NCLAT Rules, Claims Based On Guarantee Can Be Considered By RP Even If Guarantee Was Not Invoked Before Insolvency Commencement Date
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, comprising Justice Ashok Bhushan (Chairperson), Justice N. Seshasayee (Judicial Member), and Mr. Arun Baroka (Technical Member), has held that the Resolution Professional (RP) can consider claims based on corporate guarantees even if such guarantees have not been invoked prior to the insolvency commencement date. The Tribunal ruled that the maturity or invocation of a guarantee is not a prerequisite for filing or admitting claims under the Insolvency and Bankruptcy Code, 2016 (IBC), and such claims fall squarely within the definition of “claim” under Section 3(6) of the IBC.
Background
The appeal was filed by Hemant Sharma, the Resolution Professional of Today Homes and Infrastructure Pvt. Ltd., challenging an order dated 09.04.2024 passed by the National Company Law Tribunal (NCLT), New Delhi, Court-III, which directed the RP to reconsider the claim filed by the Indian Renewable Energy Development Agency Ltd. (IREDA). The NCLT had found that the RP had exceeded his jurisdiction by rejecting IREDA’s claim and directed that a copy of the order be forwarded to the Insolvency and Bankruptcy Board of India (IBBI).
Facts of the Case
During the Corporate Insolvency Resolution Process (CIRP) of Today Homes and Infrastructure Pvt. Ltd., IREDA filed a claim of ₹360.95 crore as a financial creditor, based on corporate guarantees issued by the corporate debtor for credit facilities extended to its group companies— (i) Today Clean Energy Pvt. Ltd., (ii) Photon Suryakiran Pvt. Ltd., and (iii) Photon Sunbeam Pvt. Ltd. The RP rejected the claim through emails dated 13.07.2020 and 23.01.2021, stating that the claim was not admissible since:
There was no disbursement made to the corporate debtor; and
The corporate guarantee had not been invoked before the insolvency commencement date (31.10.2019).
Aggrieved, IREDA filed IA No. 2504 of 2021 before the NCLT, which set aside the RP’s decision, directed reconsideration of the claim, and criticized the RP for exceeding his authority.
Submissions Before NCLAT
Appellant’s Arguments (RP): The RP argued that since the guarantee had not been invoked before the insolvency commencement date, the claim was not due or payable, and therefore, it could not be treated as a financial debt. It was also contended that the NCLT erred in making adverse observations and forwarding the matter to IBBI, as the RP had acted in good faith based on his understanding of the law.
Respondent’s Arguments (IREDA): IREDA contended that non-invocation of a guarantee cannot be a ground for rejecting a claim under the IBC. It submitted that the definition of “claim” under Section 3(6) of the IBC includes both matured and unmatured rights to payment, and hence, even uninvoked guarantees constitute valid claims.
Observations of the Tribunal
The NCLAT upheld the NCLT’s direction to reconsider IREDA’s claim, emphasizing that invocation of a guarantee is not a condition precedent for submission or acceptance of a claim under the IBC. The Bench relied on its earlier ruling in Export Import Bank of India v. Resolution Professional, JEKPL Pvt. Ltd., (2018), where it was held that maturity of claim, default, or invocation of guarantee has no nexus with filing of a claim pursuant to a public announcement. The Tribunal also referred to the Supreme Court’s judgment in China Development Bank v. Doha Bank QPSC & Ors. (2024 SCC OnLine SC 3829), which held: “Even if the right cannot be enforced by reason of the applicability of the moratorium, the claim will still exist. Whether the cause of action for invoking the guarantee has arisen or not is not relevant for considering the definition of claim.”
Applying this principle, the NCLAT held that even if the guarantee was not invoked before the commencement of CIRP, the creditor’s right to claim under the IBC continues to subsist. The Bench also clarified that while the RP is bound to verify and collate claims, this process does not amount to “adjudication,” which remains within the jurisdiction of the Adjudicating Authority. Therefore, merely rejecting a claim cannot be termed an “abuse of power.” “The act of not verifying the claim by the RP and communicating reasons for non-verification cannot be said to be in excess or abuse of the duties of the RP. Verification of claims is a statutory duty under Regulation 13 of the CIRP Regulations,” the Bench observed.
The NCLAT dismissed the appeal but deleted the adverse remarks made against the Resolution Professional by the NCLT. It upheld the direction requiring the RP to reconsider IREDA’s claim in accordance with law and place it before the Committee of Creditors (CoC). “The directions issued by the Adjudicating Authority to reconsider the claim cannot be faulted. The RP shall carry out reconsideration of the claim in accordance with law,” the Bench concluded. Accordingly, the appeal was dismissed, with the adverse observations against the RP expunged.
Cause Title: Hemant Sharma, Resolution Professional Today Homes and Infrastructure Pvt. Ltd. Versus Indian Renewable Energy Development Agency Ltd
Case No: Company Appeal (AT) (Insolvency) No.1039 of 2024
Coram: Justice Ashok Bhushan (Chairperson), Justice N. Seshasayee (Judicial Member), Mr. Arun Baroka (Technical Member)
