NCLAT upholds insolvency against Nyka Steel guarantor over Rs 96 crore dues

The National Company Law Appellate Tribunal (NCLAT) has upheld insolvency proceedings against Asif Ahmed Siddique, personal guarantor of Mumbai-based Nyka Steel, on a plea by UCO Bank. The two-member bench dismissed Siddique's appeal against a February 3, 2026 NCLT order that admitted the bank's petition under Section 95 of the Insolvency and Bankruptcy Code. The bank had issued demand notices of Rs 51.76 crore in September 2023 and Rs 96.23 crore in November 2024.

Siddique argued that no fresh guarantee was signed for a 2018 credit facility renewal and that his liability was capped at Rs 40 crore. The NCLAT held that the December 2017 guarantee deed capped principal at Rs 40 crore but separately provided for interest at 12.70% annually from demand date, allowing total dues to exceed the cap. It also noted Siddique had signed the 2018 renewal and the guarantee was continuing.

The tribunal rejected the contention that the bank must first seek RBI's MSME rehabilitation framework before IBC proceedings, stating an existing default is not extinguished. It further ruled that moratorium under Section 14 of IBC does not extend to personal guarantors, citing Supreme Court precedents. The appeal was dismissed without issuing formal notice.