Guarantors Who Failed to Pay Invoked Guarantees Were Rightly Barred From Filing Their Claim as FC in CIRP of CD | SC

Case Details: Skil Infrastructure Ltd. v. Sudip Bhattacharya - [2024] 161 taxmann.com 474 (SC)

Judiciary and Counsel Details

• • Sanjiv Khanna & Dipankar Datta, JJ.
  • Shikhil Shiv Suri, Sr. Adv. Madhu Suri, Jyoti Suri, Ms Vidushi Jain, Ms Wamika Chadha, Ms Vidhi Kapoor, Ms Ishita Ahuja, Advs. & T.R.B. Sivakumar, AOR for the Appellant.
  • Ms Prachi Johri for the Respondent.

Facts of the Case

In the instant case, the appellants were promoters of the corporate debtor and had executed deed of personal and corporate guarantees to secure financial facilities extended to the corporate debtor by lenders.

The corporate debtor committed default in repayment. The lenders of the corporate debtor, thus, invoked the said corporate/personal guarantees and called upon the appellants to pay the outstanding amount.

The proceedings were also initiated by lenders against the corporate debtor and the appellants before the DRT. An application u/s 7 of the IBC was filed against the corporate debtor, which was admitted by the NCLT.

A public announcement was made by IRP, in pursuance of which, all the appellants filed their claims. However, the appellant’s claim as a financial creditor was rejected by the NCLT by the impugned order. Thereafter, the appellant challenged the NCLT’s order.

Supreme Court Held

The NCLAT vide the impugned order stated that no payments had yet been made by the appellants towards the invocation of the guarantee, which could be construed as a ‘financial debt’ owed by the corporate debtor and, the claim of the said amount by the appellants was not a financial claim within the meaning of section 5(8)(h) of the IBC.

The NCLAT further held that it was not open for the appellants to file any claim as a financial creditor in the CIRP of the corporate debtor and, thus, the claim of the appellants was rightly rejected by the NCLT.

Therefore, the appellant was a corporate guarantor as per section 5(5A) and its claim against second/new promoters/management will not make them a financial creditor against the corporate debtor itself.

In view of the facts, there was no good ground and reason to interfere with the impugned order and hence, the instant appeal was to be dismissed.