Full Judgment Text
REPORTABLE
2026 INSC 423
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No. 8527 OF 2022
STATE BANK OF INDIA & ORS. ... APPELLANTS
VERSUS
DOHA BANK Q.P.S.C. & ANR. … RESPONDENTS
J U D G M E N T
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
Signature Not Verified
Digitally signed by
Jayant Kumar Arora
Date: 2026.04.28
14:57:01 IST
Reason:
the Code. The challenge mounted by respondents to the validity
of the said corporate guarantees has been made on several
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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 creditor” under the Code.
FACTUAL BACKGROUND
3. The material facts giving rise to filing of this appeal, are as
follows:
On 19.03.2010, a Facility Agreement was executed between
Respondent No. 1, Doha Bank and Reliance Infratel Limited
(RITL), namely Corporate Debtor (CD), whereby a foreign
currency loan of USD 250 million was extended. Thereafter, on
04.03.2011, a Security Trustee Agreement was executed between
the Consortium Lenders and Axis Trustee Services Ltd.,
appointing it as Security Trustee in respect of loan to Reliance
Communications Ltd., (RCOM) and Reliance Telecom Ltd., (RTL).
4. The appellants, as members of a consortium of Banks, extended
the rupee loan facilities of ₹ 6,015 crores to Reliance
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Communications Limited (RCOM) and ₹ 735 crores to Reliance
Telecom Limited (RTL). On 20.02.2015, a deed of hypothecation
was executed by the CD, in the favour of Security Trustee to
secure the consortium lending pursuant to which a charge was
created and duly registered.
5. On 26.08.2016, the accounts of RCOM, RTL and CD were
classified as Non-Performing Assets (NPA) indicating default in
repayment obligations. Subsequently, on 05.09.2016 and
04.12.2016, Reinstatement Agreements were executed between
Doha Bank and the CD, restructuring the repayment obligations
and extending repayment schedule ultimately up to 05.06.2017.
6. On 03.03.2017, the CD executed Corporate guarantees in favour
of consortium lenders to secure loans extended to its group
entities, namely RCOM & RTL. On 22.12.2017, the account of
RITL was declared as NPA with retrospective effect from
26.08.2016.
INSOLVENCY PROCEEDINGS
7. On 15.05.2018, NCLT Mumbai initiated Corporate Insolvency
Resolution Process (CIRP) against the CD. An Interim Resolution
Professional (IRP) was appointed on 18.05.2018 to take over the
management and invite claims from creditors. A public
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announcement was issued on 21.05.2018. The Security Trustee
invoked the Corporate Guarantee executed by CD.
8. On 28.02.2019, Doha Bank disputed existence of such
guarantees and called upon Security Trustee to withdraw the
invocation. By communications dated 06.03.2019 and
18.03.2019, the Security Trustee asserted the existence and
validity of the guarantees and declined interference by External
Commercial Borrowings (ECB) lenders.
9. The Security Trustee, by a communication dated 18.03.2019,
informed the ECB lenders that they should pursue their
grievance with the borrowers and had no right to question rights
of SBI consortium. The Advocates for the RITL advised the
counsel of Doha Bank admitting the execution of the guarantees
and stating that the existence of such guarantees had been
disclosed by RCOM in their financial statements/annual reports.
10. On 30.04.2019, the NCLAT allowed the withdrawal of the appeal
and directed NCLT to proceed with CIRP. On 07.05.2019, the IRP
issued fresh public announcement inviting claims.
CLAIMS AND PROCEEDINGS BEFORE NCLT
11. On 17.05.2019, the appellant submitted a claim to IRP in Form
‘C’ for ₹ 3,628.67 crores. On 24.05.2019, the IRP issued notices
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to financial creditors and members of the suspended Board of
Directors of CD to attend the first meeting of Committee of
Creditors (CoC) scheduled on 30.05.2019.
12. By a communication dated 28.05.2019, Doha Bank sought a
declaration from IRP that the corporate guarantees were
preferential, undervalued and fraudulent as contemplated under
Sections 43, 45 and 66 of the Code and requested derecognition
of consortium as financial creditors. On 29.05.2019, the IRP
rejected the objections, stating that claims have been verified
based on legally valid documents.
13. Doha Bank filed an interlocutory application before NCLT
seeking similar declarations. The appellants filed a reply on
10.06.2019 relying on the letter dated 19.03.2019 of the
Advocates from CD admitting execution of corporate guarantees.
On 12.08.2020, an additional affidavit was filed stating that the
CD’s account has been classified as NPA on 22.12.2017 with
effect from 26.08.2016, as per the RBI circular and that the
corporate guarantees are kept in safe custody of security trustee
who has certified the same.
14. By an order dated 02.03.2021, the NCLT held that (i)
inter alia
there was no material to show submission of proof of claims with
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corporate guarantees (ii) verification by Resolution Professional
at New Delhi did not satisfy the statutory requirements (iii) that
claims were admitted without proper documentation and (iv)
consortium lenders were not financial creditors. Consequently,
the Committee of Creditors was directed to be reconstituted.
PROCEEDINGS BEFORE NCLAT
15. The appellants preferred an appeal before the NCLAT. By an
order dated 14.10.2022, NCLAT held as follows: (i) the corporate
guarantees were executed when CD was in default of his
obligation and was suffering from severe financial constraints;
(ii) there is no documentary evidence to show that there was
disclosure regarding the guarantees by the beneficiary lenders of
the related party of the CD during restructuring of the debt of
corporate debtor; (iii) the guarantees were not reflected in the
financial statements of CD for financial year 2016-17 and 2017-
18 or were produced before the NCLT; (iv) there is no pleading on
record to establish that the guarantees were verified at New Delhi
by the IRP/RP apart from brief reply affidavit of the RP; (v) the
CD was declared NPA on 22.12.2017 w.e.f. from 26.08.2016
indicating that CD was in default for at least 90 days prior to
26.08.2016; (vi) it was obligatory under the law to produce a
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document duly stamped in accordance with provisions of
Maharashtra Stamp Act, 1958; (vii) the timing and manner of the
corporate guarantees were questionable as corporate debtor and
holding companies were already in default. Accordingly, the
appeal was dismissed. In the aforesaid factual background, this
appeal arises for our consideration.
SUBMISSIONS
16. Learned senior counsel for the appellant submitted that the
appellants are financial creditors of the CD on the basis of
Corporate Guarantees and a Deed of Hypothecation. It is
contended that liabilities arising from the guarantees constitute
financial debt under Section 5(8) of the IBC and the claims of the
appellant were verified by the Financial Creditors leading to
formation of Committee of Creditors (CoC). It is pointed out that
counsel for CD has admitted execution of the Corporate
Guarantee and that disclosures have been made by them in their
financial statements on an ongoing basis. It is contended that
the present corporate guarantee is not covered under Section 85
of the Companies Act.
17. It is pointed out that as per RBI Circular dated 01.07.2015,
relating to asset classification and provisioning pertains to
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advances, in case of restructuring, the asset classification will be
reckoned from the date, it became NPA on the first occasion. It is
submitted that the Corporate Guarantees were executed in the
New Delhi office of the Security Trustee and stamp duty at
applicable rates in New Delhi has duly been paid. It is submitted
that the concurrent finding of the tribunals are perverse and the
issue involved in the appeal is no longer res integra and is
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covered by the decision of this Court . In support of the aforesaid
submissions, reliance has been placed on the decisions of this
2
Court .
18. On the other hand, learned senior counsel for the respondents
submitted that the alleged corporate guarantees are non-
existent, invalid and unenforceable in law. It is submitted that
the corporate guarantees executed on 02.03.2017 are highly
suspicious, due to their timing and manner of execution, as the
corporate debtor and its group companies were already classified
as NPA on 26.08.2016.
1
China Development Bank v. Doha Bank Q.P.S.C. & Ors., (2025) 7 SCC 729.
2
Interplay Between Arbitration Agreements under Arbitration & Conciliation Act, 1996 and Stamp Act,
1899, IN RE, (2024) 6 SCC 1; Union of India v. M/s. Chaturbhai M. Patel & Co., (1976) 1 SCC 747; Dhirajlal
Girdharlal v. Commissioner of Income Tax, Bombay, (1954) 2 SCC 557; Omar Salay Mohamed Sait v.
Commissioner of Income Tax, Madras, (1959) SCC OnLine SC 71; Avantha Holdings Ltd. & Anr. v.
Abhilash Lal, Resolution Professional for Jhabua Power Ltd. & Ors.; 2022 SCC OnLine NCLAT 4352; UOI
v. M/s Chaturbhai M. Patel & Co. (1976) 1 SCC 747; Interplay between Arbitration Agreements under
Arbitration and Conciliation Act, 1996 and Stamp Act, 1899 in Re, (2024) 6 SCC 1; Hindustan Steel Ltd.
v. Dilip Construction Company, (1969) 1 SCC 597; Dena Bank v. C. Shivakumar Reddy & Anr. (2021) 10
SCC 330; Axis Bank Ltd. v. Naren Shet & Anr., (2024) 1 SCC 679
8
19. It is contented that the corporate guarantees were not disclosed
in the financial statements for financial year 2016-17 and 2017-
18 and were deliberately withheld before the NCLT and
introduced only at the appellate stage which is impermissible in
law. It is contended that the corporate guarantees are
insufficiently stamped and are inadmissible. It is argued that the
alleged corporate guarantees were created in breach of the
facility agreement and Section 186 of the Companies Act, 2013
as no special resolution was passed despite the large value of
guarantee. It is contended that the concurrent findings of facts
have been recorded by the Tribunals which do not call for any
interference in this appeal. In support of the aforesaid
submissions reliance has been placed on the decisions of
3
Rajasthan High Court and the decision of NCLAT .
ISSUES
20. We have considered the rival submissions made on both sides
and have perused the record.
21. The following issues arise for consideration:
3
Ram Narain v. Lt. Col. Hari Singh; 1963 SCC OnLine Raj 55 and Dr. Anupam Jain v. CS Chhaya Gupta
and Another; 2025 SCC OnLine NCLAT 1629
9
(i) whether the Corporate Guarantees executed by the
Corporate Debtor constitute “financial debt” within the
meaning of Section 5(8) of the Code.
(ii) Whether the claims of the appellants were liable to be
rejected for non-submission or improper verification of
documents.
(iii) Whether the findings recorded by the tribunals warrant
interference under Section 62 of the Code.
ANALYSIS
22. At the outset, it is apposite to note that for a debt to become
“financial debt” for the purpose of Part II of the Code, the
essential elements of disbursal, and that too against the
consideration for time value of money, needs to be found in the
genesis of any debt before it may be treated as “financial debt”
within the meaning of Section 5(8) of the Code. This debt may be
of any nature but a part of it is always required to be carried, or
corresponding to, or at least having some traces of disbursal
4
against consideration for the time value of money . Under
Section 5(7) of the Code, a person can be categorized as a
financial creditor if a financial debt is owed to it. Section 5(8) of
4
Anuj Jain, Interim Resolution Professional for Jaypee Infratech Ltd. v. Axis Bank Ltd. & Ors.; (2020) 8
SCC 401
10
the Code stipulates that the essential ingredient of a financial
debt is disbursal against consideration for the time value of
5
money . A liability arising from the corporate guarantee squarely
falls within the ambit of financial debt as defined under Section
5(8) of the Code. The amount of any liability in respect of any of
the guarantees for money borrowed against the payment of
6
interest is a “financial debt” within Section 5(8) of the Code . It is
well settled legal proposition that a guarantor incurs a
coextensive liability with that of a principal borrower and such
liability is enforceable in law.
23. In the present case, the execution of the corporate guarantee
executed by CD in favour of Security Trustee for and on behalf of
the appellants has not been disputed by the CD which is evident
from the communication dated 19.03.2019 sent by the counsel
of the CD. Paras 2 and 4 of the said communication are extracted
below for the facility of reference:
“2. At the outset our clients deny all allegations made
by you in the letter with respect to the alleged
conspiracy and defrauding of Emirates NBD Bank
PJSC, Industrial and Commercial Bank of China
Limited, Doha Bank Q.P.S.C. and VTB Capital Plc
(collectively, the “ ECB Lenders ”). The information
regarding the Guarantees (as defined in the Letter) has
always been available to the public including the ECB
5
Phoenix ARC (P) Ltd. v. Spade Financial Services Ltd. & Ors.; (2021) 3 SCC 475
6
China Development Bank (supra)
11
Lenders and adequate disclosures have been made on
an ongoing basis under the financial statements and
annual reports of the borrower group.
4. As the Information of the Guarantees have always
been publicly available, the ECB Lenders had full
access to such information and the allegations are
therefore false and denied. In light of the above
submission and classification, we request you to look
into the supporting documents provided under
Annexure A and withdrew your allegations made under
the Letter.”
Thus, the execution of the guarantees is beyond any pale of
doubt.
24. So far as timing of execution of the corporate guarantee is
concerned, the account of the CD was first declared NPA on
22.08.2016. However, the same was subsequently restructured
by the consortium of banks, in lieu thereof, the CD executed the
corporate guarantee on 03.03.2017. However, despite such
restructuring, the account once again became NPA on
20.12.2017. The Reserve Bank of India has issued a master
circular dated 01.07.2015, which provides for prudential norms
on income recognition or NPA Classification, and provisioning
pertaining to advances. Clause 17.2.6 of the said circular reads
as under:
“ 17.2.6 If a restructured asset, which is a standard
asset on restructuring in terms of para 20.2, is
subjected to restructuring on a subsequent occasion,
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it should be classified as substandard. If the
restructured asset is a sub-standard or a doubtful
asset and is subjected to restructuring, on a
subsequent occasion, its asset classification will be
reckoned from the date when it became NPA on the
first occasion. However, such advances restructured
on second or more occasion may be allowed to be
upgraded to standard category after the specified
period (Annexure-5) in terms of the current
restructuring package, subject to satisfactory
performance.”
The said master circular mandates that in case of restructured
assets, its asset classification will be reckoned from the date it
became NPA on the first occasion. The appellants, therefore,
declared the account of the CD as NPA w.e.f. 26.08.2016. Thus,
it is evident that the corporate guarantees were executed before
declaration of account of the CD as NPA and, therefore, the timing
and manner of the corporate guarantees could not be questioned
on the ground that the CD and the holding company were already
in default.
25. It is pertinent to note that in the communication dated
19.03.2019 sent by the counsel of the CD, it is stated that
disclosures about the corporate guarantees have been made by
the CD in their financial statements on an ongoing basis. In any
case, mere non-disclosure of corporate guarantee in the financial
statements of CD for financial years 2016-17 and 2017-18,
13
cannot deprive the appellants from making a claim on the basis
of the said guarantees. At best, it could be treated as default
committed by the CD.
26. In exercise of the powers conferred under the Code, the
Insolvency and Bankruptcy Board of India (Insolvency
Resolution Process for Corporate Persons) Regulations, 2016
have been framed. Regulation 10 of the Regulations deals with
substantiation of claims, whereas Regulation 13 provides for
verification of the claims. Regulation 10 of the said Regulations
provides that IRP or RP may call for such other evidence or
clarification as he deems fit from a creditor for substantiating the
whole or part of its claim. The corporate debtor has admitted
execution of the corporate guarantee. The appellant had
produced a letter dated 06.03.2019 before the NCLT issued by
the security trustee wherein the said trustee confirmed that the
executed and stamped version of corporate guarantees is in their
custody in New Delhi. The RP inspected the aforesaid guarantees
and verified the same by visiting the office of Security Trustee in
New Delhi. Therefore, the finding recorded by the NCLAT that
there is no pleading on record to establish that guarantees were
verified by IRP/RP is perverse.
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27. It is well-settled that an appeal is a continuation of original
proceeding. The documents which are relevant to deciding the lis
can be produced at the stage of appeal. The corporate guarantees
were produced before the NCLAT. Therefore, merely because they
were not produced before the NCLT, no adverse inference can be
drawn with regard to the genuineness of the corporate
guarantees.
28. The corporate guarantees were executed in the New Delhi office
of Security Trustee and the Stamp Duty as per applicable rates
in New Delhi has been paid. The same were produced before the
NCLAT, Principal Bench at New Delhi. The production of
corporate guarantees in a proceeding in New Delhi, does not
attract the provisions of Maharashtra Stamp Duty Act, 1958. In
any case, the legal position governing the effect of insufficiently
stamped document is no longer res integra and the same does
7
not become void or unenforceable merely on that account . The
defect of insufficient stamping of the document is curable in
nature and does not go to the root of validity of the instrument.
Even otherwise, the Stamp Act is a fiscal measure enacted to
secure revenue for the State on certain classes of instrument. It
7
Hindustan Steel Ltd. (supra)
15
is not intended to be used as a weapon by a litigant to defeat the
8 9
cause of the opponent . A Constitution Bench of this Court has
held that “Non stamping or improper stamping does not result in
the instrument becoming invalid. The Stamp Act does not render
such an instrument void. The non-payment of stamp duty is
accurately characterized as a curable defect.” Therefore, the
contention that the corporate guarantees were not duly stamped
as Stamp Duty under the Maharashtra Stamp Duty Act, 1958
was not paid is sans substance.
29. For the aforementioned reasons, issue no.(i) is answered in the
affirmative where as issue no (ii) is answered in the negative.
30. It is well-settled legal proposition that this Court would not
choose to re-appreciate a matter on facts when jurisdictional
NCLT and in appeal NCLAT have recorded concurrent findings of
fact. The exception to this self-imposed rule is where findings of
10
fact are shown to be perverse . It is pertinent to note that NCLT
had rejected the plea of respondents with regard to preferential
transactions and fraud under Sections 43 and 66 of the Code
respectively. Merely because the corporate guarantees were not
8
NN Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. & Ors.; (2023) 7 SCC 1
9
Interplay Between Arbitration Agreements under Arbitration & Conciliation Act, 1996 and Stamp
Act, 1899 (supra)
10
Catalyst Trysteeship Ltd. v. Ecstasy Realt (P) Ltd.; (2026) SCC OnLine SC 300 and SBI & Ors. v. The
Consortium of Mr. Murari Lal Jalan and Mr. Florian Fritsch & Anr.; 2024 INSC 852
16
filed along with Form-C, the claim of the appellants could not
have been negated. The tribunals at the instance of a lender
grossly erred in rejecting the claim raised by the consortium of
lenders. For the reasons already assigned by us, in our
considered opinion, the perversity of the findings of the tribunals
are glaring and manifest, beseeching interference by this Court
in second appellate jurisdiction. Accordingly, issue no. (iii) is
answered in the affirmative.
CONCLUSION
31. For the reasons aforesaid, it is held that :-
(i) the corporate guarantees executed by the corporate
debtor constitute “financial debt” within the meaning of
Section 5(8) of the Code. The appellants are entitled to be
recognized as financial creditors.
(ii) The rejection of claims of the appellants, by the NCLT
and NCLAT are legally unsustainable.
(iii) The impugned orders suffer from perversity and warrant
interference by this Court.
OPERATIVE DIRECTIONS
32. The judgments dated 14.10.2022 and 02.03.2021 passed by
NCLAT and NCLT are quashed and set aside. All consequential
17
actions taken in pursuance of impugned orders are set aside.
The appellants are recognised as “financial creditors” of the
Corporate Debtor. The Resolution Professional is directed to
reconstitute the committee of creditors by including the
appellants and to proceed with the corporate insolvency
resolution process in accordance with law.
33. In the result, the appeal is allowed. However, there shall be no
order as to costs.
.…..…….……………….………….……….J.
[PAMIDIGHANTAM SRI NARASIMHA]
…..…….……………….………….……….J.
[ALOK ARADHE]
NEW DELHI;
APRIL 28, 2026.
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