State Bank of India and Ors. Vs. Doha Bank Q.P.S.C. and Anr. - It is well-settled that an appeal is a continuation of original proceeding. The documents which are relevant to deciding the lis can be produced at the stage of appeal. The corporate guarantees were produced before the NCLAT. Therefore, merely because they were not produced before the NCLT, no adverse inference can be drawn with regard to the genuineness of the corporate guarantees.

 SCI (2026.04.28) in State Bank of India and Ors. Vs. Doha Bank Q.P.S.C. and Anr. [(2026) ibclaw.in 234 SC, Civil Appeal No. 8527 of 2022] held that;-

• Section 5(8) of the Code stipulates that the essential ingredient of a financial debt is disbursal against consideration for the time value of money5. A liability arising from the corporate guarantee squarely falls within the ambit of financial debt as defined under Section 5(8) of the Code.

• The amount of any liability in respect of any of the guarantees for money borrowed against the payment of interest is a “financial debt” within Section 5(8) of the Code6. It is well settled legal proposition that a guarantor incurs a coextensive liability with that of a principal borrower and such liability is enforceable in law.

• Thus, it is evident that the corporate guarantees were executed before declaration of account of the CD as NPA and, therefore, the timing and manner of the corporate guarantees could not be questioned on the ground that the CD and the holding company were already in default.

• It is well-settled that an appeal is a continuation of original proceeding. The documents which are relevant to deciding the lis can be produced at the stage of appeal. The corporate guarantees were produced before the NCLAT. Therefore, merely because they were not produced before the NCLT, no adverse inference can be drawn with regard to the genuineness of the corporate guarantees.

• In any case, the legal position governing the effect of insufficiently stamped document is no longer res integra and the same does not become void or unenforceable merely on that account7. The defect of insufficient stamping of the document is curable in nature and does not go to the root of validity of the instrument.

• A Constitution Bench of this Court9 has held that “Non stamping or improper stamping does not result in the instrument becoming invalid. The Stamp Act does not render such an instrument void. The non-payment of stamp duty is accurately characterized as a curable defect.”

• It is well-settled legal proposition that this Court would not choose to re-appreciate a matter on facts when jurisdictional NCLT and in appeal NCLAT have recorded concurrent findings of fact. The exception to this self-imposed rule is where findings of fact are shown to be perverse10

Excerpts of the Order;

# 1. This appeal under Section 62 of the Insolvency and Bankruptcy Code, 2016 (Code) has been preferred by SBI Consortium comprising State Bank of India, Bank of India, UCO Bank, Syndicate Bank, Oriental Bank of Commerce and Indian Overseas Bank. The appeal arises from the order dated 14.10.2022 passed by the National Company Law Appellate Tribunal (NCLAT), whereby the order dated 02.03.2021 passed by National Company Law Tribunal (NCLT) was affirmed and the appeal was dismissed.

# 2. This appeal raises important question regarding validity and enforceability of corporate guarantees within the framework of the Code. The challenge mounted by respondents to the validity of the said corporate guarantees has been made on several grounds, namely, the timing and circumstances of the execution of guarantee, the alleged absence of proper disclosure in financial statements, the manner of their verification, the corporate insolvency resolution process and to their alleged insufficiency of stamping. These objections call for careful scrutiny to determine whether such grounds can legitimately defeat the recognition of a “financial debt” and status of a “financial creditor” under the Code.

FACTUAL BACKGROUND

# 3. The material facts giving rise to filing of this appeal, are as follows:

On 19.03.2010, a Facility Agreement was executed between Respondent No. 1, Doha Bank and Reliance Infratel Limited (RITL), namely Corporate Debtor (CD), whereby a foreign currency loan of USD 250 million was extended. Thereafter, on 04.03.2011, a Security Trustee Agreement was executed between the Consortium Lenders and Axis Trustee Services Ltd., appointing it as Security Trustee in respect of loan to Reliance Communications Ltd., (RCOM) and Reliance Telecom Ltd., (RTL).

# 4. The appellants, as members of a consortium of Banks, extended the rupee loan facilities of ₹6,015 crores to Reliance Communications Limited (RCOM) and ₹735 crores to Reliance Telecom Limited (RTL). On 20.02.2015, a deed of hypothecation was executed by the CD, in the favour of Security Trustee to secure the consortium lending pursuant to which a charge was created and duly registered.

# 5. On 26.08.2016, the accounts of RCOM, RTL and CD were classified as Non-Performing Assets (NPA) indicating default in repayment obligations. Subsequently, on 05.09.2016 and 04.12.2016, Reinstatement Agreements were executed between Doha Bank and the CD, restructuring the repayment obligations and extending repayment schedule ultimately up to 05.06.2017.

# 6. On 03.03.2017, the CD executed Corporate guarantees in favour of consortium lenders to secure loans extended to its group entities, namely RCOM & RTL. On 22.12.2017, the account of RITL was declared as NPA with retrospective effect from 26.08.2016.

INSOLVENCY PROCEEDINGS

# 7. On 15.05.2018, NCLT Mumbai initiated Corporate Insolvency Resolution Process (CIRP) against the CD. An Interim Resolution Professional (IRP) was appointed on 18.05.2018 to take over the management and invite claims from creditors. A public announcement was issued on 21.05.2018. The Security Trustee invoked the Corporate Guarantee executed by CD.

# 8. On 28.02.2019, Doha Bank disputed existence of such guarantees and called upon Security Trustee to withdraw the invocation. By communications dated 06.03.2019 and 18.03.2019, the Security Trustee asserted the existence and validity of the guarantees and declined interference by External Commercial Borrowings (ECB) lenders.

# 9. The Security Trustee, by a communication dated 18.03.2019, informed the ECB lenders that they should pursue their grievance with the borrowers and had no right to question rights of SBI consortium. The Advocates for the RITL advised the counsel of Doha Bank admitting the execution of the guarantees and stating that the existence of such guarantees had been disclosed by RCOM in their financial statements/annual reports.

# 10. On 30.04.2019, the NCLAT allowed the withdrawal of the appeal and directed NCLT to proceed with CIRP. On 07.05.2019, the IRP issued fresh public announcement inviting claims.

CLAIMS AND PROCEEDINGS BEFORE NCLT

# 11. On 17.05.2019, the appellant submitted a claim to IRP in Form ‘C’ for ₹3,628.67 crores. On 24.05.2019, the IRP issued notices to financial creditors and members of the suspended Board of Directors of CD to attend the first meeting of Committee of Creditors (CoC) scheduled on 30.05.2019.

# 12. By a communication dated 28.05.2019, Doha Bank sought a declaration from IRP that the corporate guarantees were preferential, undervalued and fraudulent as contemplated under Sections 43, 45 and 66 of the Code and requested derecognition of consortium as financial creditors. On 29.05.2019, the IRP rejected the objections, stating that claims have been verified based on legally valid documents.

# 13. Doha Bank filed an interlocutory application before NCLT seeking similar declarations. The appellants filed a reply on 10.06.2019 relying on the letter dated 19.03.2019 of the Advocates from CD admitting execution of corporate guarantees. On 12.08.2020, an additional affidavit was filed stating that the CD’s account has been classified as NPA on 22.12.2017 with effect from 26.08.2016, as per the RBI circular and that the corporate guarantees are kept in safe custody of security trustee who has certified the same.

# 14. By an order dated 02.03.2021, the NCLT inter alia held that (i) there was no material to show submission of proof of claims with corporate guarantees (ii) verification by Resolution Professional at New Delhi did not satisfy the statutory requirements (iii) that claims were admitted without proper documentation and (iv) consortium lenders were not financial creditors. Consequently, the Committee of Creditors was directed to be reconstituted.

PROCEEDINGS BEFORE NCLAT

# 15. The appellants preferred an appeal before the NCLAT. By an order dated 14.10.2022, NCLAT held as follows: (i) the corporate guarantees were executed when CD was in default of his obligation and was suffering from severe financial constraints; (ii) there is no documentary evidence to show that there was disclosure regarding the guarantees by the beneficiary lenders of the related party of the CD during restructuring of the debt of corporate debtor; (iii) the guarantees were not reflected in the financial statements of CD for financial year 2016-17 and 2017-18 or were produced before the NCLT; (iv) there is no pleading on record to establish that the guarantees were verified at New Delhi by the IRP/RP apart from brief reply affidavit of the RP; (v) the CD was declared NPA on 22.12.2017 w.e.f. from 26.08.2016 indicating that CD was in default for at least 90 days prior to 26.08.2016; (vi) it was obligatory under the law to produce a document duly stamped in accordance with provisions of Maharashtra Stamp Act, 1958; (vii) the timing and manner of the corporate guarantees were questionable as corporate debtor and holding companies were already in default. Accordingly, the appeal was dismissed. In the aforesaid factual background, this appeal arises for our consideration.

SUBMISSIONS

# 16. Learned senior counsel for the appellant submitted that the appellants are financial creditors of the CD on the basis of Corporate Guarantees and a Deed of Hypothecation. It is contended that liabilities arising from the guarantees constitute financial debt under Section 5(8) of the IBC and the claims of the appellant were verified by the Financial Creditors leading to formation of Committee of Creditors (CoC). It is pointed out that counsel for CD has admitted execution of the Corporate Guarantee and that disclosures have been made by them in their financial statements on an ongoing basis. It is contended that the present corporate guarantee is not covered under Section 85 of the Companies Act.

# 17. It is pointed out that as per RBI Circular dated 01.07.2015, relating to asset classification and provisioning pertains to advances, in case of restructuring, the asset classification will be reckoned from the date, it became NPA on the first occasion. It is submitted that the Corporate Guarantees were executed in the New Delhi office of the Security Trustee and stamp duty at applicable rates in New Delhi has duly been paid. It is submitted that the concurrent finding of the tribunals are perverse and the issue involved in the appeal is no longer res integra and is covered by the decision of this Court1. In support of the aforesaid submissions, reliance has been placed on the decisions of this Court2.

# 18. On the other hand, learned senior counsel for the respondents submitted that the alleged corporate guarantees are non-existent, invalid and unenforceable in law. It is submitted that the corporate guarantees executed on 02.03.2017 are highly suspicious, due to their timing and manner of execution, as the corporate debtor and its group companies were already classified as NPA on 26.08.2016.

# 19. It is contented that the corporate guarantees were not disclosed in the financial statements for financial year 2016-17 and 2017-18 and were deliberately withheld before the NCLT and introduced only at the appellate stage which is impermissible in law. It is contended that the corporate guarantees are insufficiently stamped and are inadmissible. It is argued that the alleged corporate guarantees were created in breach of the facility agreement and Section 186 of the Companies Act, 2013 as no special resolution was passed despite the large value of guarantee. It is contended that the concurrent findings of facts have been recorded by the Tribunals which do not call for any interference in this appeal. In support of the aforesaid submissions reliance has been placed on the decisions of Rajasthan High Court and the decision of NCLAT3.

ISSUES

# 20. We have considered the rival submissions made on both sides and have perused the record.

# 21. The following issues arise for consideration:

• (i) whether the Corporate Guarantees executed by the Corporate Debtor constitute “financial debt” within the meaning of Section 5(8) of the Code.

• (ii) Whether the claims of the appellants were liable to be rejected for non-submission or improper verification of documents.

• (iii) Whether the findings recorded by the tribunals warrant interference under Section 62 of the Code.

ANALYSIS

# 22. At the outset, it is apposite to note that for a debt to become “financial debt” for the purpose of Part II of the Code, the essential elements of disbursal, and that too against the consideration for time value of money, needs to be found in the genesis of any debt before it may be treated as “financial debt” within the meaning of Section 5(8) of the Code. This debt may be of any nature but a part of it is always required to be carried, or corresponding to, or at least having some traces of disbursal against consideration for the time value of money4. Under Section 5(7) of the Code, a person can be categorized as a financial creditor if a financial debt is owed to it. Section 5(8) of the Code stipulates that the essential ingredient of a financial debt is disbursal against consideration for the time value of money5. A liability arising from the corporate guarantee squarely falls within the ambit of financial debt as defined under Section 5(8) of the Code. The amount of any liability in respect of any of the guarantees for money borrowed against the payment of interest is a “financial debt” within Section 5(8) of the Code6. It is well settled legal proposition that a guarantor incurs a coextensive liability with that of a principal borrower and such liability is enforceable in law.

# 23. In the present case, the execution of the corporate guarantee executed by CD in favour of Security Trustee for and on behalf of the appellants has not been disputed by the CD which is evident from the communication dated 19.03.2019 sent by the counsel of the CD. Paras 2 and 4 of the said communication are extracted below for the facility of reference:

• “2. At the outset our clients deny all allegations made by you in the letter with respect to the alleged conspiracy and defrauding of Emirates NBD Bank PJSC, Industrial and Commercial Bank of China Limited, Doha Bank Q.P.S.C. and VTB Capital Plc (collectively, the “ECB Lenders”). The information regarding the Guarantees (as defined in the Letter) has always been available to the public including the ECB Lenders and adequate disclosures have been made on an ongoing basis under the financial statements and annual reports of the borrower group.

• 4. As the Information of the Guarantees have always been publicly available, the ECB Lenders had full access to such information and the allegations are therefore false and denied. In light of the above submission and classification, we request you to look into the supporting documents provided under Annexure A and withdrew your allegations made under the Letter.”

Thus, the execution of the guarantees is beyond any pale of doubt.

# 24. So far as timing of execution of the corporate guarantee is concerned, the account of the CD was first declared NPA on 22.08.2016. However, the same was subsequently restructured by the consortium of banks, in lieu thereof, the CD executed the corporate guarantee on 03.03.2017. However, despite such restructuring, the account once again became NPA on 20.12.2017. The Reserve Bank of India has issued a master circular dated 01.07.2015, which provides for prudential norms on income recognition or NPA Classification, and provisioning pertaining to advances. Clause 17.2.6 of the said circular reads as under:

• “17.2.6 If a restructured asset, which is a standard asset on restructuring in terms of para 20.2, is subjected to restructuring on a subsequent occasion, it should be classified as substandard. If the restructured asset is a sub-standard or a doubtful asset and is subjected to restructuring, on a subsequent occasion, its asset classification will be reckoned from the date when it became NPA on the first occasion. However, such advances restructured on second or more occasion may be allowed to be upgraded to standard category after the specified period (Annexure-5) in terms of the current restructuring package, subject to satisfactory performance.”

The said master circular mandates that in case of restructured assets, its asset classification will be reckoned from the date it became NPA on the first occasion. The appellants, therefore, declared the account of the CD as NPA w.e.f. 26.08.2016. Thus, it is evident that the corporate guarantees were executed before declaration of account of the CD as NPA and, therefore, the timing and manner of the corporate guarantees could not be questioned on the ground that the CD and the holding company were already in default.

# 25. It is pertinent to note that in the communication dated 19.03.2019 sent by the counsel of the CD, it is stated that disclosures about the corporate guarantees have been made by the CD in their financial statements on an ongoing basis. In any case, mere non-disclosure of corporate guarantee in the financial statements of CD for financial years 2016-17 and 2017-18, cannot deprive the appellants from making a claim on the basis of the said guarantees. At best, it could be treated as default committed by the CD.

# 26. In exercise of the powers conferred under the Code, the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 have been framed. Regulation 10 of the Regulations deals with substantiation of claims, whereas Regulation 13 provides for verification of the claims. Regulation 10 of the said Regulations provides that IRP or RP may call for such other evidence or clarification as he deems fit from a creditor for substantiating the whole or part of its claim. The corporate debtor has admitted execution of the corporate guarantee. The appellant had produced a letter dated 06.03.2019 before the NCLT issued by the security trustee wherein the said trustee confirmed that the executed and stamped version of corporate guarantees is in their custody in New Delhi. The RP inspected the aforesaid guarantees and verified the same by visiting the office of Security Trustee in New Delhi. Therefore, the finding recorded by the NCLAT that there is no pleading on record to establish that guarantees were verified by IRP/RP is perverse.

# 27. It is well-settled that an appeal is a continuation of original proceeding. The documents which are relevant to deciding the lis can be produced at the stage of appeal. The corporate guarantees were produced before the NCLAT. Therefore, merely because they were not produced before the NCLT, no adverse inference can be drawn with regard to the genuineness of the corporate guarantees.

# 28. The corporate guarantees were executed in the New Delhi office of Security Trustee and the Stamp Duty as per applicable rates in New Delhi has been paid. The same were produced before the NCLAT, Principal Bench at New Delhi. The production of corporate guarantees in a proceeding in New Delhi, does not attract the provisions of Maharashtra Stamp Duty Act, 1958. In any case, the legal position governing the effect of insufficiently stamped document is no longer res integra and the same does not become void or unenforceable merely on that account7. The defect of insufficient stamping of the document is curable in nature and does not go to the root of validity of the instrument. Even otherwise, the Stamp Act is a fiscal measure enacted to secure revenue for the State on certain classes of instrument. It is not intended to be used as a weapon by a litigant to defeat the cause of the opponent8. A Constitution Bench of this Court9 has held that “Non stamping or improper stamping does not result in the instrument becoming invalid. The Stamp Act does not render such an instrument void. The non-payment of stamp duty is accurately characterized as a curable defect.” Therefore, the contention that the corporate guarantees were not duly stamped as Stamp Duty under the Maharashtra Stamp Duty Act, 1958 was not paid is sans substance.

# 29. For the aforementioned reasons, issue no.(i) is answered in the affirmative where as issue no (ii) is answered in the negative.

# 30. It is well-settled legal proposition that this Court would not choose to re-appreciate a matter on facts when jurisdictional NCLT and in appeal NCLAT have recorded concurrent findings of fact. The exception to this self-imposed rule is where findings of fact are shown to be perverse10. It is pertinent to note that NCLT had rejected the plea of respondents with regard to preferential transactions and fraud under Sections 43 and 66 of the Code respectively. Merely because the corporate guarantees were not filed along with Form-C, the claim of the appellants could not have been negated. The tribunals at the instance of a lender grossly erred in rejecting the claim raised by the consortium of lenders. For the reasons already assigned by us, in our considered opinion, the perversity of the findings of the tribunals are glaring and manifest, beseeching interference by this Court in second appellate jurisdiction. Accordingly, issue no. (iii) is answered in the affirmative.

CONCLUSION

# 31. For the reasons aforesaid, it is held that :-

• (i) the corporate guarantees executed by the corporate debtor constitute “financial debt” within the meaning of Section 5(8) of the Code. The appellants are entitled to be recognized as financial creditors.

• (ii) The rejection of claims of the appellants, by the NCLT and NCLAT are legally unsustainable.

• (iii) The impugned orders suffer from perversity and warrant interference by this Court.

OPERATIVE DIRECTIONS

# 32. The judgments dated 14.10.2022 and 02.03.2021 passed by NCLAT and NCLT are quashed and set aside. All consequential actions taken in pursuance of impugned orders are set aside. The appellants are recognised as “financial creditors” of the Corporate Debtor. The Resolution Professional is directed to reconstitute the committee of creditors by including the appellants and to proceed with the corporate insolvency resolution process in accordance with law.

# 33. In the result, the appeal is allowed. However, there shall be no order as to costs.

---

References:

1. China Development Bank v. Doha Bank Q.P.S.C. & Ors., [(2024) ibclaw.in 340 SC] : (2025) 7 SCC 729. 

2. Interplay Between Arbitration Agreements under Arbitration & Conciliation Act, 1996 and Stamp Act, 1899, IN RE, [(2023) ibclaw.in 153 SC] : (2024) 6 SCC 1; Union of India v. M/s. Chaturbhai M. Patel & Co., (1976) 1 SCC 747; Dhirajlal Girdharlal v. Commissioner of Income Tax, Bombay, (1954) 2 SCC 557; Omar Salay Mohamed Sait v. Commissioner of Income Tax, Madras, (1959) SCC OnLine SC 71; Avantha Holdings Ltd. & Anr. v. Abhilash Lal, Resolution Professional for Jhabua Power Ltd. & Ors.; [(2022) ibclaw.in 476 NCLAT] : 2022 SCC OnLine NCLAT 4352; UOI v. M/s Chaturbhai M. Patel & Co. (1976) 1 SCC 747; Interplay between Arbitration Agreements under Arbitration and Conciliation Act, 1996 and Stamp Act, 1899 in Re, [(2023) ibclaw.in 153 SC] : (2024) 6 SCC 1; Hindustan Steel Ltd. v. Dilip Construction Company, (1969) 1 SCC 597; Dena Bank v. C. Shivakumar Reddy & Anr. [(2021) ibclaw.in 69 SC] : (2021) 10 SCC 330; Axis Bank Ltd. v. Naren Shet & Anr., [(2023) ibclaw.in 103 SC] : (2024) 1 SCC 679

3. Ram Narain v. Lt. Col. Hari Singh; 1963 SCC OnLine Raj 55 and Dr. Anupam Jain v. CS Chhaya Gupta and Another; [(2025) ibclaw.in 827 NCLAT] : 2025 SCC OnLine NCLAT 1629

4. Anuj Jain, Interim Resolution Professional for Jaypee Infratech Ltd. v. Axis Bank Ltd. & Ors.; [(2020) ibclaw.in 06 SC] : (2020) 8 SCC 401

5. Phoenix ARC (P) Ltd. v. Spade Financial Services Ltd. & Ors.; [(2021) ibclaw.in 03 SC] : (2021) 3 SCC 475

6. China Development Bank (supra)

7. Hindustan Steel Ltd. (supra)

8. NN Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. & Ors.; [(2023) ibclaw.in 56 SC] : (2023) 7 SCC 1

9. Interplay Between Arbitration Agreements under Arbitration & Conciliation Act, 1996 and Stamp Act, 1899 (supra)

10. Catalyst Trysteeship Ltd. v. Ecstasy Realt (P) Ltd.; [(2026) ibclaw.in 104 SC] : (2026) SCC OnLine SC 300 and SBI & Ors. v. The Consortium of Mr. Murari Lal Jalan and Mr. Florian Fritsch & Anr.; [(2024) ibclaw.in 290 SC] : 2024 INSC 852

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Pramod Shroff Vs Mohan Singh Chopra - In the light of the above legal precedents, it can be said that though the framing of issues in an ex parte suit is not mandatory by virtue of Order XIV Rule 6 of CPC, but the judgment must be in conformity with the provisions of the Code. Thus, Order XX Rule 4 of CPC comes into picture.

 SCI (2026.04.09) in Pramod Shroff Vs Mohan Singh Chopra  [2026 INSC 378, CIVIL APPEAL NO.              OF 2026 (ARISING OUT OF SLP (C) NO.20779 OF 2025) ] held that;-

• Order XX Rule 4(2) states that judgments of Courts shall contain a concise statement of the case, the points for determination, the decision thereon, and the reasons for such decision.

• Further, it held that in a case which has proceeded ex parte, the court is not bound to frame issues under Order XIV and deliver the judgment on every issue as required by Order XX Rule 5. Yet the trial court should scrutinize the available pleadings and documents, consider the evidence adduced, and would do well to frame the “points for determination” and proceed to construct the ex parte judgment dealing with the points at issue one by one.

•  Furthermore, this Court in Maya Devi v. Lalta Prasad [(2015) 5 SCC 588], has held that in case the Defendant has been proceeded against ex parte, it is the duty of the court to pass the decree only after ascertaining the factual and legal veracity of the claim of the Plaintiff.

• What a judgment should contain is indicated in Order XX Rule 4(2) which says that a judgment ‘shall contain a concise statement of the case, the points for determination, the decision thereon, and the reasons for such decision.

• the Apex Court explained that ‘points for determination’ in Rule 4(1) are obviously nothing but ‘issues’ contemplated by Rules 1 and 3 of Order XIV. In practice, the trial court first frames issues (points of controversy) after examination of pleadings, the judgment then recites these as “points for determination” and answers them.

• The court must give its finding on each point. Order XX Rule 5 CPC further reinforces this: if issues have been framed in the suit, the court “shall state its finding or decision, with reasons, upon each separate issue”, unless deciding one issue resolves the suit. Thus, points for determination ensure that every controverted issue is  addressed. A judgment that omits discussion of issues in dispute is defective.

• Points for determination are the court’s restatement of the disputed questions (issues) that were placed before it, and the judgment must answer each. They serve to concentrate the court’s reasoning and ensure completeness of adjudication.

•  In Sayeda Akhtar v. Abdul Ahad [ (2003) 7 SCC 52], it was held that omission to frame an important issue may sometimes cause prejudice to parties resulting in failure to lead evidence on the point.

•  In the light of the above legal precedents, it can be said that though the framing of issues in an ex parte suit is not mandatory by virtue of Order XIV Rule 6 of CPC, but the judgment must be in  conformity with the provisions of the Code. Thus, Order XX Rule 4 of CPC comes into picture.

Excerpts of the Order;

# 1. Leave granted.

# 2. The present appeal raises an important question touching upon the procedural obligations of a civil court while adjudicating a suit ex parte, and more particularly, whether the absence of formal framing of issues vitiates such proceedings, and what constitutes a    legally sustainable judgment in such circumstances.

# 3. The appeal before the High Court was heard ex parte. The Respondent, despite service, chose not to enter appearance before the courts below or before this Court. On 05.12.2025, Mr. Anup Kumar, learned Counsel, who was present in the Court was appointed as Amicus Curiae to assist this Court in this matter. He was directed to get in touch with Respondent directly in writing, apprise him about pendency of present appeal, his right to engage a counsel of his choice and his right of being represented through a legal aid counsel. Having done so, still the Respondent remains unrepresented.

# 4. The instant appeal assails the judgment and order dated 21.01.2025 (hereinafter referred as “Impugned Judgment”) passed by the High Court of Calcutta (hereinafter referred as “High of 2018 filed by the Appellant (Plaintiff) herein and affirmed the judgment and decree dated  26.10.2017 passed by the City Civil Court at Calcutta (hereinafter referred as “trial court”), vide which suit filed by the Appellant for specific performance for agreement to sell was dismissed ex parte.

# 5. The brief facts are that the original owner of the property executed a 75 years lease in favour of the Khimjis. Thereafter, Khimjis constructed a building on the said property by the name of “Shalimar Apartments”. During construction, the Khimjis entered into a partnership with other persons under the name and style of Gulmohar Properties to complete the construction and sell out the flats therein on ownership basis including, Flat No. 61 in the Shalimar Apartments lying and situate at 42-B, Shakespeare Sarani, Kolkata-700017, along with a car parking space (hereinafter referred as “the suit property”).

# 6. Later, Gulmohar Properties executed an agreement for sale in relation to the suit   property, in favour of the Balwanis, with a clause for assignment.

# 7. Pursuant to assignment clause, the Balwanis transferred the property to Mohan Singh Chopra (Respondent-defendant) by a tripartite registered sale deed, in which Gulmohar Properties, the Balwanis and the Respondent were signatories.

# 8. On 27.01.1977, agreement for sale relating to suit property was executed between Respondent as Vendor and Appellant as Vendee in consideration of ₹95,000/- out of which ₹90,000/- was paid with an undertaking that balance of ₹5,000/- would be paid on the date of execution of Deed of Conveyance and presentation of the same before the Registrar of Assurance. Appellant was also put into the possession of the suit property. Respondent also handed over the original documents, indenture, Title Deeds etc. to the Appellant. On various occasions request was made to the  Respondent to execute the Conveyance Deed by the Appellant but the same did not fructify.

# 9. The Appellant, with a grievance that despite repeated requests Respondent neither accepted balance amount of ₹5,000/- nor executed Deed of Conveyance in his favour, filed a suit for specific performance for agreement to sell dated 27.01.1977 against the Respondent (Defendant) in relation to the suit property.

# 10. The courts below rejected the claim of the Appellant on the ground that Appellant failed to prove the title of the Respondent in the suit property.

# 11. The counsel for Appellant submitted that since no issue qua the title of the Respondent was framed, the onus to prove the same did not fall on the Appellant and the Appellant was not put to notice of the said issue and therefore could not be expected to lead evidence in support of the same. Both the Courts below have disregarded the procedure prescribed i.e., for issues to be framed before trial, as the same  puts the parties to notice of the facts that are required to be proved in a given case.

# 12. Having heard the learned Counsel for the Appellant, learned Amicus Curiae, and considering the written submissions filed by the Appellant and learned Amicus Curiae, we find it apposite that prior to undertaking and answering the aforementioned submissions as raised, it is imperative to delve into the statutory provisions as well as the existing jurisprudence as developed by this Court while dealing with such provisions relatable to what are the essential requirements of a valid judgment in an ex parte civil suit? And whether the courts below have discharged their obligation in accordance with law while deciding the suit ex parte?

# 13. Sub-section 9 of the section 2 of the Civil Procedure Code, 1908 (hereinafter referred as “CPC”) provides that "judgment" means the statement given by the Judge of the grounds of a decree or order.

# 14. Section 2(2) of the CPC provides that "decree" means the formal expression of an adjudication which, so far as regards the court expressing it, conclusively determines the rights of the parties with regard to all or any of the matters in controversy in the suit and may be either preliminary or final.

# 15. Order XIV Rule 1(6) explicitly provides that framing of issues is not required where the defendant at the first hearing of the suit makes no defense.

# 16. Order XX Rule 4(2) states that judgments of Courts shall contain a concise statement of the case, the points for determination, the decision thereon, and the reasons for such decision.

• “ORDER XX

• 4. Judgments of Small Cause Courts.—(1) Judgments of a Court of Small Causes need not contain more than the points for determination and the decision thereon.

• (2) Judgments of other Courts.—Judgments of other Courts shall contain a concise statement of the case, the points for determination, the decision thereon, and the reasons for such decision.”

# 17. Though, the framing of issues where defendant does not present a defense is not mandated, still the importance of framing of issues cannot be underscored. This Court in the case of Makhan Lal Bangal v. Manas Bhunia and Others [(2001) 2 SCC 652], while stressing upon the importance of framing of issues held it as an imperative stage in any civil proceedings as it narrows down the scope of trial by separating wheat from the chaff. Therefore, the real dispute between the parties is determined and the conflict between the parties is narrowed. The petition may be disposed of at the first hearing if it appears that the parties are not at issue on any material question of law or of fact and the Court may at once pronounce the judgment.

# 18. Further, in Ramesh Chand Ardawatiya v.Anil Panjwani [(2003) 7 SCC 350], it has been opined that the burden of proof on the Plaintiff is not too heavy in ex parte civil suits. The Plaintiff, however, must show prima-facie proof qua the existence of relevant facts and circumstances out of which the cause of action has arisen. Therefore, evincing that the court proceeds to record evidence of the Plaintiff qua the cause of action and accordingly decrees the suit. Further, it held that in a case which has proceeded ex parte, the court is not bound to frame issues under Order XIV and deliver the judgment on every issue as required by Order XX Rule 5. Yet the trial court should scrutinize the available pleadings and documents, consider the evidence adduced, and would do well to frame the “points for determination” and proceed to construct the ex parte judgment dealing with the points at issue one by one.

# 19. Furthermore, this Court in Maya Devi v. Lalta Prasad [(2015) 5 SCC 588], has held that in case the Defendant has been proceeded against ex parte, it is the duty of the court to pass the decree only after ascertaining the factual and legal veracity of the claim of the Plaintiff.

# 20. This Court while considering the essential requirements of a judgment in Balraj Taneja and Another v. Sunil Madan and Another [(1999) 8 SCC 396] has held that Judgment as defined in Section 2(9) of the CPC means the statement given by the Judge of the grounds for a decree or order. What a judgment should contain is indicated in Order XX Rule 4(2) which says that a judgment ‘shall contain a concise statement of the case, the points for determination, the decision thereon, and the reasons for such decision. It should be a self-contained document from which it should appear as to what were the facts of the case and what was the controversy which was tried to be settled by the court and in what manner.

“Points for Determination” – Meaning and Role

# 21. The points for determination in a judgment are essentially the legal and factual issues the court must resolve. They correspond to the issues framed during trial (Order XIV), but   in the judgment they are stated as the point(s) to be decided. In Rameshwar Dayal v. Banda (dead) through his LRs and Another [(1993) 1 SCC 531], the Apex Court explained that ‘points for determination’ in Rule 4(1) are obviously nothing but ‘issues’ contemplated by Rules 1 and 3 of Order XIV. In practice, the trial court first frames issues (points of controversy) after examination of pleadings, the judgment then recites these as “points for determination” and answers them. These points focus the judgment on the exact matters in controversy between the parties. By explicitly listing points, the judgment guides the parties and the Appellate court to see what questions were in contest. The court must give its finding on each point. Order XX Rule 5 CPC further reinforces this: if issues have been framed in the suit, the court “shall state its finding or decision, with reasons, upon each separate issue”, unless deciding one issue resolves the suit. Thus, points for determination ensure that every controverted issue is  addressed. A judgment that omits discussion of issues in dispute is defective. It was held that a Small Causes Court judgment which has not even stated the points for determination and given a finding thereon, is obviously not a judgment within the meaning of Section 2(9) of CPC.

# 22. Points for determination are the court’s restatement of the disputed questions (issues) that were placed before it, and the judgment must answer each. They serve to concentrate the court’s reasoning and ensure completeness of adjudication.

# 23. Even when a defendant fails to appear or file a written statement, the court cannot dispense with the points for determination altogether. In Balraj Taneja (supra), it was argued that if no written statement is filed the facts as set out in the plaint would be deemed to be admitted and thus, the court need not indicate the points. This Court while rejecting this submission held that ‘whether it is a case which is contested by  the defendants by filing a written statement, or a case which proceeds ex parte and is ultimately decided as an ex parte case, or is a case in which the written statement is not filed and the case is decided under Order VIII Rule 10, the court has to write a judgment which must be in conformity with the provisions of the Code or at least set out the reasoning by which the controversy is resolved’. In other words, even in default or ex parte suits, the court should identify the legal points (even if obvious) and give a reasoned answer. Simply granting a decree on default is not enough under Section 2(9) of CPC doing so would be a “material irregularity”. Thus, points should be framed (or recited from existing pleadings) and addressed regardless of default.

# 24. The true scope for framing issues is that evidence let in on issue on which the parties actually went to trial should not be the foundation for decision of another and different issue, which was not present to the minds of the parties and on which they had no opportunity   of adducing evidence. But that rule has no application to a case where the parties go to a trial with knowledge that a particular question is in issue, though no specific issue has been framed thereon and adduce evidence relating thereto. Please refer to Nagubai Ammal and Others v. B. Shama Rao and Others [(1956) 1 SCC 698].

# 25. In Sayeda Akhtar v. Abdul Ahad [ (2003) 7 SCC 52], it was held that omission to frame an important issue may sometimes cause prejudice to parties resulting in failure to lead evidence on the point. But where the parties were not only aware of the point in controversy but also led evidence and advanced their submissions, this Court held that the High Court was not justified in interfering with the finding of facts of the courts below.

# 26. In the light of the above legal precedents, it can be said that though the framing of issues in an ex parte suit is not mandatory by virtue of Order XIV Rule 6 of CPC, but the judgment must be in  conformity with the provisions of the Code. Thus, Order XX Rule 4 of CPC comes into picture.

# 27. The courts must determine “points for determination”, which are like issues, and answer them to resolve the matter of controversy between the parties.

# 28. Though framing of issues, as mentioned above, although, is not mandatory yet, if the omission to frame the same causes prejudice to the parties, then the same can vitiate the trial. The test for finding as to omission to frame the issues have caused prejudice to the parties or not can be laid down on the touchstone as to whether parties that go to trial had knowledge that (i) a particular question is in issue and (ii) had opportunity to lead evidence on that issue.

# 29. In the present case, the controversy is regarding suit for specific performance of an agreement to sell, therefore, it is important to consider as to what are the key essentials in a suit for specific  performance that a Plaintiff must prove to succeed.

# 30. As laid down in Man Kaur (dead) by LRs v.Hartar Singh Sangha [ (2010) 10 SCC 512], there must be a valid contract; that defendant committed breach of and readiness and willingness of the plaintiff to perform his part of contract.

# 31. In present case, all the three essentials are present. However, the suit was dismissed for lack of title in favour of the Respondent. No issues or points for determination were framed for the same. Appellant at no point was given an opportunity to lead evidence on the same. In the absence of any issues, and especially in the absence of any pleading contesting title of the Respondent, the Appellant could not be expected to prove such title in a suit for specific performance of Agreement to sell. Therefore, omission to frame issues has caused prejudice to the Appellant.

# 32. Hence, the judgment and decree passed by the trial court does not fulfil the requirements of a judgment as provided for under the Code of Civil Procedure, 1908. The judgments and decree of both the courts below are, therefore, not in accordance with law and thus, set-aside.

# 33. As a result;

• i) Matter shall stand remanded to the trial court for fresh consideration and decision.

• ii) The Appellant-Plaintiff shall appear before the trial court on 04.05.2026.

• iii) Trial court shall issue notice on the Respondent and grant time for completion of pleadings.

• iv) The court shall frame issues and accord opportunity to the parties to lead evidence.

• v) The court shall proceed to decide the same at the earliest keeping in view the fact that the suit is of the year 2007.

# 34. The Appeal is disposed of in above terms.

# 35. There shall be no order as to cost.

# 36. Pending application(s), if any, also stands disposed of.

# 37. We acknowledge and appreciate the constructive assistance rendered by the learned Amicus Curiae and the learned Counsel for the Appellant to this Court.

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