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

Civil Appeal · 2026 INSC 423Decided 28 Apr 2026
C.A. No.-008527 - 2022
Justice Pamidighantam Sri Narasimha · Justice Alok Aradhe

Background

A consortium of banks led by State Bank of India had extended large rupee loan facilities to Reliance Communications Limited (RCOM) and Reliance Telecom Limited (RTL), which were secured in 2017 by corporate guarantees executed by Reliance Infratel Limited (the corporate debtor, later placed into insolvency proceedings). When the SBI consortium submitted its claim as a financial creditor based on these guarantees during the corporate debtor's insolvency resolution process, Doha Bank (a separate foreign lender to the same corporate debtor) disputed the very existence and validity of the guarantees, raising objections about their timing, disclosure, verification and stamping. Both the NCLT and the NCLAT rejected the SBI consortium's claim, prompting this appeal to the Supreme Court.

Decision Breakdown

The Supreme Court allowed the appeal, holding that the corporate guarantees were validly executed and constitute "financial debt" under Section 5(8) of the IBC, entitling the SBI consortium to be recognized as financial creditors. It held that producing the guarantees for the first time before the NCLAT (rather than the NCLT) was not fatal, since an appeal is a continuation of the original proceeding, and that alleged insufficient stamping of the guarantees does not render them void or unenforceable: a defect that is curable under settled law, since the Stamp Act is a fiscal measure, not a weapon for a litigant to defeat an opponent's claim. The Court found the NCLT and NCLAT's concurrent findings rejecting the claim to be perverse and unsustainable, justifying its intervention despite the usual reluctance to re-examine concurrent factual findings. It quashed both tribunal orders, directed that the appellants be recognized as financial creditors, and ordered the Resolution Professional to reconstitute the committee of creditors to include them.

Lesson Learnt

A properly executed guarantee does not become invalid or unenforceable merely because of an alleged stamping shortfall or because supporting documents were produced only at the appellate stage: such technical defects are curable and courts will look past them to recognize genuine financial debt, especially where tribunal findings rejecting a claim are shown to be factually perverse.

Official source (sci.gov.in)View Judgment (PDF)

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