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PAMIDIGHANTAM SRI NARASIMHA, ALOK ARADHE
State Bank of India – Appellant
Versus
Doha Bank Q. P. S. C. – Respondent
What is... How to determine whether corporate guarantees constitute financial debt under Section 5(8) of the IBC? What is... How to assess validity of claims where guarantees were executed timing-wise, disclosed in statements, and verified by RP/IRP? What is... How to address permutations of stamping, disclosure, and verification defects in corporate guarantees when determining financial creditor status and CIRP proceedings?
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JUDGMENT :
ALOK ARADHE, J.
1. This appeal under Section 62 of the Insolvency and Bankruptcy Code, 2016 (Code) has been preferred by SBI Consortium comprising State Bank of India, Bank of India, UCO Bank, Syndicate Bank, Oriental Bank of Commerce and Indian Overseas Bank. The appeal arises from the order dated 14.10.2022 passed by the National Company Law Appellate Tribunal (NCLAT), whereby the order dated 02.03.2021 passed by National Company Law Tribunal (NCLT) was affirmed and the appeal was dismissed.
2. This appeal raises important question regarding validity and enforceability of corporate guarantees within the framework of the Code. The challenge mounted by respondents to the validity of the said corporate guarantees has been made on several grounds, namely, the timing and circumstances of the execution of guarantee, the alleged absence of proper disclosure in financial statements, the manner of their verification, the corporate insolvency resolution process and to their alleged insufficiency of stamping. These objections call for careful scrutiny to determine whether such grounds can legitimately defeat the recognition of a “financial debt” and status of a “financial credito
Corporate guarantees constitute financial debt under IBC Section 5(8); challenges on timing, non-disclosure, verification, and stamping rejected; tribunals' perverse findings warrant Supreme Court in....
The absence of a formal deed of guarantee precludes liability for financial debt under the Insolvency Code, rendering the application for insolvency resolution not maintainable.
Liability of guarantor is co-extensive with that of Principal Borrower. CIRP can be initiated against a corporate entity who has given a guarantee to secure dues of a non-corporate entity once borrow....
(1) Initiation of Corporate Insolvency Resolution Proceeding – Action under Section 7 of Code could be legitimately invoked even against a (corporate) guarantor being a corporate debtor.(2) Principal....
The main legal point established in the judgment is that once NCLT is satisfied that a default has occurred, there is hardly any discretion left with NCLT to refuse admission of the application under....
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