Moneywise Financial Services Private ... vs Nilesh Sharma Resolution Professional ...

(Arising against the impugned order dated 05.12.2023 passed by the Hon'ble National Company Law Tribunal, New Delhi Bench in I.A. No. 767 of 2021 filed in C.P. (IB) No. 1771 of 2018)

IN THE MATTER OF:

Moneywise Financial Services Pvt. Ltd. Address: 11/6 B, Second Floor, Shanti Chamber, Pusa Road, ...Appellant Central Delhi, New Delhi- 110005.

Versus

Mr. Arunava Sikdar, Resolution Professional ...Respondent M/s Dream Procon Pvt. Ltd. Address: C-10, LGF, Lajpat Nagar -3, New Delhi, National Capital Territory of Delhi -110024.

Present: For Appellant: Mr. Abhishek Garg and Mr. Yash Gaiha, Advocates. For Respondent: Ms. Varsha Banerjee, Advocate.

J U D G M EN T (3rd July, 2025)

INDEVAR PANDEY, MEMBER (T)

The present appeal has been preferred by Moneywise Financial Services

Private Limited under Section 61 of the Insolvency and Bankruptcy Code,

2016 (in short, the 'Code'), being aggrieved by the Impugned Order dated

05.12.2023 passed by the National Company Law Tribunal (Adjudicating

Authority), New Delhi Bench, in I.A. No. 767 of 2021 filed in C.P. (IB) No.

1771 of 2018. By the said order, the Adjudicating Authority dismissed the

Cont'd..../ -2-

Appellant's application seeking admission of its claim as a Financial Creditor

of M/s Dream Procon Private Limited (Corporate Debtor), despite the

existence of a valid and enforceable corporate guarantee extended by

M/s Dream Procon Private Limited for a loan advanced to Indirapuram

Habitat Center Private Limited (IHCPL).

2. The Appellant contends that its claim arises from the corporate

guarantee, and hence constitutes a "financial debt" under Section 5(8)(i) of

the Code. The rejection of its claim, without adequate reasoning and without

appreciating the legally binding guarantee agreement, has necessitated the

filing of the present appeal

Brief Facts

3. Brief facts of the case are given below:

(i) The Appellant is engaged in the business of providing financial

services. The Appellant is the Financial Creditor of the Corporate

Debtor. The Appellant is a wholly owned subsidiary of SMC Global

Securities limited and is registered with the Reserve Bank of India as

a non-deposit taking systematically important non-banking finance

company.

(ii) On 20.05.2015, the Appellant granted a loan of Rs. 5,00,00,000/- to

the Corporate Debtor, M/s Dream Procon Pvt. Ltd., for the

construction of a real estate project titled "Victory Ace" located at Plot

No. GH-02, Sector 143-B, Noida, Uttar Pradesh. This transaction was

formalized through a Master Loan Agreement dated 20.05.2015.

Company Appeal (AT) (Ins.) No. 310 of 2024 -3-

(iii) To secure the above loan, the Corporate Debtor executed a Declaration

of Security on 21.05.2015, and a Form CHG-01 dated 20.05.2015 was

filed, signifying the creation of a charge over the assets.

(iv) The above facility was subsequently renewed on 18.05.2017, and

relevant addendums to the Master Loan Agreement were also executed

between the parties.

(v) In early April 2016, Indirapuram Habitat Center Private Limited

(IHCPL), a group concern of the Corporate Debtor, approached the

Appellant seeking a term loan of Rs. 10,00,00,000/- for developing a

commercial project in Ghaziabad, Uttar Pradesh.

(vi) A Term Sheet dated 07.04.2016 was issued by the Appellant in favour

of IHCPL outlining the terms of the proposed loan. Importantly, the

Corporate Debtor (Dream Procon Pvt. Ltd.) executed a corporate

guarantee for the due repayment of this loan, thereby binding itself as

a financial guarantor for the obligations of IHCPL.

(vii) Following the term sheet, a Master Loan Agreement (MLA) dated

22.04.2016 was executed between the Appellant and IHCPL for

disbursal of the Rs. 10 crore loan facility. The Corporate Debtor stood

as corporate guarantor under the MLA.

(viii) On 27.12.2017, an addendum to the Master Loan Agreement dated

22.04.2016 was executed between the Appellant, IHCPL, and the

Corporate Debtor. On the same date, i.e., 27.12.2017, a Joint

Declaration and Undertaking was executed by IHCPL and the

Corporate Debtor in favour of the Appellant, confirming cross-

Company Appeal (AT) (Ins.) No. 310 of 2024 -4-

collateralization and cross-guarantee arrangements between the two

entities for loan facilities extended by the Appellant.

(ix) The CIRP against IHCPL was initiated by the Hon'ble NCLT, Principal

Bench, New Delhi on 22.08.2019 in CP(IB) No. 1397(PB)/2019. The

Appellant filed a claim in IHCPL's CIRP on 07.09.2019 for

Rs. 14,45,22,111/-, based on the 2016 loan disbursed directly to

IHCPL.

(x) The CIRP against the Corporate Debtor (Dream Procon Pvt. Ltd was

initiated on 06.09.2019 by the Hon'ble NCLT, New Delhi Bench in

CP(IB) No. 1771/2018. On 25.10.2019, the Appellant filed a claim

under Form C before the IRP of the Corporate Debtor for a sum of Rs.

7,25,19,134/- (arising from the 2015 loan), which was accepted and is

not in dispute in the present appeal.

(xi) On 20.10.2020, the Appellant filed a fresh claim in Form C with the

Respondent (RP of Dream Procon Pvt. Ltd.) for Rs. 14,59,89,580/-,

arising from the corporate guarantee executed by the Corporate Debtor

in favour of the Appellant to secure the loan advanced to IHCPL.

(xii) On 13.11.2020, the Respondent rejected the Appellant's claim, citing

that the debt was not disbursed to the Corporate Debtor and hence did

not qualify as "financial debt" under Section 5(8) of the IBC.

(xiii) The Appellant responded to this rejection through an email dated

01.12.2020, asserting that the guarantee obligations of the Corporate

Debtor are co-extensive with those of the principal borrower under

Section 128 of the Indian Contract Act, 1872.

Company Appeal (AT) (Ins.) No. 310 of 2024 -5-

(xiv) Despite repeated follow-up emails, the Respondent did not reverse the

decision, prompting the Appellant to file IA No. 767 of 2021 on

27.01.2021 before the Adjudicating Authority, seeking directions to

admit its claim for Rs. 14.59 crores as a financial debt.

(xv) By Order dated 05.12.2023, the Ld. Adjudicating Authority dismissed

IA No. 767 of 2021, holding that the Appellant failed to demonstrate

how the claim falls within the scope of clauses (a) to (h) of Section 5(8)

of the Code, and that no direct disbursal was made to the Corporate

Debtor.

(xvi) The Appellant has thus preferred the present Company Appeal seeking

recognition of its status as a financial creditor of the Corporate Debtor

under Section 5(7) r/w 5(8)(i) of the Code and consequential reliefs.

Submissions of the Appellant

4. Learned Counsel for the Appellant, Moneywise Financial Services Pvt.

Ltd., respectfully submits that the present appeal arises out of the Impugned

Order dated 05.12.2023, by which the Hon'ble National Company Law

Tribunal, New Delhi, has erroneously dismissed the application filed by the

Appellant solely on the ground that there was no disbursement of the loan

amount directly from the Appellant to the Corporate Debtor, M/s Dream

Procon Pvt. Ltd., and thereby concluded that the Appellant does not hold a

"financial debt" within the meaning of Section 5(8) of the Insolvency and

Bankruptcy Code, 2016 ("IBC" or "Code"). Counsel for the Appellant submits

that this conclusion is flawed in both law and fact, as it ignores the well-

Company Appeal (AT) (Ins.) No. 310 of 2024 -6-

settled legal position that the liability of a guarantor is independent of the

requirement of direct disbursement and that the Corporate Debtor had indeed

stood as a guarantor under a valid and binding agreement.

5. Ld. Counsel for the Appellant further submits that as per Section 128

of the Indian Contract Act, 1872, the liability of a guarantor is co-extensive

with that of the principal borrower, and the law does not require any direct

disbursement to the guarantor to establish such liability. Ld. Counsel points

out that the Code permits the initiation of CIRP against guarantors; whether

corporate or personal, even in cases where disbursement has been made only

to the principal borrower. Therefore, the rejection of the Appellant's claim on

the limited ground of non-disbursal to the Corporate Debtor reflects a

misapplication of the settled legal principle.

6. It is further submitted by counsel for the Appellant that Section 5(8) of

the Code expressly includes within the definition of "financial debt" any

liability in respect of a guarantee or indemnity. In this regard, counsel refers

to the authoritative pronouncements of the Hon'ble Supreme Court in 'BRS

Ventures Investments Ltd. v. SREI Infrastructure Finance Ltd., [(2025) 1 SCC

456]', particularly at para 26, and 'Laxmi Pat Surana v. Union of India, [(2021)

8 SCC 481]', at paras 31 and 32. In both these cases, Hon'ble Apex Court has

clearly held that the absence of disbursement to the guarantor does not

preclude a financial creditor from initiating proceedings against the corporate

guarantor under the Code. Hence, the Appellant qualifies as a financial

creditor.

Company Appeal (AT) (Ins.) No. 310 of 2024 -7-

7. Ld. Counsel for the Appellant draws attention to the Report of the

Insolvency Law Committee dated 20.02.2020, wherein it has been emphasized

that the right to pursue simultaneous remedies against both the principal

borrower and the guarantor is fundamental to the nature of a contract of

guarantee. The Committee also recommended that creditors must be

permitted to file claims in the CIRP of both the principal borrower and the

guarantor. Counsel accordingly submits that the Appellant cannot be denied

the right to submit its claim in the CIRP of the Corporate Debtor merely

because a claim has also been filed in the CIRP of Indirapuram Habitat Centre

Pvt. Ltd. (IHCPL).

8. Further, it is submitted by Ld. Counsel that the Committee categorically

clarified that if any portion of the debt is recovered in one proceeding (e.g.,

CIRP of IHCPL), the creditor's claim in the other (e.g., CIRP of the Corporate

Debtor) would be proportionately reduced. Therefore, any concern of duplicity

or double recovery is ill-founded and cannot form the basis for rejection of the

Appellant's claim. The claim made by the Appellant in the CIRP of the

Corporate Debtor is thus legally sustainable.

9. Ld. Counsel also places reliance on the judgment of the Hon'ble NCLAT

in 'State Bank of India v. Athena Energy Ventures Pvt. Ltd., CA (AT)(Ins.) No.

633/2020', wherein at para 16, the Tribunal reaffirmed that a contract of

guarantee is enforceable even when CIRP is initiated simultaneously against

both the principal borrower and the guarantor. Counsel submits that in the

present case, the Corporate Debtor had stood as a guarantor under a Term

Sheet and Master Loan Agreement (MLA) executed between the Appellant,

IHCPL, and the Corporate Debtor.

Company Appeal (AT) (Ins.) No. 310 of 2024 -8-

10. Ld. Counsel submitted that under Clause 28 of the MLA, the Corporate

Debtor unconditionally and irrevocably guaranteed the due and timely

repayment of the loan facilities availed by IHCPL. Counsel points out that the

MLA is a comprehensive tripartite agreement and clearly outlines the

Corporate Debtor's role as a guarantor, and no separate deed of guarantee

was contemplated or required. The Corporate Debtor's obligations arise

directly from the MLA itself.

11. Ld. Counsel further submits that as per Section 126 of the Indian

Contract Act, 1872, a contract of guarantee may be either express or implied,

oral or written. Therefore, the argument that the Corporate Debtor's liability

is unenforceable in the absence of a separate, registered deed of guarantee is

untenable. The conduct of the parties and the contents of the MLA, as

emphasized by counsel, clearly establish the existence of a valid contract of

guarantee.

12. In support of this position, Ld. Counsel refers to the decision of the

'Andhra Pradesh High Court in State Bank of Hyderabad v. Kotha Papi Reddy,

[1973 SCC OnLine AP 80]', which held that a deed of guarantee need not be

registered and can even be oral. Hence, insistence on a registered deed is

legally erroneous.

13. Ld. Counsel also submits that the Code recognizes the concept of

"arrangement" under Section 3(31), which includes any agreement or

understanding intended to secure payment or performance of any obligation.

The MLA constitutes such an arrangement and Clause 28 therein satisfies the

statutory test of financial debt.

Company Appeal (AT) (Ins.) No. 310 of 2024 -9-

14. He submitted that the absence of a separate document titled "deed of

guarantee" does not dilute the Corporate Debtor's liability. Judicial

precedents consistently emphasize that courts must consider the totality of

the agreement, the conduct of the parties, and surrounding circumstances to

determine whether a guarantee exists. In the present case, all such elements

point to a clear understanding that the Corporate Debtor was a guarantor.

15. Counsel for the Appellant submits that the nature of the transaction

must be assessed holistically. The MLA was executed to facilitate a loan to

IHCPL, and the Corporate Debtor's agreement to act as guarantor is expressly

recorded therein. The execution of the MLA and Clause 28 unequivocally

establish the Corporate Debtor's liability. The argument regarding the

absence of a separate deed is merely hyper-technical and undermines the

substance of the transaction.

16. Ld. Counsel submitted that the Term Sheet, when read together with

Clause 28 of the MLA, makes it evident that the Corporate Debtor acted as a

corporate guarantor for the loan extended to IHCPL. There is no contractual

requirement that the parties execute an additional deed of guarantee, and the

guarantee clause within the MLA is sufficient in law.

17. It is his submission that the Appellant's claim arises solely from the

irrevocable guarantee extended by the Corporate Debtor under the MLA. The

nature of this obligation is financial, as defined under Section 5(8) of the Code,

Company Appeal (AT) (Ins.) No. 310 of 2024 -10-

and the Appellant has rightly lodged its claim in the CIRP of both IHCPL and

the Corporate Debtor.

18. Ld. Counsel emphasizes that the mutual understanding between the

parties as recorded in the MLA is sufficient to create enforceable rights. No

further instrument is legally necessary. The guarantee clause in the MLA

constitutes a binding contractual obligation.

19. Lastly, Ld. Counsel points out that the claim was filed in the CIRP of

the Corporate Debtor within the prescribed timelines and well before approval

of the resolution plan. This fact remains undisputed by the Respondent in its

written reply as well as during the oral hearing.

20. Summing up his arguments Ld. counsel for the Appellant prays that

this Hon'ble Tribunal be pleased to set aside the Impugned Order dated

05.12.2023 and direct the Resolution Professional to admit the claim of the

Appellant in the CIRP of the Corporate Debtor, as the same arises from a valid

and enforceable contract of guarantee, satisfying all requirements under

Section 5(8) of the Insolvency and Bankruptcy Code, 2016.

Submissions of the Respondent

21. Ld. Counsel for the Respondent / Resolution Professional (hereinafter

referred to as "RP" or "Answering Respondent"), of M/s Dream Procon Private

Limited respectfully submits that the present appeal filed by the Appellant,

Moneywise Financial Services Private Limited, is wholly misconceived and is

Company Appeal (AT) (Ins.) No. 310 of 2024 -11-

liable to be dismissed at the threshold. The Appellant has challenged the

rejection of its alleged financial claim of Rs. 14,59,89,580/- filed via Form C

on 20.10.2020. Counsel submits that the said claim was rightly rejected by

the Respondent on 13.11.2020 on the ground that it does not fall within the

scope of a "financial debt" as defined under Section 5(8) of the Insolvency and

Bankruptcy Code, 2016 ("IBC"). The Ld. Adjudicating Authority, by its

detailed order dated 05.12.2023 passed in I.A. No. 767 of 2021 in CP(IB) No.

1771/ND/2018, rightly upheld the said rejection, holding that the Appellant

is not a financial creditor of the Corporate Debtor. The said order is legally

sustainable and does not warrant any interference.

22. Ld. Counsel for the Respondent submits that the primary issue involved

in the appeal is whether the Respondent correctly rejected the Appellant's

claim of Rs. 14,59,89,580/- as a financial creditor of the Corporate Debtor. In

this regard, counsel submits the following:

a) That no corporate guarantee was ever executed by the Corporate Debtor

in favour of the Appellant. Despite repeated assertions, the Appellant

has failed to place on record any duly executed deed of guarantee by

the Corporate Debtor. The foundation of the Appellant's claim thus

collapses.

b) That Clause 28 of the Master Loan Agreement, relied upon by the

Appellant, does not constitute a binding guarantee deed. Moreover,

there exists no Board Resolution of the Corporate Debtor authorizing

any of its promoters to execute a corporate guarantee in favour of the

Appellant.

Company Appeal (AT) (Ins.) No. 310 of 2024 -12-

c) That the sanction letter issued by the Appellant to Indirapuram Habitat

Centre Pvt. Ltd. only refers to an intention to obtain a corporate

guarantee from the Corporate Debtor. However, in the absence of any

actual deed of guarantee, no enforceable obligation has been created.

d) That the claim of the Appellant fails to meet the statutory definition of

"financial debt" under Section 5(8) of the Code. In the absence of a duly

executed deed of guarantee, invocation of Clause (i) of Section 5(8) is

legally impermissible.

e) That even assuming for arguments sake the existence of any guarantee,

counsel submits that it was never invoked by the Appellant prior to the

Insolvency Commencement Date (ICD). Invocation of a guarantee is a

settled pre-condition for recognition of debt under the IBC.

f) That the Resolution Plan has already been approved by the Committee

of Creditors (CoC). Counsel submits that the Appellant's claim is

belated and legally inadmissible. The conduct of the Appellant

demonstrates suppression of facts and constitutes an abuse of process.

23. Counsel for the Respondent submits that the Appellant initially referred

to a purported deed of guarantee dated 22.04.2016 in its claim form dated

20.10.2020. However, no such deed has been placed on record till date. Even

before the Adjudicating Authority, the Appellant reiterated this claim and even

quoted clauses from the alleged deed, but failed to annex or substantiate the

same. In response, the RP rightly pointed out the absence of any such deed

executed in favour of the Appellant.

Company Appeal (AT) (Ins.) No. 310 of 2024 -13-

24. Counsel further points out that in the present appeal, the Appellant has

conspicuously omitted any reference to the purported deed, thereby admitting

by implication that its earlier assertions were false and misleading. Such

suppression of material facts renders the entire claim legally dubious.

25. It is further submitted by counsel that the timeline of claim

submissions exposes the Appellant's mala fide intent. For the same loan

transaction, the Appellant filed a claim against IHCPL (principal borrower) on

25.10.2019, but waited almost a full year to file the so-called corporate

guarantee-based claim against the Corporate Debtor on 20.10.2020. This

clearly establishes that the latter claim is an afterthought, lacking in bona

fides.

26. Ld. Counsel submitted that even Clause 28 of the MLA, now relied upon

by the Appellant in lieu of the earlier claimed deed, does not fulfil the statutory

requirement for an enforceable guarantee. Under Sections 3(31) and 3(33) of

the IBC, counsel submits that security interest must be based on actual

executed documents and not on vague references or intentions.

27. Ld. Counsel places reliance on the judgments of this Appellate Tribunal

in 'Unity Small Finance Bank Ltd. v. Sripatham Venkatasubramanian

Ramkumar & Ors., Comp. App. (AT) (Ins.) No. 601 of 2024 (Paras 20, 24)'; and

'M/s. Star Maxx Properties v. Arunava Sikdar & Anr., Comp. App. (AT)(Ins.) No.

338 of 2024 (Paras 5, 31, 32)' to assert that only formally executed documents

can constitute a valid security interest.

Company Appeal (AT) (Ins.) No. 310 of 2024 -14-

28. Ld. Counsel for the Respondent submits that the Appellant has not

produced any evidence to show that the alleged guarantee was ever invoked

before the commencement of CIRP. Clause 28 of the MLA contemplates a first

demand guarantee, yet no such demand has been raised upon the Corporate

Debtor.

29. Ld. Counsel further submitted that in law, an uninvoked guarantee

cannot constitute financial debt. The Counsel relies on the following

judgements of Hon'ble Supreme Court and this Appellate Tribunal in this

regard:

i. Judgement of Hon'ble SC in Ghanshyam Mishra & Sons v. Edelweiss

ARC, (2021) 9 SCC 657 (Paras 109, 110);

ii. Judgements of this Appellate Tribunal in

 EARC v. Orissa Manganese and Minerals Ltd., 2019 SCC OnLine

NCLAT 764 (Paras 24-28);

 Ankur Kumar v. Sustainable Agro-Commercial Financial Ltd., CA

(AT)(INS) No. 484 of 2023 (Paras 25, 29, 31, 32); and

 IDBI Trusteeship Services Ltd. v. Abhinav Mukherji & Ors., CA

(AT)(INS) No. 356 of 2022 (Paras 27, 29, 30).

30. Ld. Counsel submits that the Appellant's claim for Rs. 14,59,89,580/-

has already been admitted in the CIRP of IHCPL. Filing the same claim in the

CIRP of the Corporate Debtor constitutes double-dipping, which is

impermissible under the IBC. Permitting such a duplicate claim would

unjustly prejudice over 500 homebuyers and other stakeholders and

Company Appeal (AT) (Ins.) No. 310 of 2024 -15-

undermine the CIRP. Counsel refers to 'Piramal Capital & Housing Finance

Ltd. v. Hydric Infrastructure Pvt. Ltd., CA (AT)(INS) No. 851 of 2023 (Paras 29-

34)', wherein this Appellate Tribunal held that overlapping claims are

impermissible.

31. Ld. Counsel for the Respondent reiterates that a financial debt must

involve disbursement of money against consideration for time value of money

to the Corporate Debtor. Here, the disbursement was made exclusively to

IHCPL. The essential criterion of disbursal to the Corporate Debtor is thus not

satisfied.

32. Ld. Counsel places reliance is placed on the Judgment of Hon'ble SC in

'Anuj Jain, Interim RP of Jaypee Infratech Ltd. v. Axis Bank Ltd., [2020 SCC

OnLine SC 237], (Para 43)', where the Court clarified that disbursal to the

corporate debtor is an essential ingredient. Debts not recorded in books or

unsupported by valid instruments cannot qualify under Section 5(8).

33. Ld. Counsel submits that the last date for submission of claims in the

CIRP was 29.10.2019. The Appellant filed its claim on 20.11.2020 i.e., 388

days after the deadline. This unexplained and unjustified delay renders the

claim inadmissible.

34. Ld. Counsel places reliance upon the following Judgements of Hon'ble

SC in this regard:

 Essar Steel v. Satish Gupta, 2019 SCC OnLine SC 1478 (Para 88); and

 RPS Infrastructure Ltd. v. Mukul Kumar & Anr., (2023) 10 SCC 718 (Paras

23-24).

Company Appeal (AT) (Ins.) No. 310 of 2024 -16-

35. Ld. Counsel for the Respondent submits that the Resolution Plan for

the Corporate Debtor has already been approved by the Committee of

Creditors with a vote share of 90.66% during the 11th CoC meeting held on

07.05.2021. Entertaining the Appellant's claim at this belated stage would

disrupt the settled commercial wisdom of the CoC, and jeopardize the

approved resolution plan, contrary to established jurisprudence.

36. In light of the above submissions, counsel for the Respondent prays

that this Tribunal may dismiss the present appeal with exemplary costs, as it

is devoid of merit, factually misleading, legally untenable, and constitutes an

abuse of the process of law.

Analysis and Findings

37. We have heard the Ld. Counsels for both the parties in great detail. We

have gone through the records of the case including the written submissions

of both the parties.

38. Based on the submissions of both the parties we frame the following 3

issues for adjudication:

I. Whether a valid and enforceable corporate guarantee has been executed

by the Corporate Debtor, and if so, has it been invoked;

II. Whether the Appellant's claim, is barred by limitation under the Code;

and

III. 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

Company Appeal (AT) (Ins.) No. 310 of 2024 -17-

Issue I: Whether a valid and enforceable corporate guarantee has been

executed by the Corporate Debtor, and if so, has it been invoked

39. This issue strikes at the core of the present appeal, for if the Appellant

has not demonstrated the existence of a legally binding and enforceable

corporate guarantee executed by the Corporate Debtor, then the very

foundation of its claim, asserting his status a financial creditor under the

Code, must necessarily fail.

Under Section 5(8)(i) of the Code, a financial debt includes "any liability

in respect of a guarantee or indemnity for any of the items referred to in sub-

clauses (a) to (h)." Thus, the primary legal threshold is whether the Appellant

has to establish that the Corporate Debtor had, in fact, undertaken such a

liability by way of a valid guarantee.

40. The Appellant contends that the guarantee arose pursuant to a Master

Loan Agreement (MLA) dated 22.04.2016, executed between the Appellant

(Moneywise Financial Services Pvt. Ltd.); the borrower entity Indirapuram

Habitat Centre Pvt. Ltd. (IHCPL); and the Corporate Debtor, Dream Procon

Pvt. Ltd. Clause 28 of the MLA is relied upon by the Appellant as evidence

that Dream Procon undertook a corporate guarantee for repayment of the

Rs.10 crore facility extended to IHCPL. The Appellant argues that this clause,

when read in conjunction with the execution of the MLA and the parties'

conduct; particularly the Joint Declaration dated 27.12.2017 satisfies the

requirements of a valid and enforceable contract of guarantee, even though a

standalone guarantee deed was never executed.

Company Appeal (AT) (Ins.) No. 310 of 2024 -18-

41. The Appellant relies on the principle that a contract of guarantee under

Section 126 of the Indian Contract Act, 1872 may be either oral or written

and need not follow a particular format. It further cites the Section 128 of the

Contract Act to argue that the liability of the guarantor is co-extensive with

that of the principal debtor and can be enforced without a requirement of

direct disbursal to the guarantor. The Appellant relies on the Hon'ble Supreme

Court's ruling in Laxmi Pat Surana v. Union of India, (2021) 8 SCC 481, where

it was held that insolvency proceedings can be initiated against a corporate

guarantor, even when the principal borrower is not a corporate person. Similarly, the Appellant cites State Bank of India v. Athena Energy Ventures

Pvt. Ltd., Company Appeal (AT)(Insolvency) No. 633 of 2020, and also relies

upon Hon'ble SC's Judgement in BRS Ventures Investments Ltd. v. SREI

Infrastructure Finance Ltd., (2025) 1 SCC 456 to reinforce the legal proposition

that a valid guarantee constitutes a financial debt under Section 5(8)(i) of the

Code.

42. The Respondent, however, disputes the very existence of a legally valid

corporate guarantee. It is submitted that while the Appellant initially referred

to a "Deed of Guarantee dated 22.04.2016" in its Form C claim, no such deed

was ever produced before the Adjudicating Authority or this Tribunal. The

Respondent points out that the Appellant has now entirely abandoned that

position and instead relies solely on Clause 28 of the MLA. It is contended

that such a clause, appearing within a tripartite loan agreement, does not

constitute a formal guarantee and lacks the characteristics of an enforceable

security instrument. Crucially, the Respondent highlights that there is no

Board Resolution or any other corporate authorization by the Corporate

Company Appeal (AT) (Ins.) No. 310 of 2024 -19-

Debtor permitting its promoters or directors to extend a corporate guarantee

on its behalf. In the absence of such authorization, the Respondent asserts

that no legal or enforceable corporate guarantee can be inferred. The

respondent places reliance upon this Appellate Tribunal's Judgements in

'Unity Small Finance Bank Ltd. v. Sripatham Venkatasubramanian Ramkumar

& Ors., Comp. App. (AT) (Ins.) No. 601 of 2024, and 'M/s. Star Maxx Properties

v. Arunava Sikdar & Anr., Comp. App. (AT) (Ins.) No. 338 of 2024', where this

Tribunal has held that an enforceable corporate guarantee must be supported

by clear documentation and formal authorization.

43. We agree that Section 5(8)(i) of the Code read with Section 128 of the

Contract Act permits invocation of liability against a guarantor in respect of

debt disbursed to a third-party borrower. However, the existence of a valid

and enforceable guarantee must still be established by the claimant. In the

present case, the Appellant has failed to place on record any standalone or

formally executed deed of guarantee by the Corporate Debtor. A reference has

been made to the "Deed of Guarantee dated 22.04.2016 in the application

filed in I.A. No. 767 of 2021. The relevant para 23 of the application is

reproduced below:

Para 23 of IA no. 767 of 2021

"23. That the Deed of Guarantee dated 22.04.2016 as executed

between the parties further concretizes the claim of the

applicant to the extent that the liability to repay the credit

facility availed by IHCPL was co-extensive over the corporate

debtor. The relevant clause of Deed of Guarantee is reproduced

below for kind perusal of this Hon'ble Tribunal:

Company Appeal (AT) (Ins.) No. 310 of 2024 -20-

"3 (a) In the event of any default on part of the

Guarantor in payment / repayment of any of the

monies referred to Clause 2 above, or in the event of

any default on part of the guarantor to comply with or

perform any of the terms, conditions and covenants

contained in the loan documents, the guarantor shall,

upon demand to the Guarantor, forthwith pay to the

Moneywise on demand without demur all part of the

amounts (as demanded by the Moneywise) payable by

the Guarantor under the Loan Documents...

(b) In the event of failure by the Guarantor to make

payment as stated above the Guarantor shall pay the

default interest at the same rate/s as specified in

relation to the Facilities for the Borrower till receipt of

the aforesaid amounts by the Moneywise to its

satisfaction."

44. This deed dated 22-04-2016 having aforesaid para 3 has neither been

produced before NCLT nor before us. The Appellant has now dropped that

contention without explanation. It is well settled that guarantees are not

lightly inferred in corporate law; they must be shown by either formal

execution or unequivocal documentation, especially in insolvency proceedings

where competing claims affect the rights of multiple stakeholders.

45. We now have a look at the Master Loan Agreement. The aforesaid

agreement is an agreement between 6 parties Moneywise Financial Services

as lender; Indirapuram habitat Centre Pvt. Ltd as Borrower; and 4 Guarantors

Company Appeal (AT) (Ins.) No. 310 of 2024 -21-

viz Mr. Pramod Goel; M/s Dream Procon Pvt. Ltd; M/s Victory Infra Projects

Pvt. Ltd; and M/s Victory Infratech Pvt. Ltd. We now have a look at the clause

28 of the MLA, which is extracted below:

Clause 28 of MLA

"Guarantee

28. In consideration of Moneywise granting Loan Facility to the

Borrower under this Agreement. the Guarantor, on request of

the Borrower, unconditionally guarantees due and timely

repayment of all Loan Amount according to its terms and

compliance of all terms and conditions of this Agreement by the

Borrower and to pay on first demand and without demur all

amounts due against the Borrower under this Agreement,

whether on account of principal loan, interest, additional

interest, costs, charges, or otherwise jointly and severally. Any

statement of account by Moneywise to the Borrower shall be

binding on the Guarantor. This Guarantee shall be a continuing

guarantee, joint and several and coextensive with the Borrower

and shall not be revocable till all the payments as above nave

been made. It shall not be necessary for Moneywise to either

exhaust other remedies against the Borrower or recover from

other securities before proceeding against the Guarantor or to

implead the Borrower in any claim or proceeding against the

Guarantor. In case any claim of Moneywise is not enforceable

against the Borrower for any reason, the Guarantor shall be

liable to meet it as the principal debtor. This guarantee shall not

be discharged by any subsequent variation of the terms of this

Company Appeal (AT) (Ins.) No. 310 of 2024 -22-

Agreement by Moneywise as reserved to it in this Agreement or

by any grant of time or other forbearance by Moneywise to the

Borrower or by death or change of constitution of the Borrower

or the Guarantor. For security and comfort of the Lender the

Guarantor has agreed to provide such security(ies) as the

Lender may require, to the Lender and to independently

maintain the Margin during the entire period of the Loan till the

Loan has been fully repaid with all interest and charges with

right of the Lender to liquidate the security(ies) and adjust the

proceeds against the Loan Outstanding on the Guarantor's

failure to perform the Guarantee within 5 (five) days of first

demand by the Lender"

(Emphasis Supplied)

46. Clause 28 of the MLA while appearing to contain language of an

undertaking by the Corporate Debtor to repay the facilities advanced to

IHCPL, it is embedded within a broader loan agreement, the primary purpose

of which was to record the loan extended to IHCPL. It also provides for

invocation of the guarantee. It is an admitted position that the so-called

guarantee, if any provided by Clause 28 was never invoked. Similarly, even if

read as a promise to guarantee, it is not supported by any separate

authorization or corporate resolution from the Board of Directors of Dream

Procon Pvt. Ltd. The absence of such authorization is fatal. In insolvency law,

the courts have taken a strict view that a financial creditor must demonstrate

the basis of its claim through formal instruments that clearly establish the

Company Appeal (AT) (Ins.) No. 310 of 2024 -23-

obligation and its enforceability. Hon'ble Supreme Court in Anuj Jain, Interim

Resolution Professional of Jaypee Infratech Ltd. v. Axis Bank Ltd., (2020) 8 SCC

401, emphasized that financial debts under Section 5(8) must be evidenced

by legally valid documentation and that any debt not recorded through a

demonstrable instrument could not qualify.

47. In this context, it is also relevant to consider the conduct of the

Appellant. The Appellant's in NCLT relied on Deed of Guarantee dated

22.04.2016, but could not produce the document before NCLT or before this

Appellate Authority. Now before us they have taken the plea of Clause 28 of

the MLA, an agreement which has 6 parties including 4 guarantors. The

Clause 28 also clearly provides for invocation of the Guarantee, which clearly

has not been done by the Appellant. At this stage failure to press its claim

under Clause 28 initially, and its belated reliance on it only after being unable

to produce the alleged deed of guarantee, casts serious doubt on the

credibility and consistency of its position. The Adjudicating Authority also

notes that while the Appellant refers to the Joint Declaration dated

27.12.2017 as further evidence of the Corporate Debtor's obligation, that

declaration again does not amount to a legally enforceable security or

guarantee in favour of the Appellant. It merely records mutual arrangements

and does not independently satisfy the legal criteria for creating enforceable

financial debt under the Code.

48. A corporate guarantee, like any contingent liability, becomes

enforceable only upon default of the principal borrower followed by invocation

by the creditor. In Ghanshyam Mishra & Sons v. Edelweiss ARC (supra), the

Company Appeal (AT) (Ins.) No. 310 of 2024 -24-

Hon'ble Supreme Court at paragraphs 109 and 110 held that a debt must be

real, crystallized, and enforceable as on the Insolvency Commencement Date

for it to be admitted in the CIRP. In the present case, the Appellant has failed

to demonstrate any act of invocation; whether by notice, demand letter, or

otherwise, addressed to Dream Procon prior to 06.09.2019. Although Clause

28 of the MLA refers to a "first demand" obligation, the Appellant has not

shown that such demand was ever actually made. The guarantee, even

assuming its validity, had therefore not matured into an enforceable claim

against the Corporate Debtor as of the date when CIRP commenced. A mere

default by IHCPL does not suffice to convert a contingent obligation into a live

financial debt enforceable against the guarantor in the absence of invocation.

49. The following emerge from the discussion in paras above:

i. The Appellant has failed to prove that a valid and binding corporate

guarantee was executed by Dream Procon Pvt. Ltd.

ii. 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.

iii. The Appellant could not produce a resolution of the board of Directors

of the Dream Procon Pvt Ltd. for providing such guarantee.

Company Appeal (AT) (Ins.) No. 310 of 2024 -25-

We therefore hold that 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.

Issue II: Whether the Appellant's claim is barred by limitation under the Code

50. The Appellant contends that the claim in question arises from an

ongoing contractual obligation in the nature of a corporate guarantee and that

the limitation for enforcing such a claim must be calculated from the date of

default, which in this case is post-2019. The Appellant also asserts that the

claim was submitted well in advance of the final approval of the resolution

plan by the Adjudicating Authority and, therefore, should not have been

dismissed on procedural grounds alone. It is further submitted that mere

delay in filing the claim, absent malice or fraud, ought not to bar a creditor

from asserting a legitimate financial claim, especially when the underlying

transaction is genuine and enforceable. The Appellant seeks to invoke the

broad principle laid down by the Hon'ble Supreme Court in Committee of

Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta & Ors., (2020) 8 SCC

531, to argue that the procedural timelines in the IBC should not override

substantial rights and that the resolution process must be inclusive rather

than overly rigid.

51. On the other hand, the Respondent asserts that the Appellant's claim

was filed hopelessly beyond the statutory time limits. The CIRP of the

Corporate Debtor/ Dream Procon Pvt. Ltd. commenced on 06.09.2019. In

accordance with Regulation 6(2)(c) of the IBBI (Insolvency Resolution Process

Company Appeal (AT) (Ins.) No. 310 of 2024 -26-

for Corporate Persons) Regulations, 2016 read with Section 15(1)(c) of the

Code, the last date for submission of claims was 29.10.2019. The Appellant,

who had already participated in the CIRP by filing its earlier claim in respect

of a separate loan transaction on 25.10.2019, chose to file the present claim

only on 20.10.2020, almost a year later. This delay of 388 days, according to

the Respondent, is not only procedurally fatal, but also devoid of any

justification, as the Appellant was well aware of the CIRP proceedings and its

timelines.

52. The Respondent further emphasizes that by the time the belated claim

was filed, the CIRP had advanced significantly and a Resolution Plan had

already been approved by the Committee of Creditors with 90.66% voting

share in its meeting held on 07.05.2021. It is contended that once the CoC

exercises its commercial wisdom to approve a resolution plan, no additional

liability can be introduced without upsetting the finality and commercial

balance of the process. To reinforce this position, reliance is placed on several

judicial pronouncements including 'Deputy Commissioner v. Kiran Shah,

Comp. App. (AT)(Ins.) No. 328 of 2021', of this Appellate Tribunal, where it was

held that the literal language of Section 12 of the Code mandates strict

adherence to the time frame it lays down. The Respondent places further

reliance upon the judgement of Hon'ble SC in 'RPS Infrastructure Ltd. v. Mukul

Kumar & Anr., [(2023) 10 SCC 718]', wherein the Hon'ble Court reaffirmed that

belated claims cannot be accepted or made part of the CIRP and that doing

so would compromise the sanctity of timelines and stakeholder expectations.

Company Appeal (AT) (Ins.) No. 310 of 2024 -27-

53. We are inclined to agree with the Respondent's submissions. The IBC

is a time-bound statute, whose framework is premised upon predictability,

certainty, and strict adherence to procedural milestones. The objective of

Section 12 and related regulations is to ensure that insolvency proceedings

conclude within a scheduled timeframe ideally within 180 days and, at most,

330 days. Regulation 12(2) of the CIRP Regulations does provide a limited

window for admitting claims after the public announcement, provided they

are submitted before approval of the resolution plan by the CoC. However,

even within this discretionary framework, the claimant must demonstrate

diligence, good faith, and absence of prejudice to other stakeholders. None of

these factors appear to favour the Appellant in the present case.

54. 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.

55. The IBC is not designed to accommodate open-ended, hydra-headed

claims that emerge unpredictably after the CoC has performed its commercial

function. In this regard, the Tribunal is guided by the reasoning of the Hon'ble

Supreme Court in 'RPS Infrastructure Ltd. v. Mukul Kumar & Anr., (2023) 10

Company Appeal (AT) (Ins.) No. 310 of 2024 -28-

SCC 718', where it was held that the Code does not permit revival of stale or

belated claims once the resolution plan has achieved finality. The Appellant's

argument that it should still be allowed to participate merely because the

claim arose before plan approval is not tenable. The delay was not minimal or

excusable, it was gross, unexplained, and disruptive.

56. In conclusion, we find that 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.

Issue III: 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

57. We now turn to the 3rd issue in this appeal i.e., whether the Appellant,

even assuming arguendo the existence of a corporate guarantee, could validly

assert a claim for the same debt in the CIRP of the Corporate Debtor (Dream

Procon Pvt. Ltd.) despite already having filed and admitted that claim in the

CIRP of the principal borrower, Indirapuram Habitat Centre Pvt. Ltd. (IHCPL).

The issue is important because even where a guarantee exists, the claim can

be rejected, if the right to enforce it has not crystallized, or if admitting it

would result in unjust enrichment or procedural abuse.

Company Appeal (AT) (Ins.) No. 310 of 2024 -29-

58. The Appellant contends that it is legally entitled to file claims in both

CIRPs; that of the principal borrower (IHCPL) and the guarantor (Dream

Procon Pvt. Ltd.). It argues that Section 128 of the Indian Contract Act, 1872

clearly provides that the liability of a guarantor is co-extensive with that of

the principal debtor, unless otherwise agreed, and that a creditor can pursue

either party or both simultaneously. The Appellant also places reliance on the

Insolvency Law Committee (ILC) Report dated 20.02.2020, which clarified that

creditors should be allowed to file claims in both CIRPs without fear of

duplicity, and that any recovery made in one proceeding would reduce the

corresponding amount claimed in the other. The Appellant further submits

that a demand for payment i.e., invocation of the guarantee was not necessary

prior to the Insolvency Commencement Date (ICD) because the guarantee was

a "first demand guarantee" and the default of IHCPL in repaying the loan was

sufficient to trigger liability of the guarantor, Dream Procon. In support of its

position, the Appellant relies on the judgments of the Hon'ble Supreme Court

in 'Laxmi Pat Surana v. Union of India, (2021) 8 SCC 481' and the NCLAT's

decision in 'State Bank of India v. Athena Energy Ventures Pvt. Ltd., Company

Appeal (AT)(Insolvency) No. 633 of 2020', both of which confirm that

insolvency proceedings can be initiated against corporate guarantors even in

the absence of direct disbursal of funds to them, and that a valid guarantee

suffices to create financial creditor status.

59. The Respondent on the other hand emphasizes that the Appellant had

already submitted the very same claim of ₹14.59 crores in the CIRP of IHCPL,

the principal borrower, and that it was duly admitted there. The filing of an

Company Appeal (AT) (Ins.) No. 310 of 2024 -30-

identical claim against the guarantor, Dream Procon, without any disclosure

of the earlier claim or an adjustment mechanism, constitutes impermissible

"double dipping" and is contrary to the spirit and structure of the IBC. The

Respondent relies on the ruling in Piramal Capital & Housing Finance Ltd. v.

Hydric Infrastructure Pvt. Ltd., Company Appeal (AT)(Insolvency) No. 851 of

2023, where the NCLAT held that simultaneous and overlapping claims are

not permissible unless recovery in one CIRP is proportionately adjusted in the

other. Additionally, the Respondent cites the decisions of Hon'ble SC in

Ghanshyam Mishra & Sons v. Edelweiss Asset Reconstruction Co. Ltd., (2021)

9 SCC 657 and of this Appellate Tribunal in IDBI Trusteeship Services Ltd. v.

Abhinav Mukherji & Ors., Company Appeal (AT)(Insolvency) No. 356 of 2022 to

emphasize that in the absence of a demand or invocation prior to CIRP, the

debt cannot be said to have crystallized for purposes of claim admission.

60. We find 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, in our view, amounts to impermissible duplication and is

contrary to the equitable distribution principle underlying the IBC. We are

guided here by the decision of this Appellate tribunal in Piramal Capital v.

Hydric Infrastructure Pvt. Ltd.,(supra), wherein it was held that a financial

Company Appeal (AT) (Ins.) No. 310 of 2024 -31-

creditor cannot be allowed to enforce the same claim in multiple CIRPs

without proper adjustment or coordination. 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.

61. We also note that permitting such a duplicated claim would seriously

prejudice other stakeholders in Dream Procon's CIRP, including over 500

homebuyers. It would also compromise the discipline and finality of the claims

process. The IBC is not a forum for speculative assertion of parallel claims,

and its procedural safeguards must be respected by all creditors. The

Appellant, being a established financial entity, cannot claim ignorance of this

obligation.

62. Having considered the facts, submissions, and applicable law, we find

that 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.

63. 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.

Company Appeal (AT) (Ins.) No. 310 of 2024 -32-

64. In view of the above findings, we do not find any infirmity in the

impugned order. The appeal is dismissed. Pending I.A.s are closed.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

[Mr. Indevar Pandey] Member (Technical)

SA/Pragya (LRA)

Company Appeal (AT) (Ins.) No. 310 of 2024