If any Corporate Guarantee is given against the provisions of the Companies Act, it is not open to any Shareholder, Director or MD to raise such issue in petition u/s 7 of the Code- Padmaiah Vuppu Vs. Reliance Capital AIF Trustee Company Pvt. Ltd. & Ors – NCLAT

The Corporate Guarantee was given by the Managing Director of the Corporate Debtor against the provisions of Section 185 of the Companies Act, 2013 and no Board or Special Resolution was passed. However, it is not in dispute that the Corporate Guarantee was executed on 2nd September, 2014 and since then the matter was not challenged by any of the Shareholder / Director of the Corporate Debtor before any competent authority or Court of Law. In such circumstance, it is not open to any Shareholder/ Director/ Managing Director to raise such issue in petition under Section 7 of the I&B Code, as the Adjudicating Authority has no jurisdiction to decide the question of legality and propriety of the Corporate Guarantee executed by the Corporate Debtor.

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