State Bank of India & Orsv.Doha Bank Q.P.S.C. & Anr

Legal Analysis: State Bank of India & Ors. vs. Doha Bank Q.P.S.C. & Anr

Citation: 2026 INSC 423
Court: Supreme Court of India
Bench: Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe (Division Bench)
Judgment Author: Justice Alok Aradhe
Date of Decision: April 28, 2026
Nature of Judgment: Civil Appeal under Section 62 of the Insolvency and Bankruptcy Code, 2016 against order of the National Company Law Appellate Tribunal (NCLAT).

Synopsis of the Judgment

The appellants (a consortium of banks led by State Bank of India) extended rupee loan facilities to Reliance Infratel Limited (RITL) and its group entities. RITL executed corporate guarantees in favour of the consortium to secure the loans. When the corporate debtor entered CIRP, the appellants submitted their claims as financial creditors. Doha Bank (another creditor) objected, contending that the guarantees were invalid due to their timing (executed when the debtor was already in default), non-disclosure in financial statements, improper verification, and insufficient stamping. The NCLT and NCLAT rejected the appellants’ claims. The Supreme Court reversed, holding that a liability arising from a corporate guarantee squarely falls within the definition of “financial debt” under Section 5(8) of the IBC. The Court held that the execution of the guarantees was admitted by the corporate debtor, the timing was justified by RBI circulars on restructuring, the verification by the Resolution Professional was adequate, and insufficient stamping is a curable defect that does not invalidate the instrument. The findings of the tribunals were held to be perverse, and the appeal was allowed.

1. Basic Information of the Judgment

Field Details Case Title State Bank of India & Ors. vs. Doha Bank Q.P.S.C. & Anr. Civil Appeal No.8527 of 2022 Bench Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe Judgment Author Justice Alok Aradhe Date of Decision April 28, 2026 Citation 2026 INSC 423 Appeal From Order dated 14.10.2022 of NCLAT, Principal Bench, New Delhi, affirming order dated 02.03.2021 of NCLT, Mumbai Bench

2. Legal Framework

Laws Involved:

• Insolvency and Bankruptcy Code, 2016 (IBC): Section 5(7) (financial creditor), Section 5(8) (financial debt – includes liability under a guarantee for money borrowed against payment of interest), Section 7 (initiation of CIRP by financial creditor), Section 43 (preferential transactions), Section 45 (undervalued transactions), Section 66 (fraudulent trading), Section 62 (appeal to Supreme Court).

• Companies Act, 2013: Section 186 (loan to directors and related party transactions), Section 85 (guarantees by holding company – not applicable here).

• RBI Master Circular on Prudential Norms (01.07.2015): Clause 17.2.6 – for restructured assets that become NPA again, asset classification is reckoned from the date it first became NPA.

• Maharashtra Stamp Act, 1958: Provisions relating to stamp duty on instruments executed in Maharashtra.

• Indian Stamp Act, 1899: General principles on curable defects in stamping.

Precedents Cited:

• China Development Bank v. Doha Bank Q.P.S.C. (2025) 7 SCC 729 – Liability under a guarantee constitutes financial debt under Section 5(8) IBC.

• Interplay Between Arbitration Agreements under the Arbitration Act, 1996 and Stamp Act, 1899, In re (2024) 6 SCC 1 (Constitution Bench) – Non‑stamping or improper stamping does not render an instrument invalid; it is a curable defect.

• Dena Bank v. C. Shivakumar Reddy (2021) 10 SCC 330 – A decree in favour of a financial creditor gives rise to a fresh cause of action under IBC.

• Axis Bank Ltd. v. Naren Shet (2024) 1 SCC 679 – Principles on verification of claims.

• Union of India v. Chaturbhai M. Patel & Co. (1976) 1 SCC 747 – Stamp duty is a fiscal measure; defect is curable.

• Avantika Holdings Ltd. v. Abhilash Lal (NCLAT) – Distinguished.

• Other decisions on stamp duty and verification.

What the Judgment is About: The judgment clarifies that a corporate guarantee executed by a corporate debtor to secure a loan taken by its group entity constitutes a “financial debt” under Section 5(8) of the IBC, even if the guarantee was executed after the debtor had been declared an NPA but as part of a restructuring arrangement. It also establishes that objections based on non‑disclosure in financial statements, improper verification, and insufficient stamping are not valid grounds to reject a claim if the execution of the guarantee is admitted. The Court held that the NCLT and NCLAT had acted perversely in rejecting the claims.

3. Relevant Facts

• Facility agreement (19.03.2010): Doha Bank extended a USD 250 million loan to Reliance Infratel Limited (RITL), the corporate debtor.

• Consortium loan: State Bank of India and other banks (appellants) extended rupee loan facilities of ₹6,015 crores to Reliance Communications Ltd. (RCOM) and Reliance Telecom Ltd. (RTL), the group entities.

• Corporate guarantees (03.03.2017): RITL executed corporate guarantees in favour of the security trustee (Axis Trustee Services Ltd.) for and on behalf of the consortium lenders to secure the loans given to RCOM and RTL.

• NPA classification (26.08.2016): Accounts of RCOM, RTL, and RITL were first classified as NPAs.

• Restructuring: Reinstatement Agreements dated 05.09.2016 and 04.12.2016 restructured repayment obligations. The account was restructured, and in consideration, the corporate guarantees were executed on 03.03.2017.

• Second NPA (22.12.2017): The account of RITL was declared NPA with retrospective effect from 26.08.2016 (as per RBI circular).

• CIRP initiation (15.05.2018): NCLT initiated CIRP against RITL.

• Claim by appellants (17.05.2019): Appellants submitted claim of ₹3,628.67 crores in Form C to the IRP.

• Doha Bank’s objection (28.05.2019): Doha Bank sought declaration that the corporate guarantees were preferential, undervalued, and fraudulent.

• NCLT order (02.03.2021): Held that claims were submitted without proper documentation, verification was inadequate, and consortium lenders were not financial creditors. Directed reconstitution of CoC without the appellants.

• NCLAT order (14.10.2022): Affirmed NCLT, adding that guarantees were executed when the debtor was already in default, not disclosed in financial statements, and insufficiently stamped.

• Supreme Court appeal: SBI Consortium appealed.

4. Issues

1. Whether the corporate guarantees executed by the corporate debtor (RITL) constitute a “financial debt” within the meaning of Section 5(8) of the Insolvency and Bankruptcy Code, 2016.

2. Whether the claims of the appellants were liable to be rejected for non‑submission or improper verification of documents.

3. Whether the findings recorded by the NCLT and NCLAT warrant interference under Section 62 of the IBC.

5. Ratio Decidendi

• Corporate guarantee is “financial debt” under Section 5(8) IBC: Relying on China Development Bank v. Doha Bank, the Court held that a liability arising from a corporate guarantee squarely falls within the ambit of financial debt. A guarantor incurs a co‑extensive liability with that of the principal borrower, and such liability is enforceable in law. The amount of any liability in respect of a guarantee for money borrowed against payment of interest is a financial debt (Para 22).

• Execution of guarantees admitted by corporate debtor: The Court noted that the counsel for the corporate debtor admitted execution of the guarantees in a communication dated 19.03.2019. Therefore, the existence of the guarantees was beyond doubt. Mere non‑disclosure in financial statements for certain years does not invalidate the guarantees (Para 23, 25).

• Timing of execution justified by RBI circular: The account was first classified NPA on 26.08.2016, then restructured. The RBI master circular (Clause 17.2.6) provides that for restructured assets that become NPA again, classification is reckoned from the date it first became NPA. The guarantees were executed on 03.03.2017, before the account was declared NPA again (22.12.2017). Therefore, the timing was not suspicious; it was part of the restructuring process (Para 24).

• Verification by Resolution Professional was adequate: The security trustee confirmed that the executed guarantees were in its custody in New Delhi. The RP inspected and verified the documents by visiting the security trustee’s office. The NCLAT’s finding that there was no pleading to establish verification was held to be “perverse” (Para 26).

• Non‑production of documents before NCLT is not fatal – appeal is continuation: An appeal is a continuation of the original proceeding. Documents relevant to the lis can be produced at the appellate stage. The corporate guarantees were produced before the NCLAT, and no adverse inference can be drawn from their non‑production before the NCLT (Para 27).

• Insufficient stamping is a curable defect – does not invalidate the instrument: The guarantees were executed in New Delhi (office of Security Trustee) and stamp duty as applicable in Delhi was paid. The provisions of the Maharashtra Stamp Act were not attracted. Even otherwise, following the Constitution Bench in Interplay between Arbitration Agreements (2024), the Court held that non‑stamping or improper stamping does not render the instrument invalid; it is a curable defect. The Stamp Act is a fiscal measure, not a weapon to defeat the cause of an opponent (Para 28).

• Findings of tribunals were perverse – interference warranted: The Court held that the NCLT and NCLAT had grossly erred in rejecting the claims. The findings were glaringly perverse, and interference under Section 62 of the IBC was justified (Para 30-31).

6. New Legal Principles Established / Reiterated

• Corporate guarantee as financial debt – no requirement of direct disbursal to the guarantor: The judgment reaffirms that a financial debt under Section 5(8) IBC includes a liability under a guarantee, even if the disbursal was made to the principal borrower and not directly to the guarantor. The guarantor’s liability is co‑extensive and arises from the guarantee itself.

• Execution of guarantee after first NPA but as part of restructuring is not per se suspicious: The fact that a corporate debtor executes a guarantee while its account is classified as NPA (but as part of a restructuring package approved by lenders) does not make the guarantee invalid. The RBI circular on restructured assets must be considered.

• Verification of claims by IRP/RP based on physical inspection of original documents is sufficient: If the security trustee confirms custody and the RP inspects the original guarantees, the verification requirement under Regulations 10 and 13 of the IBBI (CIRP) Regulations is satisfied. Non‑submission of a copy of the guarantee along with Form C is not fatal if the document is otherwise available and its execution is admitted.

• Stamp duty defect is curable – does not affect the existence of the debt: Following the Constitution Bench, the judgment reiterates that an instrument that is insufficiently stamped is not void or unenforceable per se. The defect can be cured by paying the deficit stamp duty and penalty. The Stamp Act cannot be used to defeat substantive rights under the IBC.

• Section 62 IBC – Supreme Court can interfere when findings are perverse: While concurrent findings of the NCLT and NCLAT are ordinarily binding, the Supreme Court will interfere if the findings are perverse or based on no evidence.

7. Court’s Analysis and Examination of Concepts

• Definition of “financial debt” – tracing the disbursal: The Court analysed Section 5(8) and noted that the essential element of a financial debt is “disbursal against consideration for the time value of money”. However, in the case of a guarantee, the disbursal is made to the principal borrower. The liability of the guarantor arises by operation of the contract of guarantee, not by a separate disbursal. The Court held that this does not take the debt outside the definition of “financial debt”.

• Admission by corporate debtor as conclusive proof of execution: The letter dated 19.03.2019 from the counsel of the corporate debtor admitted execution of the guarantees and stated that disclosures had been made in public financial statements. This admission was held to be binding on the debtor and could not be ignored by the tribunals.

• RBI circular on restructured assets – retroactive NPA classification: The Court explained that under Clause 17.2.6 of the RBI Master Circular, when a restructured asset becomes NPA again, the classification is reckoned from the date it first became NPA, not from the date of subsequent default. Thus, the retrospective declaration of NPA from 26.08.2016 did not mean that the guarantee was executed after default; it was executed during the restructuring period.

• Verification – physical inspection by RP: The Court noted that the security trustee’s letter dated 06.03.2019 confirmed that the executed guarantees were in its custody in New Delhi. The RP visited the office and verified the documents. This satisfied the verification requirement under Regulation 13. The fact that the documents were not filed along with Form C was a procedural irregularity that did not affect the existence of the debt.

• Stamp duty – place of execution and curable defect: The guarantees were signed in New Delhi, stored with the security trustee in New Delhi, and produced before the NCLAT in New Delhi. Therefore, the Maharashtra Stamp Act (which would apply to instruments executed in Maharashtra) was not applicable. Even if it were, the Constitution Bench in Interplay held that insufficient stamping is a curable defect. The Court rejected the argument that the guarantees were inadmissible for want of stamp duty.

• Perversity of the tribunals’ findings: The Court found that the NCLT and NCLAT had ignored the admission of execution by the corporate debtor, applied an incorrect standard of verification, and placed undue emphasis on minor procedural irregularities. These findings were “glaring and manifest” perverse, warranting interference.

8. Critical Analysis

Strengths: The judgment provides clarity on the treatment of corporate guarantees under the IBC. It reinforces the principle that the definition of “financial debt” is broad and encompasses liabilities arising from guarantees, even when the disbursal was not made directly to the guarantor. The reliance on the RBI circular on restructured assets is important for cases involving multiple defaults and restructuring. The judgment also correctly holds that stamp duty defects are curable and cannot be used to defeat a claim under the IBC. The rejection of procedural technicalities (non‑filing of documents with Form C, verification issues) in favour of substantive justice is consistent with the object of the IBC.

Potential concerns: The judgment does not explicitly address whether the corporate guarantees could be challenged as “preferential transactions” under Section 43 of the IBC if they were executed when the debtor was already insolvent. However, the Court noted that the NCLT had rejected the plea of preferential transactions, and that finding was not separately challenged. The judgment also does not discuss the requirement of a “special resolution” under Section 186 of the Companies Act, 2013 for guarantees exceeding certain limits – the argument was raised but the Court did not rule on it specifically. However, given that the execution was admitted, the Court may have considered it to be a matter of corporate governance rather than a ground to deny the existence of the debt.

Practical impact: This judgment will be cited by financial creditors (especially banks) who hold corporate guarantees from group entities. It confirms that such guarantees are valid financial debt under the IBC, even if the guarantor was in default or in a restructuring phase at the time of execution. It also clarifies that procedural deficiencies in claim filing (e.g., not attaching the guarantee with Form C) can be cured if the existence of the guarantee is otherwise established. The decision on stamp duty will prevent litigants from using technical stamping objections to delay or defeat insolvency claims.

9. Final Outcome

Appeal allowed. The judgments dated 14.10.2022 of the NCLAT and 02.03.2021 of the NCLT are quashed and set aside. The appellants are recognised as “financial creditors” of the corporate debtor (Reliance Infratel Limited). The Resolution Professional is directed to reconstitute the Committee of Creditors by including the appellants and to proceed with the corporate insolvency resolution process in accordance with law. No order as to costs.

10. Practical Application (Use in Court)

• By financial creditors (banks/lending institutions): If you hold a corporate guarantee from a group entity and the guarantor enters CIRP, submit your claim as a financial creditor. Even if the guarantee was executed after the guarantor’s account was classified as NPA (but as part of a restructuring), rely on this judgment to argue that the timing does not invalidate the guarantee. Also, ensure that the Resolution Professional is given access to the original guarantee documents for verification; if the guarantor admits execution, the claim should be admitted.

• By resolution professionals / IRPs: When verifying claims based on corporate guarantees, you may accept physical inspection of original documents at the office of the security trustee. If the execution of the guarantee is admitted by the corporate debtor or established through correspondence, you are justified in admitting the claim. Non‑filing of the guarantee with Form C is not fatal if the document is otherwise available.

• By corporate debtors / other creditors objecting to claims: To successfully challenge a guarantee, you must show that the guarantee is forged or that there was no consideration. Mere procedural objections (timing of execution, non‑disclosure in financial statements, insufficient stamping) are not sufficient to defeat the claim. You should also note that stamp duty defects are curable, and the court will permit the creditor to pay the deficit.

11.  Court Lines

“It is well settled legal proposition that a guarantor incurs a coextensive liability with that of a principal borrower and such liability is enforceable in law.” (Para 22)

“The execution of the corporate guarantee executed by CD in favour of Security Trustee for and on behalf of the appellants has not been disputed by the CD which is evident from the communication dated 19.03.2019 sent by the counsel of the CD.” (Para 23)

“The Reserve Bank of India has issued a master circular dated 01.07.2015 … Clause 17.2.6 mandates that in case of restructured assets, its asset classification will be reckoned from the date it became NPA on the first occasion.” (Para 24)

“Non‑stamping or improper stamping does not result in the instrument becoming invalid. The Stamp Act does not render such an instrument void. The non‑payment of stamp duty is accurately characterized as a curable defect.” (Para 28, quoting Constitution Bench in Interplay)

“For the reasons already assigned by us, in our considered opinion, the perversity of the findings of the tribunals are glaring and manifest, beseeching interference by this Court in second appellate jurisdiction.” (Para 30)

12. Legal Strategy Insight

For the financial creditor (appellant): When filing a claim under Section 7 or submitting a claim to the IRP based on a corporate guarantee, always include the guarantee document or, if the original is with a security trustee, obtain a certified copy and a confirmation letter from the trustee. If the guarantor admits execution (even indirectly through correspondence), annex that correspondence. If the claim is rejected on technical grounds (e.g., verification, stamping), appeal immediately to the NCLAT. Use this judgment to argue that stamp duty defects are curable, that verification by physical inspection is sufficient, and that the timing of execution (even after first default) is not fatal if the document was part of a restructuring.

For the objecting creditor (e.g., Doha Bank) or corporate debtor: To resist a claim based on a corporate guarantee, focus on substantive grounds: forgery, absence of consideration, or that the guarantee was executed without proper authorisation (e.g., without board resolution). Do not rely solely on procedural defects such as non‑disclosure in financial statements or insufficient stamping – these are unlikely to succeed after this judgment. If the guarantee was executed after the initiation of CIRP or is a “preferential transaction” under Section 43, lead evidence to prove that ground. However, note that the burden is on the objector to establish the transaction is preferential.