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2021 (3) TMI 470 - AT - Insolvency and BankruptcyMaintainability of appeal - CIRP has been initiated against the principal borrower - Whether the Appellant have filed claim in CIRP initiated against the Corporate Guarantor? - HELD THAT - Similar issue had come up before us in the matter of State Bank of India vs. Athena Energy STATE BANK OF INDIA, STRESSED ASSET MANAGEMENT BRANCH VERSUS ATHENA ENERGY VENTURES PRIVATE LIMITED 2020 (11) TMI 800 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , NEW DELHI where it was held that We are unable to agree with the arguments of Learned Counsel for Respondent that when for same debt claim is made in CIRP against Borrower, in the CIRP against Guarantor the amount must be said to be not due or not payable in law. Under the Contract of Guarantee, it is only when the Creditor would receive amount, the question of no more due or adjustment would arise. It would be a matter of adjustment when the Creditor receives debt due from the Borrower/Guarantor in the respective CIRP that the same should be taken note of and adjusted in the other CIRP. There is no bar for the Financial Creditor to proceed against the principal borrower as well as Corporate Guarantor at the same time, either in CIRPs or file claims in both CIRPs - The matter is remitted back to the Adjudicating Authority and the Adjudicating Authority is requested to pass further Orders with regard to the claim made by the Appellant which was required to be considered by the IRP/RP - Appeal allowed by way of remand.
Issues Involved
1. Whether the Corporate Insolvency Resolution Process (CIRP) can be initiated against the Corporate Guarantor if it has already been initiated against the principal borrower. 2. Whether the Financial Creditor can file claims in CIRP against both the principal borrower and the Corporate Guarantor simultaneously. 3. Interpretation of the law as laid down in the case of "Dr. Vishnu Kumar Agarwal Vs M/s. Piramal Enterprises Ltd." Issue-wise Detailed Analysis 1. Whether the Corporate Insolvency Resolution Process (CIRP) can be initiated against the Corporate Guarantor if it has already been initiated against the principal borrower. The Appellant argued that the law has been clarified in judgments by the Hon’ble Supreme Court and the Tribunal, particularly in "State Bank of India vs. Athena Energy Ventures Pvt. Ltd." The Respondent, however, relied on the judgment in "Piramal," which stated that for the same set of debts, a claim cannot be filed by the same Financial Creditor in two separate CIRPs. The Tribunal revisited the "Piramal" judgment and observed that the issue in "Piramal" was whether CIRP can be initiated against two Corporate Guarantors simultaneously for the same set of debt and default. The Tribunal found that the law does not prevent simultaneously proceeding against the Corporate Debtor and Corporate Guarantor, as supported by Section 60(2) and (3) of the IBC. 2. Whether the Financial Creditor can file claims in CIRP against both the principal borrower and the Corporate Guarantor simultaneously. The Tribunal noted that the observations in "Piramal" did not consider the amendments to Section 60(2) and (3) of the IBC, which allow for simultaneous proceedings against the Corporate Debtor and Corporate Guarantor. The Tribunal highlighted that the IBC does not prevent filing claims in both CIRPs and that adjustments can be made at the stage of disbursement. The Tribunal also referred to the Insolvency Law Committee's Report of February 2020, which supported the view that claims can be maintained against both the Principal Borrower and the surety. 3. Interpretation of the law as laid down in the case of "Dr. Vishnu Kumar Agarwal Vs M/s. Piramal Enterprises Ltd." The Tribunal critically examined the "Piramal" judgment and found that it did not appropriately consider the provisions of Section 60(2) and (3) of the IBC. The Tribunal concluded that the interpretation in "Piramal" was not in line with the legislative intent and the provisions of the IBC, which allow for simultaneous proceedings against the Principal Borrower and the Corporate Guarantor. The Tribunal emphasized that the IBC does not bar the Financial Creditor from proceeding against both entities at the same time. Conclusion The Tribunal allowed the appeal, quashing the Impugned Order and remitting the matter back to the Adjudicating Authority to reconsider the claim filed by the Appellant. The Tribunal clarified that the Financial Creditor is not barred from filing claims in CIRP against both the Principal Borrower and the Corporate Guarantor simultaneously. The Adjudicating Authority was requested to pass further orders regarding the claim made by the Appellant and reconsider the Resolution Plan pending for approval. The Tribunal also stated that the Avoidance Application should be decided separately on its merits.
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