Corporate guarantor insolvency, unstamped guarantee evidence, and creditor-led liquidation were upheld under the Insolvency Code.

Insufficiency of stamping on a guarantee document did not by itself negate otherwise supported evidence of financial debt, security creation, and default under the Insolvency and Bankruptcy Code; the objection was rejected. A corporate guarantor could be proceeded against under Section 7 even where the principal borrower was an individual, because the guarantor's liability arises coextensively on default. The Committee of Creditors' choice to liquidate the corporate debtor under Section 33(2), before any resolution plan was confirmed, was found valid on the material before the Adjudicating Authority, and the liquidation order was upheld.

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Issues: (i) whether an insufficiently stamped guarantee document could be ignored while considering default and debt under Section 7 of the Insolvency and Bankruptcy Code, 2016; (ii) whether a corporate guarantor could be proceeded against under Section 7 when the principal borrower was an individual and not a corporate person; (iii) whether the decision of the Committee of Creditors to liquidate the corporate debtor under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 was valid.

Issue (i): whether an insufficiently stamped guarantee document could be ignored while considering default and debt under Section 7 of the Insolvency and Bankruptcy Code, 2016.

Analysis: The guarantee and security materials were not treated in isolation. The record showed deposit of title deeds, registration of charge over the residential property, and other contemporaneous documents evidencing creation of security for the loan. The insufficiency of stamping, even if assumed, did not displace the independent material establishing the financial debt, the security arrangement, and the default. The claim that the guarantee could not be looked into for any purpose was therefore rejected.

Conclusion: The objection based on insufficient stamping failed and the finding of debt and default was sustained against the appellant.

Issue (ii): whether a corporate guarantor could be proceeded against under Section 7 when the principal borrower was an individual and not a corporate person.

Analysis: The governing principle applied was that a corporate person which has stood as guarantor may itself become amenable to insolvency proceedings upon default by the principal borrower, regardless of whether the borrower is a corporate person. The liability of the guarantor is triggered coextensively with the default, and the statutory definition of corporate guarantor does not restrict the remedy in the manner suggested by the appellant. The reasoning aligned with the principle that the corporate guarantor's obligation is enforceable upon default of the underlying borrower.

Conclusion: The Section 7 proceedings against the corporate guarantor were held to be maintainable.

Issue (iii): whether the decision of the Committee of Creditors to liquidate the corporate debtor under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 was valid.

Analysis: The record showed that the Committee of Creditors considered the corporate debtor to be a non-going concern with no viable resolution prospect and exercised its statutory power to opt for liquidation before confirmation of any resolution plan. The Adjudicating Authority, on the material placed before it, accepted that decision and directed liquidation. No procedural or substantive infirmity was shown in the exercise of that power.

Conclusion: The liquidation decision and the consequential order were upheld.

Final Conclusion: The challenged orders admitting the insolvency application and directing liquidation were sustained, and the appeals were rejected.

Ratio Decidendi: A corporate guarantor may be subjected to Section 7 proceedings upon default by the principal borrower, even if the borrower is not a corporate person, and insufficiency of stamping does not by itself negate otherwise available evidence of financial debt, default, and security; separately, the Committee of Creditors may validly choose liquidation under Section 33(2) before confirmation of a resolution plan.

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