The Supreme Court of Mauritius has confirmed on appeal, that a deed of company arrangement (DOCA) cannot extinguish a creditor’s rights against guarantors. In Wong Hee J. & Anor v. The Mauritius Development Investment Trust Company Ltd (2026 SCJ 1), the Court held that section 269(2) of the Insolvency Act 2009 (IA 2009) is mandatory and preserves a guarantor’s liability notwithstanding any contrary term in a DOCA.

This appellate decision upholds the trial judgment in Mauritius Development Investment Trust Co Ltd v Wong Hee J & Anor (2025 SCJ 9). At first instance, the judge found that, although the DOCA purported to release the company’s principal debt and to discharge guarantors upon payment, section 269(2) of the IA 2009 maintained the creditor’s rights against personal guarantors. Judgment was entered for the outstanding balance, with interest and costs. On appeal, the Supreme Court rejected arguments to the contrary and reaffirmed that section 269(2) is a matter of public order (‘ordre public’) that cannot be overridden by private agreement or DOCA drafting.

The facts

The Mauritius Development Investment Trust Company Ltd (MDIT) advanced an aggregate of MUR 15 million to Super Construction Company Ltd (SCC). SCC’s directors personally guaranteed the loan on a joint and several basis. Following SCC’s voluntary administration, a DOCA was executed providing, among other things, that unsecured creditors, including MDIT, would receive 30% of their claims and that any guarantor of a claim would be released upon payment under the DOCA. SCC subsequently paid MUR 4.5 million to MDIT in ‘full and final settlement’ per the DOCA. MDIT then pursued the guarantors for the remaining balance and accrued interest.

The central question was whether a DOCA that compromises or releases the company’s principal debt also operates to release the company’s guarantors from their obligations under the guarantees.

The parties’ submissions were as follows:

• The guarantors relied on the DOCA’s release provisions and articles 1234 and 1287 of the Mauritius Civil Code to contend that their liability was discharged alongside the company’s.
• MDIT based its claim on section 269(2) of the IA 2009 which provides that the release of a company from a debt does not discharge the liability of a guarantor of that debt.

Court’s analysis and decision

At first instance, the judge considered the interplay between the Civil Code and the IA 2009 and concluded that, in an insolvency context, guarantors do not benefit from the same release as the principal debtor. The analysis drew support from legal commentary and comparative reasoning, including analogous provisions in the Australian Corporations Act 2001.

The Court determined that section 269(2) of the IA 2009 preserves creditors’ recourse against guarantors notwithstanding any compromise or release of the company’s liability under a DOCA.

On appeal, the Supreme Court endorsed this approach. It held that section 269(2) of the IA 2009 is of public order, meaning it is mandatory and cannot be derogated from by contractual provisions or restructuring instruments such as a DOCA. Consequently, a clause purporting to release guarantors such as clause 4.1.2 of the DOCA could not override the statutory scheme and was without effect to the extent it conflicted with section 269.

Outcome

The guarantors were held jointly and severally liable for the outstanding loan balance, with their obligations unaffected by the company’s settlement under the DOCA. The appellate court reaffirmed that any DOCA term seeking to discharge guarantor liability is ineffective where section 269(2) of the IA 2009 applies.

In an important observation, the Court expressly noted that inserting a clause in a DOCA to release guarantors cannot defeat the IA 2009’s framework for a creditor’s statutory right to recover from guarantors. Such provisions are contrary to section 269 (2) of the IA 2009, a rule of public order, and therefore can have no legal effect.

The appellants are understood to be considering an application for leave to appeal to the Judicial Committee of the Privy Council, the ultimate court of appeal in Mauritius. Any further appellate guidance will be significant for DOCA practice and guarantee enforcement in Mauritius.

Key takeaway

Section 269(2) IA 2009 is a mandatory rule of public order: a DOCA cannot discharge guarantors’ liabilities. Creditors retain their statutory rights against guarantors notwithstanding any compromise or release of the company’s principal debt.

Written by Gilles Athaw, Partner; and Nawsheen Jaulim and Deeviya Rughooputh, Associates; Bowmans Mauritius