Siddharth Satish Kataria ... vs Central Bank Of India Limited

NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Insolvency) No. 395 of 2025 [Arising out of the Impugned Order dated 07.01.2025 passed by the Adjudicating Authority, National Company Law Tribunal, Mumbai Bench, in C.P. (IB) No. 691/MB/2023] In the matter of: Siddharth Satish Katariya (Ex-Director) Superfine Extrusions Private Limited Having its Office at: 1267, Pratibha Dalmandai, Ahmednagar - 414001 ...Appellant Versus 1. Central Bank of India Central Office at: 'Chandermukhi ', Nariman Point Mumbai-400021 Through its Authorized Representative

Mr. Amit Kumar (Employee No.73695) Chief Manager House No.16, Main Mathura Road, Badarpur Gaon, New Delhi-110044.

2. Mr. Jitendra Palande, Interim Resolution Professional 38, 5-3/D, New Ajanta Avenue, Paud Road, Kothrud, Pune-411038. .... Respondents Present: For Appellant : Mr. Ashish Mohan, Sr. Advocate with Ms. Sunanda Tulsyan, Advocate. For Respondent : Mr. Kunal Tandon, Sr. Advocate with Mr. Tushar Singh, Ms. Aastha Kaushik, Ms. Natasha, Advocates for R1. JUDGMENT

(Hybrid Mode)

Per: Barun Mitra, Member (Technical)

The present appeal filed under Section 61 of Insolvency and Bankruptcy

Code 2016 ('IBC' in short) by the Appellant arises out of the Order dated

07.01.2025 (hereinafter referred to as 'Impugned Order') passed by the

Adjudicating Authority (National Company Law Tribunal, Mumbai Bench-III) in

C.P. (IB) No. 691/MB/2023. By the impugned order, the Adjudicating Authority

has admitted the Section 7 application filed by the Central Bank of India

admitting the Corporate Debtor/Corporate Guarantor into the rigours of

Corporate Insolvency Resolution Process ("CIRP" in short). Aggrieved by the

impugned order, the present appeal has been preferred by the Appellant-

suspended Director of the Corporate Debtor.

2. The relevant facts which are required to be noticed for deciding the present

matter before us are as follows:

 The Central Bank of India and other banks as a consortium had

extended credit facilities to M/s Superfine Metal Pvt. Ltd. ("SMPL" in

short) as the Principal Borrower. The said loan was inter alia secured

by M/s Superfine Extrusions Pvt. Ltd. ("SEPL" in short) as one of the

Corporate Debtor/Corporate Guarantor.

 A sanction letter dated 27.11.2013 was issued by Central Bank of

India wherein certain credit facilities were sanctioned to the Principal

Borrower.

Page 2 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025  On 22.08.2015, a Corporate Guarantee deed was executed by the

Corporate Debtor-SEPL guaranteeing payment to the Central Bank of

India Consortium for a principal sum not exceeding Rs.73.61 Cr.

 Another Corporate Guarantee Deed was executed on 18.11.2016 by

the Corporate Debtor-SEPL in favour of Central Bank of India

consortium for the secured advances by way of Term Loan and Cash

Credit not exceeding Rs 92.47 Cr. sanctioned to Principal Borrower-

SPML. This Consortium of Bank included Central Bank of India,

Indian Bank and Oriental Bank of Commerce (now Punjab National

Bank).

 On 26.12.2019, letter of sanction was issued by the Central Bank of

India to SPML-Principal Borrower for Ad hoc Limit of Rs 3.70 Crores.

Another sanction letter dated 09.09.2020 was issued for FITL Scheme

to SPML for a sum of Rs.3,16,90,762/-. In the sanction letters dated

26.12.2019 and 09.09.2020, Bank of Maharashtra got added to the

Consortium of Banks.

 On 06.11.2020, a new Corporate Guarantee was executed for the

Central Bank of India, Indian Bank, Oriental Bank of Commerce (now

PNB) and Bank of Maharashtra.

 On 06.11.2020, a Working Capital Consortium Agreement was also

executed between the Corporate Debtor and the Consortium of Bank.

 On 29.11.2020, the accounts of SMPL-Principal Borrower was

classified as NPA.

Page 3 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025  On 29.06.2022, a Section 13(2) Demand Notice under SARFAESI Act

was issued against the SMPL for a default of Rs 86.23 Cr.

 On 02.01.2023, the Consortium of Banks issued a Recall Notice to

SMPL, SEPL and other guarantors to the Consortium Agreement to

repay the defaulted amount within eight days of the notice.

 Since the defaulted amount was not paid, a Demand Notice was

issued by the Central Bank of India-Respondent No.1 to SEPL on

06.03.2023 which was followed by the filing of a Section 7 petition for

an amount of Rs 94.71 Cr.

 On 07.01.2025, the Adjudicating Authority admitted the Section 7

application filed by the Central Bank of India-Respondent No.1

holding that the guarantee was invoked on 06.03.2023. SEPL was

thus admitted into rigours of CIRP.

 Aggrieved with the said order, the present appeal has been preferred

by the Suspended Management of the Corporate Debtor/Corporate

Guarantor-SEPL.

3. Shri Ashish Mohan, Ld. Senior Counsel representing the Appellant

submitted that the Section 7 petition was not maintainable against the

Appellant-Corporate Debtor/Corporate Guarantor. The Deeds of Guarantee of

22.08.2015 and 18.11.2016 which have been purportedly invoked by the

Respondent No.1 Bank could not have been relied upon by the Adjudicating

Authority since these Guarantee Deeds were insufficiently stamped documents.

Being insufficiently stamped, it was contended that these documents were

Page 4 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025 inadmissible in evidence and should have been impounded in terms of Sections

33 and 34 of the Maharashtra Stamp Act. As the Guarantee Deeds were not

stamped appropriately, the said deeds did not constitute a contract and therefore

not enforceable in law under the Indian Contract Act. In support of their

contention, reliance has been placed on the judgment passed by the Hon'ble

Supreme Court of India in M/s N.N. Global Mercantile Pvt. Ltd. Vs M/s Indo

Unique Flame Ltd. & Ors. in Civil Appeal Nos. 3802-2803 of 2020; Avinash

Kumar Chauhan Vs Vijay Krishna Mishra MANU/SC/8502/2008 and

Hindustan Steel Ltd. Vs Dilip Construction Company MANU/SC/0474/1969

in which judgments the Hon'ble Supreme Court held that unstamped documents

cannot be acted upon unless the defects are cured. It was asserted that these

defects were not rectified prior to invocation of these aforementioned guarantee

deeds and hence the guarantee was unenforceable.

4. Submission was pressed that subsequent to the execution of Guarantee

Deeds on 22.08.2015 and 18.11.2016, certain further facilities were advanced

on 26.12.2019 and 09.09.2020 which was followed by a Working Capital

Consortium Agreement dated 06.11.2020 accompanied by a Corporate

Guarantee on the same date. Contention was raised that with the execution of a

fresh set of loan document and execution of another Deed of Guarantee on

06.11.2020, the earlier guarantees executed by the Appellant stood extinguished

as there was a novation of the contract. It was contended that no Section 7

proceeding could have been initiated without invocation of the fresh guarantee

dated 06.11.2020. It was also submitted that with the novation of the contract

between the Appellant and Respondent, the original contract flowing out of the Page 5 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025 guarantees executed on 22.08.2015 and 18.11.2016 were not required to be

performed any further.

5. Refuting the contentions raised by the Appellant, Shri Kunal Tandon, Ld.

Senior Advocate representing the Respondent No.1 submitted that the alleged

insufficiency of stamp duty on the Guarantee Deeds of 22.08.2015 and

18.11.2016, in the facts of the present case, cannot come in the way of the

admission of Section 7 petition. In support of their contention, reliance was

placed on the judgment of this Tribunal in Hiren Meghji Bharani Vs

Shankheshwar Properties Pvt. Ltd. in CA(AT)(Ins) No. 446 of 2023 wherein

it has been clearly held that technical objections like insufficient stamping does

not render CIRP proceedings non-maintainable. It was pointed out that the

Principal Borrower as well as the Appellant-Corporate Guarantor had already

obtained a Stamp Duty Exemption Certificate for the secured property. It was

also added that insufficiently stamped Deed of Guarantee was a curable defect

and the onus to cure was on the Principal Borrower or by the Corporate

Guarantor as it was their obligation to pay the stamp duty. Furthermore, the

Principal Borrower had undertaken to pay the deficit stamp duty payable in case

any such demand was raised. The deficit was admittedly not paid by the Principal

Borrower as no such demand was raised.

6. Submission was further pressed that there was no substance in the

argument canvassed by the Appellant that there was a novation of the contract

and hence the guarantee amount could not have been claimed without

invocation of the new Deed of Guarantee dated 06.11.2020. Repelling the above

Page 6 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025 contention of the Appellant, it was asserted that non-invocation of the guarantee

dated 06.11.2020 was not material since the Corporate Debtor still remained

bound by the guarantees which were executed on 22.08.2015 and 18.11.2016.

Hence, the Section 7 petition was pretty much maintainable basis the invocation

of guarantee of 22.08.2015 and 30.11.2016 and no error was committed by the

Adjudicating Authority in admitting the Section 7 application filed by the

Respondent Bank.

7. It was emphatically asserted that all that the Adjudicating Authority is

required to look into in a Section 7 application is the issue of debt and default.

Since the Appellant has not disputed the liability arising out of the discharge of

the guarantee obligations in respect of the debt of the Principal Borrower qua the

Respondent Bank nor denied the incidence of default, the admission of the

Section 7 application by the Adjudicating Authority was in consonance with the

statutory provisions of the IBC and in conformity with the judicial precedents of

the Hon'ble Supreme Court.

8. We have duly considered the arguments advanced by the Learned Counsel

for the parties and perused the records carefully including Stamp Duty

Exemption Certificates of the Principal Borrower and Corporate Guarantor

brought on the record by the Respondent by way of an Additional Affidavit.

9. Coming to one of the principal limbs of argument of the Appellant, it is

their case that with the coming into existence of the Working Capital Consortium

Agreement dated 06.11.2020 and the Corporate Guarantee Deed dated

06.11.2020, the two earlier guarantee deeds of 22.08.2015 and 18.11.2016 had

Page 7 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025 ceased to exist. The Adjudicating Authority erred in not taking into consideration

that the demand made by the Respondent Bank under the guarantee deeds of

2015 and 2016 was illegal and non-est in the eyes of law. Alongwith the

execution of entirely new loan documents, there was also a reconstitution of the

consortium of lenders with Bank of Maharashtra getting added. As there was a

novation of the guarantees, for any Section 7 application to be filed, it was

required to invoke the novated Guarantee Deed of 06.11.2020. Since this

invocation was not done, the Section 7 application was not maintainable.

10. Per contra, it is the contention of the Respondent Bank that the argument

canvassed by the Appellant that following issue of sanction letters of 26.11.2019

and 09.09.2020, there was a novation of contract which necessitated invocation

of the subsequent guarantee of 06.11.2020 is misconceived. It was stated that

the sanction letters of 26.11.2019 and 09.09.2020 were fully covered by the

existing securities which were included in the guarantees dated 22.08.2015 and

18.11.2016. The Working Capital Consortium Agreement executed on

06.11.2020 also clearly mentioned that it was not to affect existing securities.

The guarantees issued by the corporate guarantor on 22.08.2015 and

18.11.2016 therefore continued to bind the Corporate Debtor to discharge the

debt. When the Corporate Debtor was bound by earlier bank guarantees dated

22.08.2015 and 18.11.2016, there is no force or substance in the plea of the

Appellant that there was a need to invoke the guarantee dated 06.11.2020.

11. Before we analyse the rival contentions made by both the parties, it would

be useful to notice the guarantees which were executed by the SEPL-Corporate

Page 8 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025 Guarantor dated 22.08.2015 and 18.11.2016 that have been brought on record

by the Appellant. Clause 1 of the Guarantee Deed is as follows:

"This Deed of Guarantee made on this 22nd day of August 2015 by SUPERFINE EXTRUSION PVT LTD, a company incorporated under the Companies Act 1956 and having its registered office at 'Pratibha', 1267 Dalmandai, Ahmednagar hereinafter referred to as the Guarantors which expression shall unless repugnant to context or meaning thereof be deemed to include its successor and assigns in favour of Central Bank of India Consortium represented by Central Bank of India as Lead Bank as defined in the working capital consortium agreement dated 22nd August 2015 (hereinafter referred to as Lead Bank which expression shall unless repugnant to the context or meaning thereof be deemed to include the Central Bank of India and other consortium member banks constituting the Central Bank of India Consortium from time to time or each of them or any one or more of them and their respective successor and assigns) whereas in terms of the working capital consortium Agreement dated 22nd August 2015 and Joint Deed of Hypothecation dated 22nd August 2015 executed by SUPERFINE METALS PVT LTD, a company within the meaning of the Companies Atc 1956 and having its registered office at 'Pratibha', 1267 Dalmandai, Ahmednagar (Hereinafter referred to as the Borrower which expression shall unless repugnant to the context or meaning thereof be deemed to include its successors and permitted assigns) with the Lead Bank of the other part on the 22nd August 2015 executed between the Borrower and the Lead Bank (hereinafter the said working capital consortium agreement, Joint Deed of Hypothecation and Supplement Agreement collectively referred to as the said Agreement of Loan) the Lead Bank/Central Bank of India consortium has agreed to grant to the borrower all or some or any of the credit facilities either in Indian or foreign currencies by way of over drafts, cash credits, term loans, pre-shipment credits, opening of letters of credit, issuing of guarantees including deferred payment guarantees and indemnities negotiations and discounting of demand and /or Usance bills and cheques inland as well as foreign and such other facilities as may be agreed upon from time to time between the bank and the borrower (hereinafter called the above mention facilities) for sums not

Page 9 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025 exceeding in the aggregate the sum of Rs. 73 .61 crores (hereinafter for the sake of brevity referred to as the principle sum) on the terms and conditions specified and contained therein. ....

"1. If any time default shall be made by the borrower in payment of the principal sum (not exceeding Rs 73.61 Crores) together with interest, costs, charges, expenses and/or other money for the time being due to the Central Bank of India consortium in respect of or under the above mentioned credit facilities or any of them the guarantors shall forthwith on demand pay to the Central Bank of India consortium the whole of such principal sum (not exceeding Rs 73.61 Crores) together with interest, costs, charges, expenses and or any other money as may be then due to the Central Bank of India consortium in respect of the above mentioned credit facilities and shall indemnify and keep indemnified the Central Bank of India consortium against all losses of the said principal sum, interest or other money due and all cost, charges and expenses whatsoever which the Central Bank of India consortium may incur by reason of any default on the part of the borrower."

(Emphasis supplied)

12. Clause 1 of the above Guarantee Deed dated 22.08.2015 clearly stipulates

that if at any time default is made by the borrower in making payment, the

Corporate Guarantor-SEPL shall forthwith on demand pay to the Central Bank

of India amount not exceeding Rs. 73.61 Cr. It is also clear from the language

employed in the above Guarantee Deed that the guarantee could be invoked

either by the consortium or any of the members. Thus, no bar was placed on

individual constituent member of the consortium to proceed with invocation of

the guarantee on a default committed by the Principal Borrower.

13. The subsequent Guarantee Deed dated 18.11.2016 reads as follows:

"This Deed of Guarantee made on this 18th day of November 2016 by SUPERFINE EXTRUSION PVT LTD, a company incorporated under the Companies Act 1956 and having its registered office at 'Pratibha", 1267 Dalmandai, Ahmednagar hereinafter referred to as the Page 10 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025 Guarantors which expression shall unless repugnant to context or meaning thereof be deemed to include its successor and assigns in favour of Central Bank of India Consortium represented by Central Bank of India as Lead Bank as defined in the working capital consortium agreement dated 18th November 2016 (hereinafter referred to us Lead Bank which expression shall unless repugnant to the context or meaning thereof be deemed to include the Central Bank of India and other consortium member banks constituting the Central Bank of India Consortium from time to time or each of them or any one or more of them and their respective successor and assigns) whereas in terms of the working capital consortium Agreement dated 18th November 2016 and Joint Deed of Hypothecation dated 18 th November 2016 executed by SUPERFINE METALS PVT LTD, a company within the meaning of the Companies Act 1956 and having its registered office at 'Pratibha', 1267 Dalmandai, Ahmednagar (Hereinafter referred to as the Borrower which expression shall unless repugnant to the context or meaning thereof be deemed to include its successors and permitted assigns) with the Lead Bank of the other part on the 18th November 2016 executed between the Borrower and the Lead Bank (hereinafter the said working capital consortium agreement, Joint Deed of Hypothecation and Supplement Agreement collectively referred to as the said Agreement of Loan) the Lead Bank/Central Bank of India consortium has agreed to grant to the borrower all or some or any of the credit facilities either in Indian or foreign currencies by way of over drafts, cash credits, term loans, pre-shipment credits, opening of letters of credit, issuing of guarantees including deferred payment guarantees and indemnities negotiations and discounting of demand and /or Usance bills and cheques inland as well as foreign and such other facilities as may be agreed upon from time to time between the bank and the borrower (hereinafter called the above mention facilities) for sums not exceeding in the aggregate the sum of Rs. 92.47 crores (hereinafter for the sake of brevity referred to as the principle sum) on the terms and conditions specified and contained therein.

....

1. If any time default shall be made by the borrower in payment of the principal sum (not exceeding Rs 92.47 Crores) together with interest, costs, charges, expenses and/or other money for the time being due to the Central Bank of India consortium in respect of or under the above mentioned credit facilities or any of them the Page 11 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025 guarantors shall forthwith on demand pay to the Central Bank of India consortium the whole of such principal sum ( not exceeding Rs 92.47 Crores) together with interest, costs, charges, expenses and or any other money as may be then due to the Central Bank of India consortium in respect of the above mentioned credit facilities and shall indemnify and keep indemnified the Central Bank of India consortium against all losses of the said principal sum, interest or other money due and all cost, charges and expenses whatsoever which the Central Bank of India consortium may incur by reason of any default on the part of the borrower.

(Emphasis supplied)

14. Clause 1 of the Guarantee Deed dated 18.11.2016 also clearly stipulated

that if at any time default is made by the borrower in making payment, the

guarantors shall forthwith on demand pay to the Central Bank of India amount

not exceeding Rs. 92.47 Cr. Like in the Guarantee Deed of 22.08.2015, the

language employed in the present Guarantee Deed also provided that the

guarantee could be invoked either by the consortium or any of the members.

Thus, no bar was placed on the Respondent No.1 Bank to proceed with

invocation of the guarantee on a default committed by the Principal Borrower.

15. Now that we have noticed the Deeds of Guarantee, we now come to the

Guarantee Deed of 06.11.2020 which is based on sanction letters dated

26.12.2019 and 09.09.2020. These sanction letters, according to the Appellant,

related to sanction of further amounts and therefore without invoking the

guarantee dated 06.11.2020, this rendered the application under Section 7 non-

maintainable.

16. We may now have a look at the sanction letter issued by the Central Bank

of India consortium to SPML-Principal Borrower on 26.12.2019 with regard to Page 12 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025 Ad-hoc Limit of Rs.3.70 Crores for a period of 90 days. Letter dated 26.12.2019

contains following:

"BR/AHMPOO/2019-20/1 Date: 26/12/2019

SUPERFINE METALS PVT. LTD., 1267, PRATIBHA, DALMANDAI, AHMEDNAGAR-414001

Reg: Adhoc Limit Sanction- Superfine Metal Pvt. Ltd.

Ref: 1) Regional Office Letter no.RO/NAGAR/CREDIT/2019- 20/464dated 26/12/2019

2) Zonal Office Letter No. ZO: CR: 2019-20:161 dated 26/12/2019

We are pleased to inform you that your ad-hoc limit proposal has been approved by ZLCC, Pune vide their Agenda Item No. ZO/ZLCC/2019- 20/31 DATED 26/12/2019 as under subject to compliance of terms and conditions as stipulated in this letter:

✓ Committee has approved adhoc limit of Rs.3.70 crore for a period of 90 days, subject to compliance of terms & conditions as stipulated under:

1. Interest rate- 1 yr MCLR + 3.00% p.a. + additional interest 2.00% p.a. (i.e. ROI for Adhoc Limit 1 yr MCLR + 5.00% p.a)

2. Security-As applicable for existing FBWC limits.

3. Margin-25% on paid stock & 25% on book-debts upto 90 days

4. Processing charges:- Concession of 50% in processing charges on pro rata basis or till adjustment of ad-hoc, whichever is later.

5. Validity:- 90 days. Ad-hoc is to be adjusted on or before the expiry of 90 days from the date of availment

6. The Ad-hoc limit shall be secured by way of our exclusive charge over the additional current assets created out of the said Ad-hoc limit."

Committee Observations:

1. You are advised to rectify the observation/s of Stock Audit report.

2. During ad-hoc limit period, any asset insurance falling due for renewal should be got renewed in time.

Page 13 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025

3. Committee has observed that you are maintaining current a/c with our bank and other member banks. Whether you have sought specific approval of bank for maintaining current a/c based on necessity of operations? If no such approval taken, kindly give your comments/ justification for routing operations through current a/c instead of CC a/c.

Kindly comply with all the Terms & Conditions and convey your acceptance of the above mentioned Terms & Conditions duplicate copy of this letter for our record.

RAVI KANT CHIEF MANAGER"

(Emphasis supplied)

17. The other sanction letter dated 09.09.2020 by which an amount of

Rs.3,16,90,762/- has been sanctioned under FITL Scheme provides as follows:

BR/AHMPOO/2020-21/FITL/01 Date:09.09.2020

TO:

M/S SUPERFINE METALS PVT. LTD.

PRATIBHA 1267 DALMANDAI AHMEDNAGAR-414001 MAHARASHTRA

Dear Sir,

REG: SANCTION OF FITL

With reference to your application for FITL SCHEME, We have examined your application based on the application submitted by you and We are pleased to inform you sanction of FITL SCHEME on terms and conditions mentioned in this sanction letter.

1. Name of the M/S SUPERFINE METALS PVT.

Borrower LTD.

Page 14 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025

2. Address PRATIBHA 1267 DALMANDAI AHMEDNAGAR-414001 MAHARASHTRA

3. Purpose of Deferment of interest in working Loan capital facility.

4. Loan Amount Rs. 3,16,90,762.00

5.Facility type Term Loan

6.Rate of Interest 10.30% pa. Rate of interest as being applied on the existing FBWC limit of the borrower.

7.Repayment 6 Instalment of Rs 52,81,794 + term Interest. Commencing from 1st October 2020.

FITL shall be repayable fully not later than 31.03.2021 8.Documentation Agreement for FITL

OTHER TERMS AND CONDITIONS-

1. Any unpaid arrears of interest/Instalments/ Charges pertaining to 01/03/2020, will be repaid before disbursement.

2. The instalments in the term loan falling due during the period from 01/03/2020 to 31/08/2020 in respect of Term Loan will be repaid by you as per the revised repayment schedule by extending the tenor of the loan as allowed in the Regulation Package.

3. All necessary agreements on account of the above deferment of interest/allowing moratorium to be executed before disbursement of FITL.

4. All existing securities in the captioned facilities will continue to be the security for the existing facilities with the revised repayment schedule. Further the said securities will also cover the fresh FITL facility opened to park the interest on the captioned working capital facilities.

(Emphasis supplied) Page 15 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025

18. It is relevant to notice that Clause 2 of the sanction letter dated 26.12.2019

clearly mentions that: "Security- As applicable for existing FBWC limits" which

clearly indicates that existing securities were continuing. Similarly, in the

sanction letter of 09.09.2020, Clause 4 clearly mentions that all existing

securities in the captioned facilities will continue to be the security for the

existing facilities with the revised repayment schedule. It was further mentioned

that the said securities will also cover the fresh FITL facility. Thus, both the

sanction letters dated 26.12.2019 and 09.09.2020 were fully covered by

existing securities included in the guarantees dated 22.08.2015 and 18.11.2016.

19. Before we peruse the Deed of Guarantee dated 06.11.2020, we may first

take notice of Part-IV of the Section 7 petition filed by the Central Bank of India

which contains the amounts claimed as per all the facilities which is as

reproduced below:

Part IV

PARTICULARS OF FINANCIAL DEBT

1. TOTAL AMOUNT Total amount of debt granted to Superfine Metals Pvt. Ltd.

OF DEBT for which corporate debtor has provided corporate GRANTED guarantee dated August 22, 2015 and November 18, 2016, DATE(S) OF and Board Resolution dated August 21,2015 DISBURSEMENT Rs.66,21,05,008/- (Rupees Sixty-Six Crore Twenty-One Lakh Five Thousand and Eight Only).

Nature of A/C No. Amount Facility Disbursed (Rs.) Cash Credit 3056432616 54,27,45,208.00 Term Loan 3305046620 5,06,70,198.00 FITL 3852802470 3,16,90,762.00

Page 16 of 27

Company Appeal (AT) (Insolvency) No. 395 of 2025 Cash Credit 3793059834 3,69,98,840.00 Adhoc Total 66,21,05,008/

A copy of the disbursement schedule of the principal borrower is hereto annexed and marked as Annexure D.

2. AMOUNT Total Amount of debt in default from the Corporate Debtor is CLAIMED TO BE Rs.94,71,23,119.18/- (Rupees Ninty Four Crore Seventy IN DEFAULT One Lakh Twenty Three Thousand One Hundred and AND THE DATE Nineteen and Eighteen Paisa Only) The breakup of the said ON WHICH THE defaulted amount is as under-

DEFAULT OCCURRED Nature of A/C No Amount (ATTACH THE Facility Disbursed (Rs.) WORKINGS FOR Cash Credit 3056432616 77,85,36,496.00 COMPUTATION Term Loan 3305046620 6,68,45,124.18 OF AMOUNT FITL 3852802470 4,15,05,088.00 AND DAYS OF Cash Credit 3793059834 6,02,36,411.00 DEFAULT IN Adhoc TABULAR Total 94,71,23,119.18/ FORM) Hereto annexed is the copy of breakup of the defaulted

amount for each facility as on 6.03.2023 annexed as Annexure "E"

A copy of the System Generated proof for the above-

defaulted amount dated March 06, 2023 is annexed herewith as Annexure - F.

The Account of the Superfine Metals Private Limited (Hereinafter called as Principal Borrower) was classified as a Non-Performing Asset (NPA) on 29th November 2020. The classification of an account as an NPA is when an account remains not serviced/ in default for a period of Three months. Hence, the date of the first default was 29 th November 2020.

Page 17 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025 A copy of the system generated extract showing proof of NPA dated November 29, 2020 is annexed herewith as Annexure - G.

The Financial Creditor issued a notice dated 29th June 2022 under section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

Further, a recall notice was addressed by the applicant to the Superfine Metals Private Limited on 02.01.2023 inter alia calling upon the corporate debtor to clear outstanding as mentioned above on or before 10th January 2023.

However, the Principal Borrower has failed to rectify the default and the said default continues till date.

As per the corporate guarantee deed executed between the Financial creditor and corporate debtor on behalf of Superfine Metals, corporate debtor agreed to pay the amount in case the principal borrower makes a default in repayment of such borrowed amount. A copy of Corporate Guarantee Deeds dated August 22, 2015 and November 18, 2016 and Board Resolution dated August 21, 2015 is annexed herewith as Annexure - H (Colly.).

A demand notice was then addressed to the Corporate Guarantor on 6.03.2023 to repay the outstanding loan amount of Rs. 94,71,23,119.18. Hereto annexed as Annexure "I"

When we look at Part-IV of the Section 7 application, we notice that Cash Credit,

Term Loan, FITL and Cash Credit Adhoc are the facilities made by Central Bank

of India against which disbursals, default was claimed.

20. We now glance through the guarantee deed dated 06.11.2020 which was

guarantee deed executed with regard to Term Loan Facility aggregating to

Page 18 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025 Rs.114.22 Crores. The relevant extract of the corporate guarantee dated

06.11.2020 is as follows:

"WHEREAS AT THE REQUEST OF THE BORROWER- which is the Group Company of the Guarantor and also on the request of the Guarantor, which is the Group Company of the Borrower, THE LENDER agreed in principle to lend and advance to the Borrower the Term Loan (Hypothecation) facility aggregating to Rs.114.22 Crores (Rs. Rupees One Hundred Fourteen Crores Twenty Two Lacs only), hereinafter referred to as the said Facilities as the context admits, on the terms and conditions mentioned in its respective Sanction Letter dated 24.06.2019, 22.01.2020, 21.09.2019 & 12.08.2020 and also other agreements and security documents entered into between the Borrower and THE LENDER (hereinafter referred to as "the said agreements")"

21. Guarantee Deed of 06.11.2020 was executed by Corporate Guarantor in

favour of the Financial Creditor for Term Loan of Rs.114.22 Cr. Further, the

Consortium Agreement which was executed on 06.11.2020 between the parties

clearly mentions that it was not to affect existing securities. Thus, the reading of

the Guarantee Deed of 06.11.2020 does not indicate that it takes away the

existing securities.

22. We may now have a look at the Notice of Invocation dated 06.03.2023

which is as follows:

"To, March 06, 2023

Superfine Extrusions Private Ltd 1267 Pratibha Dalmandai Ahemednagar-414001

Subject: Legal Notice for invocation of corporate guarantee and calling upon you to repay the outstanding loan amount of Rs. 94,71,23,119.18/- (Rupees Ninety Four Crore Seventy One Lakhs Twenty Three Thousand One Hundred and Nineteen and Eighteen Paisa).

Page 19 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025 Reference:

1. Recall Notice sent to Superfine Metal Pvt Ltd dtd 02-01-2023

2. Corporate Guarantee deed dated August 22, 2015

3. Corporate Guarantee deed dated November 18, 2016

4. Sanction Letter dated 27-11-2013, 26-12-2019, 09-09-2020 & 19-01-2021

5. Review the Proposal dated January 19, 2021

6. Notice under section 13(2) SARFAESI Act, 2002

7. POA of Mr Abhay Kulkarni

Sir,

Aware as you are, we the undersigned, and the superfine group shares a Banking relationship for the last couple of years. The Superfine Metal Pvt ltd. approached the Central Bank of India (Lender) with a request for the advancement of a loan facility for an amount of Rs. 66,21, 05,008/- (Rupees Sixty Six Crore Twenty One Lakhs Five Thousand and Eight Only) ("Hereinafter referred to as the said Loan').

The bank has sanctioned the credit facilities wide sanctioned letter dated 27-11-2013, 26-12- 2019, 09-09-2020, 19-01-2021. Loan was disbursed from time to time to Superfine Metal Pvt Ltd wherein your company has given corporate guarantee.

We have to inform you that the principal borrower i.e. Superfine Metals Pvt Ltd has committed defaults in payment of their labilities and consequently their account has been classified as a non- performing asset. A copy of the notice dated 29.06.2022 under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and Recall Notice dated 02.01.2023 sent by us to the Principle borrower is enclosed.

Since the borrower has committed defaults. in terms of the guarantee deed dated August 22, 2015 and November 18, 2016, Superfine Extrusions Pvt Ltd have become liable to pay to us the outstanding amount of loan/credit facilities aggregating balance 0/s as of 06.03.2023 Rs 94,71,23,119.18/- (Rupees Ninety Four Crore Seventy One Lakhs Twenty Three Thousand One Hundred and Nineteen and Eighteen Paisa) exclusive of other charges, and we hereby invoke the corporate guarantee and call upon you to pay the said amount within Page 20 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025 10 days from the date of this notice, failing which we have been instructed to initiate the legal proceeding including but not limited to appropriate legal actions under the provisions of Insolvency & Bankruptcy Code, 2016.

The cost of the notice being INR 25,000/- are a lien on you.

Please note. Hence, the notice.

Yours sincerely,

(ABHAY KULKARNI) MANAGER Ahmednagar."

23. Now we proceed to answer the question as to whether there was a novation

of contract between the parties which necessitated invocation of Guarantee Deed

of 06.11.2020 to render the Section 7 application maintainable. We notice that

even though sanction letters were issued on 26.12.2019 and 09.09.2020 for Ad-

Hoc Limit and FITL by the Respondent Bank in respect of which the Appellant-

Corporate Debtor/Corporate Guarantor had given a guarantee on 06.11.2020,

the sanction letters had clearly mentioned that the securities which were covered

in the guarantees dated 22.08.2015 and 18.11.2016 were to continue. Thus, the

guarantees issued by the Corporate Guarantor on 22.08.2015 and 18.11.2016

continued to hold ground. Thus, the Corporate Debtor continued to remain

bound by the earlier bank guarantees dated 22.08.2015 and 18.11.2016 to

discharge the debt liability of the Principal Borrower. We cannot accept the

submission of the Appellant that Guarantee Deed dated 06.11.2020 which was

for term loan of Rs 114.22 Cr. had wiped off the earlier guarantees. We cannot

view this as a novation of contract between the parties. The invocation of

Page 21 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025 guarantee on 06.03.2023 by the Bank was therefore a correct invocation which

obligated the Corporate Guarantor to clear the dues.

24. We also do not find any merit in a related contention raised by the

Appellant that the Respondent No.1 Bank being one of the constituents of the

consortium of banks which had extended credit facilities to the Principal

Borrower, it could not have filed the Section 7 application on its own. We are not

inclined to agree with the above contention of the Appellant. The wordings

employed in the Deed of Guarantee indicate that it gave independent and

separate rights to the consortium members including Respondent No.1 Bank to

realise their debt. Merely because the Respondent No.1 Bank was a member of

the consortium can in no manner come in their way to file a Section 7 petition

independently. Hence, when the loan account of the Principal Borrower had been

declared NPA on 29.11.2020, each of the consortium members was entitled to

file the Section 7 application on their own steam without any need of consent or

approval or permission from the other members. That being so, the right of the

Respondent No.1 Bank to file the Section 7 petition cannot be questioned.

25. This brings us to the second limb of argument of the Appellant that Deeds

of Guarantee of 22.08.2015 and 18.11.2016 could not have been relied upon by

the Adjudicating Authority since these Guarantee Deeds were insufficiently

stamped documents and the defects not having been cured, the Guarantee

Deeds were not enforceable in law.

26. Per contra, it is submitted by Respondent No.1 that the Working Capital

Consortium Agreement of 22.08.2015 entered into by the Principal Borrower was

Page 22 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025 for the same property for which Stamp Duty Exemption Certificate was given.

When the Appellant was in possession of a Stamp Duty Exemption Certificate

which covered their property which had been mortgaged to secure the loan

sanctioned to the Principal Borrower, they have no ground to raise this plea to

contend that the Guarantee Deed suffered from any infirmity. The Corporate

Guarantee Deed being exempt from payment of stamp duty under Section 4 of

the Maharashtra Stamp Act, the objection of the Appellant that the Guarantee

Deeds were insufficiently stamped in terms of the provisions of the Maharashtra

Stamp Act is untenable.

27. Before we answer the question about the inadmissibility of the Guarantee

Deed on account of insufficient stamping, it may be worthwhile to notice the

Stamp Duty Exemption Certificates in possession of the Principal Borrower and

the Corporate Guarantor. The Stamp Duty Exemption Certificate of the Principal

Borrower which has been produced on record by the Respondent Bank in their

Additional Affidavit reads as follows:

Date: 10 SEP. 2007

CERTIFICATE

M/s Superfine Metal Pvt. Ltd., Plot No. E-29 & E-39 M.I.D.C. Supa, Tal- Parner, District-Ahmednagar situated here for proposed new industries, this unit is certified as New Project as per Government Order No. Mudrank/2007/Pra.Kra. -196(1)/M-1, dated 12/06/2007 under Bombay Stamp Duty Act 1958.

This certificate is issued as per above Government Order under Bombay Stamp Duty Act 1958 for exemption of Stamp Duty. This certificate is issued for land transfer letter from Maharashtra Industrial Development Corporation situated at Plot No. E-29 & E-39 M.I.D.C. Supa, Ta-Parner, District-Ahmednagar, lease deed and execution of Bank loan hypothecation, mortgage deed Other agreements."

Page 23 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025

28. A similar Stamp Duty Exemption Certificate of the Corporate Guarantor

which has been produced on record by the Respondent Bank in their Additional

Affidavit reads as follows:

Date: 05.10.2004

CERTIFICATE

"M/s Superfine Extrusion Pvt. Ltd.,

Factory address- Gat No. 53, KM No. 17, Mu. Post. Bhalwani, Taluka Parner, District Ahmednagar, unit is being established / established here. This unit is certified as new business/extension of new business as per Government Order No. Stamp 2000/4229 Pra. kra. 1064/M-1 dated 05.05.2001 under Bombay Stamp Duty Act 1958.

This certificate is issued as per above Government Order under Bombay Stamp Duty Act 1958 to said industrial unit to get exemption from registration fee and stamp duty for availing the loans from Bank for expansion of industrial unit."

29. We therefore find that both the Principal Borrower and the Corporate

Guarantor who were involved in the loan transaction held valid Stamp Duty

Exemption Certificates. The SPML-Principal Borrowers' Certificate covered Plot

No. E-29 and E-39, Taluka Parner, Distt. Ahmednagar which was offered as

primary security for the loan. Similarly, the property described at page 760 of

Appeal Paper Book in Corporate Guarantor-SEPL's own stamp duty exemption

certificate viz. GAT No. 53, Km No. 17, Post Bhalwani was the same property

which was mortgaged to secure the loans sanctioned to the Principal Borrower.

The above properties referred to in the Stamp Duty Exemption Certificates were

the same properties as was mentioned in the Section 13(2) SARFAESI Notice.

Even at that stage, no objections were raised regarding insufficient stamping.

Page 24 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025 Again, when the sanction letters of 26.11.2019 and 09.09.2020 were issued,

there was not even a whisper of protest by the Appellant with regard to

insufficiency of stamp duty in the said Guarantee Deeds. Once the opportunity

available to object to the admissibility of the document was not availed by the

Appellant, the validity of the document cannot be ignored, discarded or wished

away by them now.

30. We also notice that the Principal Borrower had sworn an affidavit affirming

that they have with them a Stamp Duty Exemption Certificate which is

applicable for bank loan agreements and that, if necessary, they would pay in

case stamp duty was payable by them. This letter is as extracted below:

"Superfine Metals Pvt Ltd has received 100% stamp duty exemption certificate No B-22234 from Directorate of Industries. The stamp duty exemption certificate is applicable for bank loan agreements and documentations.

We hereby undertake that in case stamp duty is payable on the agreements executed by us, we shall pay the stamp duty immediately along with penalty if any thereon."

For Superfine Metals Pvt Ltd

Director

Date: 06.11.2020 Place: Ahmednagar

31. We are of the view that that insufficiently stamped Deed of Guarantee is a

curable defect and the onus to cure the same was on the Principal Borrower or

the Corporate Guarantor as it was their obligation to pay the stamp duty.

Furthermore, we find that the Principal Borrower had even undertaken to pay

the deficit stamp duty payable in case any such demand was raised. The deficit

Page 25 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025 was admittedly not paid by the Principal Borrower as no such demand was

raised. In such circumstances, when the Principal Borrower was expressly aware

of the stamp duty that was required to be paid and having given an explicit

undertaking to pay for any shortfall, they had ample opportunity to remedy the

purported deficiency in the stamp duty payment. Since neither the Principal

Borrower nor Corporate Guarantor took any corrective steps in this direction,

the Appellant as the Corporate Guarantor cannot be seen to take undue benefit

of inaction/lapse on their own part to cure the defect. The Adjudicating Authority

had correctly applied the ratio of the decision of the Hon'ble Supreme Court in

N.N. Global Mercantile judgement supra in holding that technical deficiencies

like insufficient stamp duty being curable, and the same not having been cured,

there was no good ground placed by the Appellant to demonstrate that the

Guarantee Deeds could not have been taken into cognisance as they were

insufficiently stamped. We are inclined to agree with the Respondent No.1 Bank

that the issue of insufficient stamping has been raised as an after-thought in the

present appeal and that such technical objections cannot be a ground to defeat

the substantive rights of the Respondent Bank to initiate insolvency proceedings

against the Corporate Debtor/Corporate Guarantor.

32. The core issue of any insolvency proceeding is debt and default. Debt and

default have not been contested by the Appellant. There is no submission of the

Appellant that no amount is due qua their guarantee obligations. The Appellant

has only tried to get over their liabilities on the ground that the earlier contract

of guarantee having been novated, there was no liability on the part of the

Corporate Guarantor until the new Guarantee Deed was invoked and on the Page 26 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025 ground that no occasion had arisen for the Appellant to discharge their liabilities

due to insufficient stamping of the Guarantee Deeds. For detailed reasons stated

above, both these grounds have been found to be devoid of merit. The admission

of the Section 7 application cannot be obfuscated or defeated by raising such

unfounded technical pleas. In the present case, when debt and default is

undisputedly established, the Adjudicating Authority did not commit any error

in accepting the Section 7 application.

33. We do not find any error in the order passed by the Adjudicating Authority

admitting Section 7 application. There is no merit in the Appeal. The Appeal is

dismissed with no order as to costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

Place: New Delhi Date: 25.09.2025 Abdul/Harleen.

Page 27 of 27 Company Appeal (AT) (Insolvency) No. 395 of 2025