2026 INSC 423 1

REPORTABLE

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

the Code. The challenge mounted by respondents to the validity

of the said corporate guarantees has been made on several

2

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

3

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 w ere

classified as Non-Performing Assets (NPA) indicating default in

repayment obligations. Subsequently, o n 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

4

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

5

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 inter alia held that (i)

there was no material to show submission of proof of claims with

6

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

7

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

8

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

covered by the decision of this Court

1

. In support of the aforesaid

submissions, reliance has been placed on the decisions of this

Court

2

.

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

9

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 cor porate 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

Rajasthan High Court and the decision of NCLAT

3

.

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

10

(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

against consideration for the time value of money

4

. 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

11

the Code stipulates that the essential ingredient of a financial

debt is disbursal against consideration for the time value of

money

5

. 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

interest is a “financial debt” within Section 5(8) of the Code

6

. 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)

12

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,

13

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,

14

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.

15

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

not become void or unenforceable merely on that account

7

. 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)

16

is not intended to be used as a weapon by a litigant to defeat the

cause of the opponent

8

. A Constitution Bench of this Court

9

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

fact are shown to be perverse

10

. 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

17

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

18

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.