The Supreme Court of India ('Court') in UV Asset Reconstruction Company Limited v. Electrosteel Castings Limited, Civil Appeal No. 9701/2024, has delivered a critical judgment clarifying the legal boundaries between a Deed of Undertaking and a Contract of Guarantee under Section 126 of the Indian Contract Act, 1872 (‘Act’). The Court's decision underscores that mere commercial nomenclature and internal funding arrangements do not satisfy the rigorous legal requirements of a guarantee.

Factual Background

CASE BRIEF

Case Name: Sri Lakshmi Hotel Pvt. Limited & Anr vs Sriram City Union Finance Ltd & Anr.

Case No.: Civil Appeal No. 13785 of 2025

Citation: 2025 INSC 1327

Court: Hon’ble Supreme Court of India.

Coram: Hon’ble Mr. Justice J.B. Pardiwala and Hon’ble Mr. Justice, K.V. Viswanathan

Date: 18 November 2025

1. FACTUAL MATRIX

Introduction

Established in 2005 by the Wadia Group, Go Air, later rebranded as Go First, entered the Indian aviation sector as a low-cost carrier, aiming to provide affordable air travel to the rapidly expanding middle class. The airline was built on a business model that focused on operational efficiency, a streamlined fleet, and competitive pricing. However, despite its early success, Go Air faced mounting financial difficulties that ultimately led to its insolvency.