Rahim, 1958 SCC OnLine SC 38 (paras 11–13).
  • Ramkishorelal v. Kamal Narayan, 1962 SCC OnLine SC 113 (paras 12–13).
  • Delhi Development Authority v. Karamdeep Finance and Investment India Pvt. Ltd. & Ors., (2020) 4 SCC 136 (para 36).
  • IFCI Limited v. Sutanu Sinha & Ors., 2023 SCC OnLine SC 1529; (2024) 248 Comp Cas 217.
  • Disortho S.A.S. v. Meril Life Sciences Pvt. Ltd., 2025 SCC OnLine SC 570 (paras 26–28).
  • Halsbury’s Laws of England, Vol. 49, 5th Ed.

Statutes/laws referred

  • Insolvency and Bankruptcy Code, 2016 — Sections 7, 31(1), 62.
  • Indian Contract Act, 1872 — Section 126 (contract of guarantee).
  • Indian Evidence Act, 1872 — Section 58 (admissions).
  • Indian Accounting Standard (Ind AS) 109.
UV ARC v. Electrosteel Castings 2026 INSC 14 - Contract Act - 'See To It' Guarantee
UV ARC v. Electrosteel Castings 2026 INSC 14 - Contract Act - 'See To It' Guarantee .pdf
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