There is no requirement under Section 5(8) of the IBC that there can be a debt only when there is a default | Whether the cause of action for invoking the guarantee has arisen or not is not relevant for considering the definition of ‘claim’ under IBC | Even if that right cannot be enforced by reason of the applicability of the moratorium, the claim will still exist – China Development Bank Vs. Doha Bank Q.P.S.C. and Ors. – Supreme Court

/ 60 minutes of reading

The Hon’ble Supreme Court held that:
(i) Section 14(1) imposes an embargo or prohibition on certain acts. However, it does extinguish the claim.
(ii) Whether the cause of action for invoking the guarantee has arisen or not is not relevant for considering the definition of ‘claim’.
(iii) There is no requirement under Section 5(8) of the IBC that there can be a debt only when there is a default. The moment it is established that the financial debt is owed to any person, he/she becomes a Financial Creditor.
(iv) A public announcement of CIRP under Section 15(1) must contain the last date of submission of claims as may be specified.
(v) For submitting the claim by a Financial Creditor, there is no requirement of actual default.

There is no requirement under Section 5(8) of the IBC that there can be a debt only when there is a default | Whether the cause of action for invoking the guarantee has arisen or not is not relevant for considering the definition of ‘claim’ under IBC | Even if that right cannot be enforced by reason of the applicability of the moratorium, the claim will still exist – China Development Bank Vs. Doha Bank Q.P.S.C. and Ors. – Supreme Court Read Post »