NCLT Chandigarh: Indemnity Obligation Can't Be Treated As Operational Debt For Lack Of Privity

The National Company Law Tribunal Chandigarh bench, led by Harnam Singh Thakur and LN Gupta, ruled that indemnity obligations concerning guarantees do not apply to operational debts under the Insolvency and Bankruptcy Code (IBC). \r

In a case where Agarwal Foundries Private Limited sought initiation of Corporate Insolvency Resolution Process (CIRP) against POSCO E&C India Private Limited for a defaulted payment guaranteed by email, the tribunal dismissed the petition. It emphasized the necessity of documented agreements signed by all parties, noting the absence of such evidence weakened the petitioner's claim. \r

Referring to precedent, the tribunal upheld that CIRP cannot proceed without privity of contract, ultimately dismissing the petition for lack thereof.