Corporate guarantee enforceability survives group restructuring, and proven financial debt and default support Section 7 insolvency admission.

A corporate guarantee was treated as an independent contractual obligation that survived demerger and later amalgamation of group entities; restructuring and a request for an additional guarantee did not discharge it, and the renewal letter preserved the existing terms. Objections based on the signatory's authority, absence of a separately pleaded default date, validity of the demand notice, and information utility records were rejected because the power of attorney was broad and default was otherwise established, with invocation of the guarantee treated as the relevant default date. Financial debt, default, completeness of the application, and limitation were found satisfied, so the Section 7 application was admitted and CIRP commenced.

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Issues: (i) Whether the corporate guarantee remained enforceable notwithstanding the demerger and subsequent amalgamation of group entities; (ii) Whether the objections regarding authority of the signatory, date of default, demand notice, and information utility records defeated the Section 7 application; (iii) Whether financial debt and default were established so as to warrant admission of the insolvency petition.

Issue (i): Whether the corporate guarantee remained enforceable notwithstanding the demerger and subsequent amalgamation of group entities.

Analysis: The guarantee was treated as an independent contractual obligation arising from the original loan documents. The renewal letter did not extinguish the earlier guarantee and instead preserved existing terms and conditions. The restructuring arrangements did not, by themselves, discharge the corporate debtor from its guarantee obligation, and the request for an additional guarantee from another entity did not invalidate the original guarantee.

Conclusion: The corporate guarantee continued to bind the corporate debtor.

Issue (ii): Whether the objections regarding authority of the signatory, date of default, demand notice, and information utility records defeated the Section 7 application.

Analysis: The power of attorney was held to confer broad authority to institute proceedings for the bank's interests. The absence of a separately pleaded date of default did not invalidate the petition where default was otherwise established, and the invocation of guarantee was treated as the relevant default date. The demand notice was upheld as valid, and the objection based on information utility records did not dislodge the application on the facts found.

Conclusion: The procedural and maintainability objections were rejected.

Issue (iii): Whether financial debt and default were established so as to warrant admission of the insolvency petition.

Analysis: The Tribunal found the debt due and payable, the default established, the application complete, the claim within limitation, and the statutory requirements for initiation of CIRP satisfied. The existence of financial debt and default was held to be proved on the record.

Conclusion: The Section 7 application was admitted and CIRP was ordered against the corporate debtor.

Final Conclusion: The insolvency petition succeeded on merits, the corporate debtor was brought into CIRP, and moratorium and ancillary insolvency consequences followed.

Ratio Decidendi: A corporate guarantee remains enforceable unless it is lawfully discharged, and where financial debt and default are otherwise established, restructuring between group entities does not by itself defeat admission under Section 7 of the Insolvency and Bankruptcy Code, 2016.

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