2026 (1) TMI 329 - AT - IBC

Alleged corporate guarantee for master loan debt-no separate deed or board approval; claim rejected as time-barred, duplicative

The Appellate Tribunal held that the claimant failed to establish any valid and enforceable corporate guarantee by the corporate debtor: reliance on a ... Dismissal of Appellant’s application seeking admission of its claim as a Financial Creditor - existence of a valid and enforceable corporate guarantee - claim arising from the corporate guarantee constitutes a “financial debt” under Section 5(8)(i) of IBC or not - rejection of the claim, without adequate reasoning and without appreciating the legally binding guarantee agreement. Whether a valid and enforceable corporate guarantee has been executed by the Corporate Debtor, and if so, has it been invoked? - HELD THAT:- The Appellant has failed to prove that a valid and binding corporate guarantee was executed by Dream Procon Pvt. Ltd. - The reliance on Clause 28 of the MLA, unsupported by any separate guarantee deed falls short of establishing an enforceable obligation under Section 5(8)(i) of the IBC. Even this clause has not been invoked by the Appellant which is essential for filing any claim under the code - The Appellant could not produce a resolution of the board of Directors of the Dream Procon Pvt Ltd. for providing such guarantee. Thus, a legally binding valid guarantee has not been executed by the Respondent and consequently, the Appellant does not qualify as a financial creditor of the Corporate Debtor on the strength of the alleged guarantee. Whether the Appellant’s claim, is barred by limitation under the Code? - HELD THAT:- The Appellant was not a dormant or unaware creditor. It had already submitted a claim for a different transaction in October 2019, acknowledging the existence and schedule of the CIRP. Its failure to file the present claim within the permitted time cannot be attributed to lack of knowledge or external impediments. No explanation—let alone a legally sustainable one— has been offered to justify a delay of 388 days. Even assuming that the Appellant only became aware of its right to enforce the corporate guarantee subsequently, it could have sought directions from the Adjudicating Authority or filed the claim with a proper explanation. It did neither. The Appellant’s claim is barred by limitation - The same cannot be entertained after the approval of the Resolution Plan by the CoC, as doing so would contravene the statutory mandate of Section 12, undermine the resolution process, and prejudice the interests of other stakeholders. The delay in submission of the claim is solely attributable to the Appellant, who was well aware of the timelines and who has already submitted one of his claims well within timeline, but submitted the second one with 388 days delay for which it has no explanation. Whether the Appellant’s claim is admissible in the CIRP of the Corporate Debtor considering the admitted claim for the same underlying debt of in the CIRP of IHCPL? - HELD THAT:- The Appellant had already submitted and secured admission of the ₹ 14.59 crore claim in the CIRP of IHCPL on 07.09.2019. This fact is not denied. A year later, on 20.10.2020, the Appellant filed the same claim in the CIRP of Dream Procon without disclosing that the earlier claim had been admitted. There was no mechanism proposed for adjusting or reconciling the claims in both CIRPs. The Appellant merely filed the same claim amount twice in two proceedings for the same underlying loan transaction. This amounts to impermissible duplication and is contrary to the equitable distribution principle underlying the IBC - The Report of the Insolvency Law Committee (2020) also clarifies that simultaneous claims are permitted only to the extent that double recovery is avoided. In the present case, the Appellant made no effort to safeguard against such eventuality. The Appellant has failed to establish the existence of any valid or enforceable corporate guarantee executed by the Corporate Debtor. Clause 28 of the Master Loan Agreement, without a separate deed or board resolution, does not constitute a financial debt under Section 5(8)(i) of the IBC - The claim was filed after a delay of 388 days and cannot be entertained post-approval of the Resolution Plan by the CoC with 90.66% majority. Further, the alleged guarantee was never invoked prior to the Insolvency Commencement Date, and the same claim had already been admitted in the CIRP of the principal borrower, IHCPL. Filing the identical claim in the CIRP of Dream Procon constitutes impermissible duplication. There are no infirmity in the impugned order - The appeal is dismissed. Issues: (i) Whether a valid and enforceable corporate guarantee was executed by the Corporate Debtor and, if so, whether it had been invoked; (ii) Whether the Appellant's claim is barred by limitation under the Code; (iii) Whether the Appellant's claim is admissible in the CIRP of the Corporate Debtor in view of the admitted claim for the same underlying debt in the CIRP of IHCPL.Issue (i): Whether a valid and enforceable corporate guarantee was executed by the Corporate Debtor and, if so, whether it had been invoked.Analysis: The Appellant relied on an alleged Deed of Guarantee dated 22.04.2016 and Clause 28 of the Master Loan Agreement (MLA). The Deed of Guarantee referenced in earlier pleadings was not produced before the Adjudicating Authority or this Tribunal. Clause 28 of the MLA contains guarantee language but is embedded in a multi-party loan agreement and was not supported by a separate executed guarantee deed or by a board resolution authorising the Corporate Debtor to provide the guarantee. There is no evidence that any demand or invocation of the alleged guarantee was made on the Corporate Debtor prior to the Insolvency Commencement Date.Conclusion: The Appellant failed to establish the existence of a valid and enforceable corporate guarantee or its invocation; the Appellant does not qualify as a financial creditor of the Corporate Debtor on the basis of the alleged guarantee.Issue (ii): Whether the Appellant's claim is barred by limitation under the Code.Analysis: The CIRP commenced on 06.09.2019 and the last date for submission of claims was fixed under the CIRP regulations. The Appellant had already filed a separate claim in October 2019 but filed the present claim only on 20.10.2020, a delay of 388 days with no adequate explanation. The Resolution Plan had been approved by the CoC before the belated claim, and admitting such a late claim would undermine the time-bound scheme and finality of the IBC process. Relevant statutory timelines and precedent support strict adherence to limitation and timelines.Conclusion: The Appellant's claim is barred by limitation and cannot be entertained after approval of the Resolution Plan.Issue (iii): Whether the Appellant's claim is admissible in the CIRP of the Corporate Debtor in view of the admitted claim for the same underlying debt in the CIRP of IHCPL.Analysis: The Appellant had already obtained admission of the same claim in IHCPL's CIRP on 07.09.2019 but later filed an identical claim in the Corporate Debtor's CIRP without disclosure or any mechanism for adjustment. The simultaneous filing of identical claims in multiple CIRPs, without reconciliation to avoid double recovery, amounts to impermissible duplication and prejudices other stakeholders. The insolvency framework and precedents require prevention of double recovery and protection of distributional equity among creditors.Conclusion: The identical claim admitted in IHCPL's CIRP renders the Appellant's claim in the Corporate Debtor's CIRP inadmissible for being duplicative and prejudicial to other stakeholders.Final Conclusion: The Appellant has failed to prove a valid and invoked corporate guarantee, the claim is time-barred, and the claim is impermissibly duplicative of an admitted claim in the principal borrower's CIRP; accordingly, there is no infirmity in the impugned order and the appeal is dismissed.Ratio Decidendi: For a guarantee-based claim to qualify as a financial debt under Section 5(8)(i) of the IBC, the claimant must establish a valid, enforceable guarantee supported by demonstrable documentation or corporate authorization and, where the guarantee is contingent, evidence of invocation crystallizing the liability as of the Insolvency Commencement Date; belated or duplicative claims filed after prescribed CIRP timelines and after approval of a resolution plan are inadmissible.