### Corporate Guarantees for Group Entity Loans Constitute Enforceable Financial Debt Under the IBC Regardless of Restructuring Timelines

The SBI Consortium (Appellants) extended rupee loans to group entities of the Corporate Debtor (CD), Reliance Infratel Ltd.

On March 3, 2017, the CD executed corporate guarantees in favor of the Appellants to secure these loans.

Earlier, the CD's account had been classified as an NPA on August 26, 2016, though it underwent restructuring before the guarantees were executed. Following the initiation of the Corporate Insolvency Resolution Process (CIRP) in 2018, the Appellants submitted claims as financial creditors based on these guarantees.

Respondent No. 1 (Doha Bank) challenged the validity of these guarantees, alleging they were fraudulent, undervalued, and improperly stamped.

The NCLT and NCLAT concurrently held that the consortium were not financial creditors, citing a lack of documentation, improper verification by the Resolution Professional (RP), and suspected timing of execution.

The court primarily applied Section 5(8) of the Insolvency and Bankruptcy Code (IBC), which defines "financial debt" as a debt disbursed against the consideration for the time value of money, explicitly including liabilities arising from guarantees.

The court relied on Anuj Jain v. Axis Bank Ltd., establishing that a debt must have traces of disbursal against time value of money to be "financial", and China Development Bank v. Doha Bank Q.P.S.C., confirming that money borrowed against interest under a guarantee is a financial debt.

Regarding stamping, the court applied the principle from the Constitution Bench in Interplay Between Arbitration Agreements and Stamp Act, 1899, which held that non-stamping or improper stamping is a curable defect and does not render an instrument void or unenforceable.

The Court observed that the CD's counsel had previously admitted to the execution and public disclosure of the guarantees, rendering their existence undisputed.

It rejected the "suspicious timing" argument by citing the RBI Master Circular (01.07.2015), noting that while the NPA date was retrospective (Aug 2016), the guarantees were executed during a valid restructuring phase in March 2017.

The Court found the NCLAT's finding on lack of verification perverse, noting the RP had physically verified the original guarantees at the Security Trustee’s New Delhi office.

On the issue of stamping, the Court clarified that since the documents were executed and produced in New Delhi, the Maharashtra Stamp Act, 1958 did not apply; furthermore, even if a deficit existed, it is a fiscal curable defect that cannot be used as a weapon to defeat a creditor's legitimate claim.

The Supreme Court set aside the NCLAT and NCLT orders, holding that the Appellants are "financial creditors" under Section 5(8) of the IBC. The Court ruled that concurrent findings of fact can be overturned if they are "perverse" and based on a misapplication of law. The Resolution Professional was directed to reconstitute the Committee of Creditors (CoC) to include the Appellants and proceed with the CIRP in accordance with the law.