Vol 22 (2025) - Issue 5

Article preview

IDBI Bank Ltd v Axcel Sunshine Ltd [2025] EWHC 442 (Comm)

Synopsis
The English High Court considered a claim brought by IDBI Bank Limited (the ‘Lender’), an Indian bank, against Axcel Sunshine Limited (the ‘Borrower’) and Siva Industries And Holdings Limited (‘Siva’) in relation to USD 143.7 million owed by the Borrower to the Lender under a facility agreement (the ‘Outstanding Sum’). At dispute was the enforceability of a comfort letter provided by Siva to the Lender as a condition of lending (the ‘Comfort Letter’): the Lender alleged that Siva had guaranteed the Outstanding Sum under the Comfort Letter, whereas Siva asserted that the parties had never intended the Comfort Letter as a binding document, and that it was only provided for ‘optical’ purposes.
The case provides a useful reminder of the importance of clear drafting in comfort letters, and that courts will look to the substance of an agreement between parties, rather than its label.