China Development Bank vs Doha Bank Q. P. S. C.

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2024 Supreme(SC) 1238

ABHAY S. OKA, PANKAJ MITHAL
China Development Bank – Appellant
Versus
Doha Bank Q. P. S. C. – Respondent

Advocates appeared:
For the Appellant(s) : Mr. Neeraj Kishan Kaul, Sr. Adv. Mr. Chetan Kapadia, Sr. Adv. Mr. Siddharth Ranade, Adv. Ms. Nishi Bhankharia, Adv. Mr. Ribhu Garg, Adv. Ms. Kaazvin Kapadia, Adv. Mr. Pushkar Deo, Adv. Mr. Deepak Joshi, Adv. Mr. Raghav Agarwal, Adv. Mr. Syed Jafar Alam, AOR
(Item Nos.1501.1 & 1501.3) : Mr. Darius Khambata, Sr. Adv. Mr. Rajendra Barot, Adv. Mr. Abhijnan Jha, Adv. Mr. Bharat Makkar, Adv. Mr. Pranav Tomar, Adv. Ms. Liz Mathew, AOR
For the Respondent(s): Mr. S. S. Shroff, AOR Mr. Saurav Panda, Adv. Mr. Vaijayant Paliwal, Adv. Ms. Charu Bansal, Adv. Ms. Mohana Nijhawan, Adv. Ms. Kirti Gupta, Adv. Mr. P. Chidambaram, Sr. Adv. Mr. Dhruv Malik, Adv. Ms. Jinal Shah, Adv. Ms. Palak Nenwani, Adv. Mr. Ronit Chopra, Adv. Mr. P Chidambaram, Sr. Adv. M/S. Juris Corp., AOR Mr. Abhijnan Jha, AOR Mr. Bharat Makkar, Adv. Mr. Pranav Tomar, Adv. Mr. Sanjay Kapur, AOR Mr. Devesh Dubey, Adv. Mr. Surya Prakash, Adv. Mr. Arjun Bhatia, Adv. Ms. Divya Singh Pundir, Adv. Ms. Mahima Kapur, Adv. Ms. Shubhra Kapur, Adv.

Judgement Key Points

Question 1? Question 2? Question 3?

Key Points: - The DoH clause 5(iii) can create a guarantee under Section 126 of the Contract Act, making Corporate Debtor a guarantor for shortfall obligations. (!) (!) (!) - Whether the appellants are Financial Creditors under IBC depends on treating the DoH as a guarantee and the applicability of Sections 5(7), 5(8), and 3(6)/(11) to define "financial debt" and "claim." (!) (!) (!) (!) (!) - The NCLAT's reversal of NCLT's classification of appellants as Financial Creditors was quashed; the appellants are to be classified as Financial Creditors, with the DoH recognized as guaranteeing obligations. (!) (!)

Question 1?

Question 2?

Question 3?

JUDGMENT :

ABHAY S. OKA, J.

FACTUAL ASPECTS

1. These appeals take exception to the judgment dated 9th September 2022 of the National Company Law Appellate Tribunal, Principal Bench, New Delhi (for short, ‘the NCLAT’). The appellants in this batch of appeals (for short, ‘appellants’), except the appellant in Civil Appeal No.7434 of 2023, were parties to the appeals preferred by 1st to 4th respondents in Civil Appeal No. 7298 of 2022.

2. The issue involved in these appeals is whether the appellants can be classified as ‘Financial Creditors’ within the meaning of sub-section (7) of Section 5 of the Insolvency and Bankruptcy Code, 2016 (for short, ‘the IBC’). Another issue may arise in the event it is held that the appellants are not ‘Financial Creditors’. The issue will be whether the appellants can be classified as ‘Secured Creditors’ and paid commensurate to their security interest.

3. 1st respondent-Doha Bank claims to be a direct lender and secured Financial Creditor of Reliance Infratel Limited (for short, ‘RITL’ or ‘the Corporate Debtor’). A Corporate Insolvency Resolution Process (CIRP) was initiated by the adjudicating authority (NCLT) in respect of RITL-Corporate Debtor at the ins