Voluntary payments by promoters not constitutive of a contract of guarantee

Ad-hoc or voluntary remittals of funds made by a promoter company to a financial creditor on behalf of an associate borrower do not create or evidence a contract of guarantee in the absence of an underlying contractual covenant. Where payments are made by a promoter in its independent capacity to support a project, preserve solvency, or discharge specific commercial objectives, such payments do not arise out of any contractual guarantee obligation. A voluntary financial infusion or unilateral remittance cannot retrospectively alter the legal character of a deed of undertaking or bind the remitter as a statutory surety under Section 126 of the Indian Contract Act, especially where the underlying agreements contain no covenant answering for the borrower's default. (UV Asset Reconstruction Company Limited Vs Electrosteel Castings Limited | 2026 INSC 14)