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2026 Supreme(Online)(NCLT) 1832

IN THE NATIONAL COMPANY LAW TRIBUNAL,
MUMBAI BENCH- I

IA(I.B.C)/4850/MB/2025
IN
CP(IB) No. 973 of 2020

Under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the NCLT Rules, 2016

In the Application of
Union Bank of India
…Applicant

Versus
Mr. Amit Chandrakant Shah
…Respondent

In the matter of
Bank of India
…Financial Creditor /Petitioner

Versus
Frost International Limited
…Corporate Debtor

Order Delivered On : 24.03.2026

Coram:
Sh.Prabhat Kumar
Member (Technical)
Sh.Sushil Mahadeorao Kochey
Member (Judicial)

Advocates:
For the Appellants/Petitioners: Adv Malhar Zatakia, Adv Drishti Ojha
For the Respondents: Adv. Astha Ojha, Adv. Jash Shah, Adv. Prateek Kumar

A Resolution Professional cannot reject a financial creditor's claim on the grounds of insufficient stamp duty, as it is a curable defect, and limitation is extended by a court decree against the principal borrower, as the guarantor's liability is co-extensive.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - S. 60(5) - CIRP - Admission of claim by Financial Creditor - Guarantee agreement - Limitation - Sufficiency of stamp duty. (Para 1)

(B) Limitation Act - S. 18, 19 - Extension of limitation - Decree from foreign court as fresh cause of action - Supreme Court ruling in Dena Bank v C. Shivakumar Reddy regarding co-extensive liability of guarantor and principal borrower. (Paras 7, 21, 22)

(C) Stamp Act - Insufficiency of stamp duty - Whether curable defect - Held that technical deficiency being curable, guarantee deed cannot be rejected on grounds of insufficient stamping where opportunity to cure was not provided or utilized by the guarantor. (Para 24)

Facts of the case:
Applicant filed an application seeking direction to the Resolution Professional (RP) to admit its claim of Rs.27,48,32,625.55 based on a Corporate Guarantee. The RP had rejected the claim on grounds of insufficient stamp duty, limitation, and discharge under Clause 19 of the Guarantee. Applicant challenged the rejection, asserting that the debt is within limitation due to a decree passed by the Singapore High Court and that stamp duty deficiency is a curable defect.

Findings of Court:
The Tribunal found that the claim was within the extended period of limitation due to the foreign court decree acting as a fresh cause of action. The Tribunal also held that the guarantee liability persists and insufficient stamp duty is a curable defect which does not warrant rejection of the claim at the verification stage. The RP exceeded his jurisdiction by adjudicating on complex legal issues that should have been viewed in light of established judicial precedents.

Issues: Whether the rejection of the claim by the Resolution Professional on grounds of limitation, stamp duty, and the interpretation of the Guarantee clause was legally valid.

Ratio Decidendi: Liability of a guarantor is co-extensive with that of the principal borrower; a foreign decree creates a fresh cause of action extending limitation, and insufficient stamp duty is a curable technical defect that does not render the instrument unenforceable for the purpose of claim admission in CIRP.

Result: Application allowed; rejection set aside.

Appearances:

For the Applicant : Adv Malhar Zatakia a/w Adv Drishti Ojha i/b Legal Prism

For Respondent No.1 : Adv. Astha Ojha a/w Adv. Jash Shah & Adv. Prateek Kumar

Brief facts:

1. The present Interlocutory Application has been filed on 20.09.2025 by the Applicant under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (“Code”) read with Rules 11 of the NCLT Rules, 2016, seeking directions to Respondent-Resolution Professional for admitting claim of the Applicant being financial creditor, thereby praying the following:

a. To allow the present Interlocutory Application;

b. Direct the Respondent-Resolution Professional to admit the claim of Rs.27,48,32,625.55 (Rupees Twenty-Seven Crore Forty-Eight Lakh Thirty-Two Thousand Six Hundred Twenty-Five Only) submitted by the Applicant under Form C dated 22.08.2023;

c. Grant such further and other reliefs as this Tribunal may deem just and proper in the facts and circumstances of the case.

2. The Union Bank of India (hereinafter referred to as “Applicant”) is a public sector bank incorporated under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and is a scheduled bank within the meaning of Banking Regulation Act, 1949, having its Head Office at 239, Vidhan Bhavan Marg, Nariman Point, Mumbai - 400 021 and having one of its Stressed Asset Management Branch at 104, Bharat House, Ground Floor, M.S. Marg, Fort, Mumbai 400 023.

3. The Bank of India filed C.P. (IB) No. 973/MB/C-1/2020 under Section 7 of the IBC, 2016 against the Corporate Debtor which was admitted vide order dated 09.02.2023 of this Tribunal, wherein Mr. Amit Chandrakant Shah (hereinafter referred to as “Respondent”) was appointed as Interim Resolution Professional.

Submissions of the Applicant

4. The present Application has been filed seeking directions to the Respondent Resolution Professional (“RP”) to admit its claim of ₹27,48,32,625.55/- arising out of a Corporate Guarantee dated 25.03.2013.

5. The Applicant had filed its claim in Form C on 22.08.2023 for a total amount of ₹486.85 crore, out of which a substantial portion was admitted, however, the aforesaid amount under the Corporate Guarantee was rejected vide email dated 23.06.2025 on grounds of (i) insufficient stamping, (ii) limitation, and (iii) discharge under Clause 19 of the Guarantee.

6. The Applicant contends that the rejection on the ground of stamp duty is erroneous, as deficiency of stamp duty is a curable defect and does not render the instrument void. It is submitted that the Applicant is willing to pay the requisite stamp duty and penalty, and therefore, rejection on this ground is premature.

7. On the issue of limitation, it is argued that the Corporate Guarantee is a continuing guarantee and limitation would run from the date of default or acknowledgment. The Applicant relies upon the decree dated 02.03.2022 passed by the High Court of Singapore against the principal borrower, which according to the Applicant constitutes a fresh cause of action under Sections 18 and 19 of the Limitation Act. Hence, the claim filed on 22.08.2023 is within limitation.

8. Further, Clause 19 of the Corporate Guarantee has been misconstrued by the Respondent. It is argued that the said clause only regulates invocation and does not extinguish subsisting liability. The Facility Agreement preserves repayment obligations even beyond expiry of the validity period, and therefore, the guarantee continues to secure such liability.

9. It is also contended that the RP has exceeded his jurisdiction by adjudicating complex legal issues, whereas his role is limited to verification and collation of claims. The rejection is stated to be contrary to the objectives of the IBC, particularly maximization of value and equitable treatment of creditors.

Submissions of the Respondent

10. The Respondent RP opposes the Application and submits that the same is misconceived and liable to be dismissed since the claim under the Corporate Guarantee was rejected after

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2026 Supreme(Online)(NCLT) 1832

A Resolution Professional cannot reject a financial creditor's claim on the grounds of insufficient stamp duty, as it is a curable defect, and limitation is extended by a court decree against the principal borrower, as the guarantor's liability is co-extensive.

Cases Referred (3)