Appeal Dismissed: Tribunal Upholds Corporate Guarantee's Validity, Cites Broad Default, Debt Definition in Insolvency Code.

The Tribunal dismissed the appeal challenging the admission of an application under Section 7 of the Insolvency and Bankruptcy Code, 2016. It upheld the validity of the 'Corporate Guarantee and Undertaking' Agreement, despite allegations of fraud and its absence from the Registrar of Companies' records. The Tribunal emphasized the broad definition of default and debt, referencing the Supreme Court's observations in "Innoventive Industries Ltd. Vs. ICICI Bank." It concluded that the agreement's existence, supported by e-Stamp, justified the Adjudicating Authority's decision. The Tribunal noted that pre-existing disputes should be resolved under Section 9, not Section 7.

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Issues:
Admission of application under Section 7 of the Insolvency and Bankruptcy Code, 2016 based on a 'Corporate Guarantee and Undertaking' Agreement dated 7th April, 2017; Allegation of fraud in obtaining the agreement; Validity of the agreement as per the Companies Act, 2013; Interpretation of the Supreme Court's observations in "Innoventive Industries Ltd. Vs. ICICI Bank and Anr. - (2018) 1 SCC 407" regarding default and debt under the Insolvency and Bankruptcy Code.

Analysis:

1. The appeal was filed against the order admitting the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, by the Adjudicating Authority. The appellant argued that the 'Corporate Guarantee and Undertaking' Agreement dated 7th April, 2017, was obtained fraudulently and was not reflected in the records of the Corporate Debtor available with the Registrar of Companies, making the application not maintainable under the law.

2. The Tribunal noted that the agreement in question was executed on e-Stamp, issued by the Government of National Capital Territory of Delhi, clearly showing the involvement of the Corporate Debtor. The fact that the agreement was not reflected in the Registrar of Companies' records did not invalidate its existence. The Tribunal emphasized that the Corporate Guarantee was entered into by the Management of the Corporate Debtor, and any failure to register it with the Registrar of Companies did not negate its validity.

3. Referring to the Supreme Court's observations in "Innoventive Industries Ltd. Vs. ICICI Bank and Anr. - (2018) 1 SCC 407," the Tribunal highlighted the broad definition of default and debt under the Insolvency and Bankruptcy Code. The Court's ruling emphasized that once the Adjudicating Authority is satisfied that a debt is payable and there is a default, the application must be admitted. The Tribunal concluded that the existence of the 'Corporate Guarantee and Undertaking' Agreement, supported by the e-Stamp, was sufficient for the Adjudicating Authority to admit the application under Section 7.

4. The Tribunal dismissed the appeal, stating that there was no merit in the arguments presented. However, it cautioned that the observations made in the appeal could not be used to decide the pending suit, if any. The Tribunal clarified that pre-existing disputes should be addressed under Section 9 of the Insolvency and Bankruptcy Code, not Section 7, emphasizing the importance of adhering to the statutory provisions and established legal principles in insolvency proceedings.

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