The Supreme Court of India, in China Development Bank v Doha Bank QPSC & Ors, held that the corporate debtor’s undertaking to discharge the liabilities of third parties under a deed of hypothecation (DoH) constitutes a guarantee under the Indian Contract Act, 1872 (ICA), and hence it can become a financial debt within the meaning of the Insolvency and Bankruptcy Code, 2016 (IBC).
In this case, the corporate insolvency resolution process (CIRP) had been commenced against Reliance Infratel. The appellants filed claims as financial creditors that were initially admitted, placing them on the committee of creditors (CoC). Respondent Doha Bank subsequently filed an application before the National Company Law Tribunal…
