I. Introduction
The recent judgment of the Supreme Court of India in ICICI Bank Limited v. Era Infrastructure (India) Limited [2026 INSC 201] is a consolidated decision disposing of eight matters, each arising from different orders passed by the NCLT and the NCLAT across various benches. While the parties, facts and circumstances differ across the eight cases, they are unified by a single, overarching question of law: Whether simultaneous Corporate Insolvency Resolution Process (CIRP) proceedings can be maintained against both a principal corporate debtor and its corporate guarantor — or vice versa — under the Insolvency and Bankruptcy Code, 2016 (hereinafter, ‘the IBC’ or ‘the Code’).
The Bench noted at the outset that the issue appeared to stand covered by the coordinate bench decision in BRS Ventures Investments Ltd. v. SREI Infrastructure Finance Ltd. & Anr., (2025) 1 SCC 456. Nevertheless, given that elaborate arguments were advanced spanning over a couple of days and covering a wide array of issues, the Court chose to consider the matter in some depth. The judgment proceeds on the premise of the law as it stands to-date, expressly clarifying that the correctness of BRS Ventures Investments Ltd. (supra) was not under assessment, and that the Court is bound by Article 141 of the Constitution.
II. Background — The Impugned Orders
The eight matters that came up before the Supreme Court arose from a series of conflicting decisions at the tribunal level on the question of simultaneous CIRP proceedings. Broadly, in some cases the NCLT or NCLAT rejected simultaneous CIRP proceedings relying on Vishnu Kumar Agarwal (NCLAT, 2019), while in others, the tribunals permitted such proceedings relying on Athena Energy Ventures (NCLAT, 2021). The background to each impugned order is set out below.
A. Civil Appeal No. 6094 of 2019 — ICICI Bank Limited v. Era Infrastructure (India) Limited
ICICI Bank (hereinafter, ‘ICICI’) had advanced loans to certain group/related companies of Era Infra Engineering Private Limited, including the respondent ERA Infrastructure (India) Limited, for which ERA Infrastructure was sanctioned a loan of Rs. 300 crore (subsequently reduced to Rs. 200 crore) by a Credit Arrangement Letter. Era Infra Engineering Private Limited, the parent company, entered into a Loan Purchase Agreement (LPA) with ICICI wherein, upon occurrence of a default by ERA Infrastructure (India) Limited, Era Infra Engineering Private Limited guaranteed payment to ICICI. Additionally, Era Infra Engineering Private Limited entered into a Non-Disposal Undertaking (NDU) arrangement whereby 30% shares of ERA Infrastructure were placed in a designated NDU Account along with a power of attorney in favour of ICICI, enabling it to sell, transfer, assign, dispose or encumber those shares.
Upon default by ERA Infrastructure (India) Limited, a Joint Lenders’ Forum (JLF) was formed by ICICI along with Yes Bank, which restructured the account while continuing the extant securities and guarantees. ICICI claimed that Era Infra Engineering Private Limited failed to comply with the NDU arrangement despite being called upon to do so and that both ERA Infrastructure and Era Infra Engineering failed to comply with their payment obligations under the restructured facility. Consequently, Era Infra Engineering Private Limited was declared a Non-Performing Asset (NPA).
Under the LPA, Era Infra Engineering was called upon to purchase the Restructured Facilities at Rs. 199.5 crore, which ICICI claims was not complied with. ICICI then invoked a recall-cum-invocation of guarantee notice for Rs. 198.8 crore with interest and charges. On 8th May 2018, CIRP was initiated against Era Infra Engineering Private Limited. ICICI lodged its claim under the LPA based on the guarantee. The claim was initially rejected by the Resolution Professional (RP), but upon ICICI approaching the NCLT, the claim was admitted and ICICI was permitted to participate in the Committee of Creditors (CoC).
Thereafter, ICICI filed an application under Section 7 of the IBC for initiation of CIRP against ERA Infrastructure (India) Limited itself — the principal corporate debtor. The NCLT, Principal Bench, Delhi, relying on the NCLAT judgment in Vishnu Kumar Agarwal v. M/s Piramal Enterprises Ltd. (2019 SCC OnLine NCLAT 81), rejected the application on the ground that based on the same facts and documents, a fresh Section 7 application could not be filed.
B. Civil Appeal No. 6093 of 2019 — ICICI Bank v. Hyderabad Ring Road Project Private Limited
The facts in this civil appeal are similar to Civil Appeal No. 6094 of 2019. ICICI filed an application under Section 7 of the IBC against Hyderabad Ring Road Project Private Limited, claiming that it owed Rs. 193,60,00,000/- under various facilities, including interest and other payables. Here too, Era Infrastructure Engineering Private Limited had provided corporate guarantees to Hyderabad Ring Road Project Private Limited.
When CIRP was initiated against Era Infrastructure Engineering Private Limited, ICICI lodged its claim on the strength of the corporate guarantee, which was admitted by the Interim Resolution Professional (IRP) for Era Infrastructure Engineering Private Limited. ICICI then approached the NCLT, Principal Bench, seeking initiation of CIRP against Hyderabad Ring Road Project Private Limited.
The NCLT rejected the application, once again relying on Vishnu Kumar Agarwal (supra), on the ground that once a claim based on the same facts and documents was admitted, no such claim could be made against another entity. The Supreme Court noted that in both Civil Appeal Nos. 6093 and 6094 of 2019, the respective respondents had filed applications seeking to bring on record a settlement between them and ICICI. However, as ICICI’s counsel denied having instructions regarding any settlement, and no agreement was subsequently brought forth, the Court proceeded to adjudicate the matters on the assumption that no settlement had been entered.
C. Civil Appeal Nos. 827–828 of 2021 — Anubhav Anilkumar Agarwal v. Bank of India & Anr.
Bank of India (BoI) filed an application under Section 7 of the IBC against RNA Corp. Pvt. Ltd. (RNA) before the NCLT, Mumbai Bench. The NCLT, by its order dated 26th November 2019, allowed the application and initiated CIRP against RNA. Against this order, the appellant, Anubhav Kumar Agarwal, filed an appeal before the NCLAT on two grounds. First, that the Section 7 application was barred by limitation (which the NCLAT negatived). Second, that CIRP had already been initiated based on the same debt against one M/s Chamber Constructions, a guarantor to RNA, and therefore a further CIRP based on the same debt could not be initiated against another entity.
Both contentions were rejected by the NCLAT vide the impugned order. A review against the order was preferred on the second ground of simultaneous proceedings, which too was rejected. Both orders — the order dismissing the appeal and the order rejecting the review — are the subject of challenge in the present civil appeals.
D. SLP (C) No. 21778 of 2019 — International Finance Corporation v. Punj Lloyd Upstream Limited
International Finance Corporation (IFC) granted a loan of USD 25,000,000 to Punj Lloyd Upstream Limited under a Loan Agreement dated 6th June 2008, of which USD 12,500,000 was disbursed. Punj Lloyd Limited stood as guarantor to the transaction. On 8th March 2019, CIRP was initiated against Punj Lloyd Limited by ICICI. Upon invitation of claims, IFC filed its claim with the Resolution Professional based on the Loan Agreement.
IFC then filed an application under Section 7 of the IBC seeking initiation of CIRP against Punj Lloyd Upstream Limited — the principal debtor. This application was rejected by the NCLT vide the impugned order dated 13th May 2019, citing Vishnu Kumar Agarwal (supra). Notably, instead of filing an appeal before the NCLAT, IFC directly approached the Supreme Court by way of an SLP against the NCLT order.
E. Civil Appeal No. 40 of 2020 — Phoenix ARC Private Limited v. G.R.K. Reddy & Ors.
By its order dated 29th May 2019, the NCLT directed initiation of CIRP against Marg Limited at the instance of ICICI. The promoter of Marg Limited, Mr. G.R.K. Reddy, filed an appeal before the NCLAT. During the hearing, the NCLAT was informed that the promoter had settled its dues under Section 12A of the IBC, a fact confirmed by the IRP which stated that 95.96% of the CoC had approved the settlement.
Intervention applications were filed by SREI Equipment Finance Limited and Phoenix ARC Private Limited (Phoenix), both alleging that their claims were not redressed by Mr. G.R.K. Reddy. The NCLAT, however, vide the impugned order allowed ICICI’s limited prayer to withdraw the Section 7 application and set aside the CIRP initiated against Marg Limited. Phoenix challenged this order contending that the NCLAT incorrectly permitted withdrawal without properly examining whether 90% of the CoC had assented to such withdrawal under Section 12A. Phoenix further contended that the IRP had incorrectly rejected its claim against Marg Limited, which arose out of a Corporate Guarantee given to New Chennai Township Private Limited (which was itself already undergoing CIRP). Due to this rejection, Phoenix’s voting share in the CoC was substantially reduced, enabling the CoC to approve withdrawal. Had Phoenix’s claim been admitted, it would have had a 10.57% voting share — sufficient to object to the settlement.
F. Civil Appeal No. 2715 of 2020 — State Bank of India v. Bijay Kumar Agarwal & Anr.
By an order dated 2nd August 2019, the NCLT initiated CIRP against Greengrow Commercial Pvt Ltd (Greengrow). Greengrow had extended a corporate guarantee to Gee Pee Infotech Pvt Ltd (Gee Pee) against the facilities given by State Bank of India (SBI). The ex-director of Greengrow, Bijay Kumar Agarwal, filed an appeal before the NCLAT.
Relying on Vishnu Kumar Agarwal (supra), the NCLAT allowed the appeal on the ground that an application by SBI against Gee Pee (the principal debtor) already stood admitted, and in such circumstances, CIRP against the guarantor Greengrow could not have been initiated at all. All proceedings under Section 7 against Greengrow were consequently closed. The NCLAT did not consider the separate ground of limitation, having already decided the first issue in favour of the appellant. SBI challenged this order before the Supreme Court.
G. Civil Appeal No. 4018 of 2023 — Mohan Nathuram Sakpal v. State Bank of India & Anr.
SBI advanced cash credit facilities to A A Estates Private Limited for Rs. 70 crore, secured by, among other things, a corporate guarantee by RNA Corp Pvt Ltd. When A A Estates defaulted, SBI filed an application under Section 7 of the IBC, which was admitted by the NCLT, initiating CIRP against A A Estates.
An appeal was filed by the director of A A Estates on two grounds. First, that the corporate guarantor RNA Corp Pvt Ltd had already been admitted in CIRP and SBI had filed a claim of Rs. 137,55,54,367/- with the RP, which stood admitted — therefore relying on Vishnu Kumar Agarwal (supra), simultaneous applications could not have been filed. Second, that the application was barred by limitation, as the date of default was stated as 1st June 2015 and the application was filed on 15th January 2021.
On limitation, the NCLAT held that by a letter dated 31st January 2018, A A Estates had acknowledged the debt within the existing limitation period (3 years from 1st June 2015) and had also proposed a settlement. The limitation period thus stood revived from 31st January 2018 and the application was within time. On simultaneous proceedings, the NCLAT differentiated Vishnu Kumar Agarwal (supra) from the present case, observing that in that case simultaneous proceedings were filed against two guarantors, whereas here proceedings were against the debtor and guarantor. Support was drawn from SBI v. Athena Energy Ventures (P) Ltd., (2021) 226 Comp Cas 744. The appeal was dismissed.
H. Civil Appeal No. 7231 of 2024 — Noil Christuraj v. State Bank of India & Anr.
SBI, as part of a consortium, granted loans and facilities to Coastal Energen Private Ltd of approximately Rs. 1,139.84 crore. Against these facilities, Fossil Logistics Private Ltd. extended corporate guarantees. When Coastal Energen Private Ltd. defaulted, its account was classified as NPA. SBI filed an application under Section 7, IBC against Coastal Energen, which was admitted on 4th February 2019, initiating CIRP. Subsequently, SBI also filed an application against Fossil Logistics Private Ltd.
The NCLT admitted the application against Fossil Logistics on 15th June 2023, and CIRP was initiated. The suspended director of Fossil Logistics challenged this order before the NCLAT, contending that the application could not have been admitted since CIRP had already stood initiated against Coastal Energen Private Ltd., relying on Vishnu Kumar Agarwal (supra). The NCLAT dismissed the appeal, negativing the contention and holding that the liability of a guarantor and principal debtor is co-extensive.
III. Arguments Advanced
The Supreme Court heard extensive and elaborate arguments from learned senior counsel and counsel on either side. Departing from the conventional manner of setting out submissions by appellants and respondents ad seriatim, the Court organized the arguments in favour of and against the proposition of simultaneous proceedings, noting that all consequential arguments flow from this central issue.
A. Submissions Opposing Simultaneous CIRP Proceedings
The following submissions were advanced by those opposing simultaneous CIRP proceedings against the principal debtor and the corporate guarantor:
i. Question of Extent, Not Mere Maintainability
It was argued that the question which ought to be answered is not merely whether a financial creditor can maintain a claim against the principal borrower and a guarantor in insolvency proceedings; rather, the Court should answer to what extent such a claim can be maintained. Much emphasis was placed on the object of resolution proceedings under the IBC and the scope of inquiry by the adjudicating authority at the time of admitting the application.
ii. IBC is Not Recovery Proceedings
Referring to the inceptive judgments of the Court analyzing insolvency jurisprudence, it was argued that proceedings under the IBC are not mere recovery proceedings but are meant to maximize the value of assets of all persons and balance the interests of all stakeholders. Reference was made to Mobilox Innovations v. Kirusa Software, (2018) 1 SCC 353; Dena Bank v. C. Shivakumar Reddy, (2021) 10 SCC 330; Ebix Singapore (P.) Ltd. v. Educomp Solutions Ltd. (CoC), (2022) 2 SCC 401; HPCL Bio Fuels Ltd. v. Shahaji Bhanudas Bhad, 2024 SCC OnLine 3190 and Transmission Corpn. of A.P. Ltd. v. Equipment Conductors & Cables Ltd., (2019) 12 SCC 697.
iii. Quantum of Default Must Be Crystalized
Interpreting the word ‘default’ as defined in sub-section (12) of Section 3 and used in various provisions of the IBC, it was argued that the default by a corporate debtor must be quantified. Without the default being crystalized, the CIRP cannot be initiated. Form C as mentioned in Regulation 8 and set out in Schedule I of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 also provides that the specific amount of claim must be mentioned.
iv. Doctrine of Election
The financial creditor must exercise the doctrine of election at the time of filing an application for CIRP. Adopting the reasoning in Vishnu Kumar Agarwal (supra), it was argued that while the financial creditor has a co-extensive claim, the extent of such claim must be clear and defined. If this is not done, three inequitable consequences are likely to follow:
- First, the creditor would have a much larger voting share in the CoC resulting in a disproportionate resolution.
- Second, the likelihood of payment being received by the creditor from more than one source, essentially receiving more than what the creditor is entitled to, may lead to unjust enrichment.
- Third, the practice of impermissible duplication of the same claim in multiple CIRPs was deprecated by the NCLAT in Moneywise Financial Services Pvt Ltd v. Arunava Sikdar, 2025 SCC OnLine NCLAT 1127.
Drawing support from Tettempudi Salalith v. SBI, (2024) 1 SCC 24, it was contended that the doctrine of election applies even to IBC proceedings.
v. Inadequacy of Regulatory Safeguards Against Double Recovery
Countering the argument that the creditor is bound to update its claims under Regulation 12A of the 2016 Regulations, it was contended that non-compliance of these regulations carries only a fine up to Rs. 2 crore under Section 235A of the IBC, which is not a sufficient deterrent against duplication of claims. Further, there is no requirement to refund the excess money.
vi. Need for Disclosure of Parallel Claims
At the stage of filing of claims — either by filing an application under Section 7 or by filing Form C of the 2016 Regulations — the creditor is not bound to disclose claims made against co-borrowers or guarantors. A guideline mandating disclosure of parallel claims was sought to facilitate effective CIRP proceedings for the resolution professional as well as other stakeholders.
vii. Call for Group Insolvency Framework
A direction was sought for the Court to lay down appropriate principles and guidelines for what was termed ‘group insolvency.’ Illustrations were drawn from the judgment of the NCLT in SBI v. Videocon, 2019 SCC OnLine NCLT 34792, referred to by the NCLAT in Radico Khaitan Ltd. v. BT & FC (P) Ltd., 2021 SCC OnLine NCLAT 55. In Videocon, the NCLT mooted the concept of substantial consolidation of CIRPs with a common information memorandum and a common resolution professional, and identified various ingredients including common control, common directors, common assets, common liabilities, interlacing of finance, pooling of resources, and singleness of economic units as factors to activate the process of consolidation.
B. Submissions in Support of Simultaneous CIRP Proceedings
The following submissions were advanced in support of simultaneous CIRP proceedings:
i. Issue Already Settled by BRS Ventures
At the very outset, it was contended that the issue stands settled in view of BRS Ventures Investments Ltd. v. SREI Infrastructure Finance Ltd. & Anr., (2025) 1 SCC 456. The primary contention hinged on Section 60(2) of the IBC, which provides that where a CIRP or liquidation proceeding of a corporate debtor is pending before an NCLT, an application relating to the insolvency resolution or liquidation or bankruptcy of a corporate guarantor or personal guarantor of such corporate debtor shall be filed before such NCLT. It was thus contended that Section 60(2) enables the adjudicating authority before which the principal debtor’s application is pending to also adjudicate the application of the corporate or personal guarantor.
ii. Co-Extensive Liability of Surety Under Section 128, Contract Act
Under common law principles as well as Section 128 of the Indian Contract Act, 1872, the liability of the surety or guarantor is co-extensive with that of the principal debtor. Reliance was placed on Bank of Bihar Ltd. v. Damodar Prasad & Anr., AIR 1969 SC 297; State Bank of India v. Indexport Registered and Ors., AIR 1992 SC 1740; Industrial Investment Bank v. Bishwanath Jhunjhunwala and State Bank of India v. V. Ramakrishnan, (2018) 17 SCC 394.
iii. Purpose of Guarantee Cannot Be Rendered Futile
The very object of a guarantee is to be a fail-safe mechanism against the default of the principal debtor. The purpose of a guarantee would be rendered futile if the creditor is required to wait until the process against the principal debtor concludes. The interpretation otherwise would mean that the guarantor would be exempt, in the interregnum, from paying the debt — which the IBC does not provide for.
iv. Clean Slate Principle Militates Against Forced Election
Countering the contention of election of claims, it was argued that the law does not require the creditor to elect its claims. In view of the ‘clean slate’ principle as postulated in Ghanshyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., (2021) 9 SCC 657 and Essar Steel (India) Ltd. (CoC) v. Satish Kumar Gupta, (2020) 8 SCC 531, no part of the debt of the debtor can continue once the CIRP is completed. Thus, if a claim is not submitted or only a part of it is submitted, the creditor would be permanently relinquishing its remaining claim against the corporate debtor.
v. Creditor Cannot Be Asked to Wait
A creditor who is legally entitled to initiate proceedings against the debtor or the guarantor cannot be deprived of such right, nor can it be compelled to wait for the proceedings against the principal debtor or guarantor to conclude before initiating proceedings against the other.
vi. Sufficient Mechanisms Against Double Enrichment
The IBC and the 2016 Regulations provide sufficient mechanisms to avoid unjust enrichment. The duty is cast upon the Resolution Professional to maintain an updated list of creditors and adjust the list according to modifications — with the consequential change in voting rights. Reference was made to Regulation 12A and Regulation 14 of the 2016 Regulations in this regard.
vii. Doctrine of Election Not Applicable
Opposing the argument relating to the doctrine of election, reliance was placed on A.P. State Financial Corporation v. M/s Gar Rerolling Mills & Anr., (1994) 2 SCC 647, and on Transcore v. Union of India, (2008) 1 SCC 125. For the doctrine of election to be applicable, three conditions are necessary: (i) existence of two or more remedies, (ii) inconsistency between such remedies, and (iii) a choice of one of them. The Court in Transcore held that if in truth there is only one remedy, the doctrine of election does not apply, and that the doctrine is applicable only when there are two or more co-existent remedies available to the litigants at the time of election which are repugnant and inconsistent. It was contended that in the present case, none of these elements are satisfied.
IV. Ruling of the Court
Having heard and considered the submissions advanced by learned senior counsel and counsel for the parties, the Supreme Court, per Justice Dipankar Datta, proceeded to analyze the law at hand across six distinct limbs. The Court noted that the common thread running through each of the impugned orders is one of guarantee — the underlying corporate debtor in each case is either the principal debtor or the surety/guarantor in a guarantee arrangement, and all issues run within the four corners of guarantee and the IBC.
Limb I — History of Laws Relating to Insolvency, Reconstruction, Recovery of Dues, and the Objects/Purposes of the IBC
The Court commenced its analysis by tracing the history of insolvency legislation in India and the objects and purposes the IBC seeks to achieve. The Court observed that the IBC is a comprehensive legislation which has ushered in a regulatory regime governing all aspects of insolvency and bankruptcy, providing for insolvency resolution of all entities in India, be they corporate or individual.
The Court referred to the preamble of the IBC, which introduces it as an ‘Act to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto.’ The Court identified the key objectives of the IBC from its preamble as follows:
- To consolidate and amend the laws relating to re-organisation and insolvency resolution of corporate persons, partnership firms and individuals, providing for a time bound insolvency resolution mechanism;
- To ensure maximization of value of assets;
- To promote entrepreneurship;
- To increase availability of credit;
- To balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues;
- To establish an Insolvency and Bankruptcy Board of India as a regulatory body; and
- To provide procedure for connected and incidental matters.
Historically, the Court noted, prior to the IBC, the insolvency regime in India was multi-pronged and highly fragmented. The Presidency Towns Insolvency Act, 1909 and the Provincial Insolvency Act, 1920 governed individuals and partnerships but were archaic and created different fora and procedures for similarly circumstanced persons at different places. The Companies Act, 1956 provided for winding up if a company was unable to pay its debts, but had no provision mandating resolution prior to liquidation and no timeline for even liquidation. The Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) proved to be ineffective, as dishonest persons at the helm of sick industrial companies exploited procedural delays before the Board for Industrial and Financial Reconstruction and the Appellate Authority. The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (DRT Act) and the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) too failed to achieve timely recovery despite statutorily prescribed timelines, leading to deterioration of the value of assets.
The aforesaid drawbacks in the then existing bankruptcy framework necessitated a more unified and focused legislation, which ultimately took the shape of the present Code. The Court noted that the two remaining recovery statutes — the DRT Act (rechristened the Recovery of Debts and Bankruptcy Act, 1993) and the SARFAESI Act — were suitably amended to ensure that the provisions of the IBC held sway. Significantly, Debt Recovery Tribunals have been designated as the Adjudicating Authorities in Part III of the IBC for insolvency resolution of individuals and partnership firms, symbolizing that recovery and insolvency resolution were to go hand in hand.
The Court observed that it has consistently been found that recovery is not the object of proceedings under the IBC. The idea behind such a statement is that a proceeding under the IBC is primarily focused on insolvency resolution of the debtor — and although recovery is incidentally effected, the proceeding is actually not meant to facilitate recovery of dues only of the person who initiated the proceeding. The Court observed that the process is a time-bound composite process involving insolvency resolution and recovery upon shifting the control of the corporate debtor and its assets from the hands of its promoters/directors to a Resolution Professional, who is ultimately guided by the Committee of Creditors, such that the interests of all stakeholders are balanced.
The Court further grappled with the question of whether the NCLT could refuse to admit an otherwise valid Section 7 or Section 9 application on the ground that the object of the application was recovery. The Court noted that the common ground for lodging an application under both Section 7 and Section 9 is default only — neither provision bars an approach to the NCLT for the purpose of recovery. The question of admission would have to be answered upon an analysis of two major aspects: default and legally enforceable debt. If those two aspects yield affirmative results, ‘admission would be inevitable irrespective of the motive with which the application might have been filed.’
Limb II — Re: Simultaneous Proceedings
The Court addressed the central question of whether simultaneous proceedings against both the corporate debtor and the guarantor(s) can be maintained. The Court noted that in cases where CIRP applications were rejected, reliance was chiefly placed on Vishnu Kumar Agarwal (supra), wherein the NCLAT had held:
There is no bar in the I&B Code for filing simultaneously two applications under Section 7 against the ‘Principal Borrower’ as well as the ‘Corporate Guarantor(s)’ or against both the ‘Guarantors’. However, once for same set of claim application under Section 7 filed by the ‘Financial Creditor’ is admitted against one of the ‘Corporate Debtor’ (‘Principal Borrower’ or ‘Corporate Guarantor(s)’), second application by the same ‘Financial Creditor’ for same set of claim and default cannot be admitted against the other ‘Corporate Debtor’ (the ‘Corporate Guarantor(s)’ or the ‘Principal Borrower’).
The Court noted that an appeal was carried to this Court from Vishnu Kumar Agarwal (supra); however, the parties having reached a settlement, the appeal stood disposed of without expression of any opinion on the merits thereof (vide Order dated 16th December 2024 in Civil Appeal No. 878 of 2019).
Conversely, impugned orders allowing CIRP to be initiated simultaneously had relied on the NCLAT judgment in Athena Energy Ventures (supra), where the NCLAT preferred not to follow Vishnu Kumar Agarwal (supra), holding that in the matter of guarantee, CIRP can proceed against both the principal borrower as well as the guarantor.
The Court observed that the reasoning against simultaneous proceedings, at first blush, would seem simple: one debt, one proceeding. However, this reasoning was considered and negatived by this Court in BRS Ventures Investments Ltd. (supra), which held that sub-section (2) of Section 60 contemplates separate or simultaneous insolvency proceedings against the corporate debtor and the guarantor, and that consistent with the basic principles of the Contract Act that the liability of the principal borrower and surety is co-extensive, the IBC permits separate or simultaneous proceedings to be initiated under Section 7 by a financial creditor against the corporate debtor and the corporate guarantor.
The Court held that the question of whether simultaneous proceedings against the corporate debtor and/or the guarantor(s) can be maintained is no longer res integra. All arguments canvassed — including the interpretation of sub-section (8) of Section 5, sub-section (2) of Section 60 of the IBC, and Regulation 8 of the 2016 Regulations read with Schedule I, Form C — were held to have been considered by the coordinate bench in BRS Ventures Investments Ltd. (supra). The question stands decisively answered in favour of permissibility of simultaneous proceedings.
Limb III — Re: IBC as Recovery Proceedings
The arguments against simultaneous proceedings were also premised on the contention that the process under the IBC is not intended to be converted to recovery proceedings, and that initiating insolvency against several companies for recovery of just one debt would be against the object and ethos of the Code.
The Court approved the settled position that the IBC is not purely recovery proceedings, noting that in view of the preamble of the Code which envisions maximization of value of assets, principles of the Contract Act cannot be made applicable to the IBC stricto sensu. Reliance was placed on Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17 and Essar Steel (India) Ltd. Committee of Creditors v. Satish Kumar Gupta, (2020) 8 SCC 531.
This submission was further buttressed by the discretionary powers vested with the NCLT at the time of admission of a petition by the financial creditor. The use of the word ‘may’ in Section 7(5)(a) as against ‘shall’ in Section 9(5)(a) — its analogous provision — signifies that the adjudicating authority can and must consider circumstances beyond the obvious debt, default, and the conditions prescribed under Section 7. Should the adjudicating authority consider, in its prudence, not to initiate proceedings against the creditor, it may decline admission of the petition. The Court referred in extenso to Axis Bank Ltd. v. Vidarbha Industries Power Ltd., (2022) 8 SCC 352, which expounds the law by considering the modal verbs ‘may’ and ‘shall’ and stresses on a reasonable and well-founded, not arbitrary or capricious, judgment in the exercise of discretion under Section 7(5)(a) by the adjudicating authority.
The Court read in such decision abidance by the fundamental principle of statutory interpretation: that the plain language of the statute governs its express terms, with all other interpretive aids, including the preamble and secondary sources serving only to clarify, and not contradict, that meaning. The Court restated the principle that when the words of a statute are clear and unambiguous, it must be given effect to as it stands — a right created by statute cannot be restricted or taken away except by express statutory provision or necessary implication.
The Court also noted the recent decision in Power Trust (Promoter of Hiranmaye Energy Ltd.) v. Bhuvan Madan (Interim Resolution Professional of Hiranmaye Energy Ltd.), 2026 SCC OnLine SC 248, as further fortifying this view.
On the basis of the above, the Court held thus: ‘whilst approving that the IBC is not a recovery proceeding, we negate the contention that CIRP can be prohibited against a guarantor or co-borrower only on that ground. It seems prudent that the rationale of a creditor obtaining a guarantee for its debt must be realized to its fullest. A financial creditor, vested with rights under the Code, must be able to exercise it. Equally so, the adjudicating authority has the obligation to examine the application independently, on its own merits.’
Limb IV — Re: Election of Claims
The Court examined the seminal issue of whether the doctrine of election applies to CIRP proceedings under the IBC, and in particular, whether a creditor can be compelled to claim part of its debt against the principal debtor and the rest against the guarantor.
The Court was not impressed with the argument that permitting a creditor to claim 100% of the debt from both the principal debtor and the guarantor would allow the creditor two shots at recovery and voting rights in two CoCs, which would be against the object of the IBC.
The Court held that restricting the claim of a creditor against a debtor or a guarantor is likely to defeat the purpose of a guarantee. Since a guarantor’s liability is co-extensive, forcing the creditor to elect would essentially make it sacrifice part of its claim — and this is not how a guarantee works, ‘particularly when the Code does not provide for such election.’
The Court accepted the contentions on the ‘clean slate’ doctrine under the IBC. Reliance was placed on Ghanshyam Mishra (supra) and Essar Steel (supra). If the argument were accepted that a creditor must elect which part of the debt to enforce against the debtor or the guarantor, the creditor might lose the right to claim the remaining debt from either party after the CIRP concludes.
The Court further observed that when election of remedies or claims is intended by the statute, such a provision must be expressly provided for. The Court drew a contrast with the Motor Vehicles Act, 1988, under which claimants must choose between Section 163A (structured formula — no-fault liability) and Section 166 (fault-based claim) since both are alternative and not cumulative remedies.
The Court held that ‘the conspicuous absence of any such provision in the IBC implies that no such restriction can be imposed on the creditor. The effect of imposing a mandatory election of claims upon the creditor would effectively take away the statutorily vested right to approach the NCLT against one or both. In the absence of any statutory proscription against filing such a claim, it would be unwarranted for this Court to impose such a restriction.’
The Court also negated the argument that a creditor gets double voting power in each of the CoCs. It was held that whilst true that the creditor could have such a benefit in two separate CoCs for different debtors, the proceedings against the guarantor and the debtor are separate and independent — the benefit in voting is in respect of separate CoCs for different debtors.
Limb V — Re: Double Enrichment
The Court addressed the apprehension that permitting a creditor to initiate CIRP against multiple debtors might lead to recovery of dues more than what it is entitled to, thereby doubly enriching itself. It was contended that the Code, as it stands today, does not envisage a mechanism for prohibition of such double enrichment, and there is no onus upon the creditor to disclose recovery of the debt or a part thereof from any other sources.
The Court acknowledged that the concern underlying this submission is well founded. However, it held that to entirely bar proceedings against guarantors solely on this ground would be an overextension of the principle. More importantly, the Court was of the view that sufficient safeguards exist as on date to prevent such double enrichment.
The Court referred to Regulation 12A of the 2016 Regulations, which sets up an obligation upon the creditor to update its claim as and when it is satisfied, either partly or fully, from any source in any manner, after the insolvency commencement date. The Court also referred to Regulation 14 of the 2016 Regulations, which casts an obligation upon the resolution professional to independently assess and update claims from time to time — including by revising the amounts of claims admitted as soon as practicable when additional information warranting such revision comes to light.
Profitable reference was also made to Maitreya Doshi v. Anand Rathi Global Finance Ltd., (2023) 17 SCC 606, where this Court held: ‘If there are two borrowers or if two corporate bodies fall within the ambit of corporate debtors, there is no reason why proceedings under Section 7 of the IBC cannot be initiated against both the Corporate Debtors. Needless to mention, the same amount cannot be realised from both the Corporate Debtors. If the dues are realised in part from one Corporate Debtor, the balance may be realised from the other Corporate Debtor being the co-borrower. However, once the claim of the Financial Creditor is discharged, there can be no question of recovery of the claim twice over.’
The Court concluded that the contention that simultaneous proceedings must necessarily be barred apprehending double enrichment is far-fetched and stands rejected, particularly in view of the safeguards mentioned above.
Limb VI — The Need for Reform
The Court acknowledged that the issue of simultaneous proceedings has gained traction only recently in view of judgments of this Court, and that submissions were advanced regarding the absence of modalities for simultaneous proceedings or group insolvency — submissions described as being of considerable significance. During the course of arguments, the Court was urged to lay down guidelines and modalities for the path ahead.
The Court found it apposite to refer to the Report of the Insolvency Law Committee of February 2020, which had also noted the issue. The Report had discussed whether, in light of the rule of co-extensive liability of the surety and the principal borrower under Section 128 of the Contract Act, a creditor should be permitted to initiate CIRP against both and whether it should be permitted to file claims in both CIRPs. The Committee noted the contrary views in Vishnu Kumar Agarwal (supra) and Edelweiss Asset Reconstruction v. Sachet Infrastructure, and concluded that:
A creditor should not be prevented from proceeding against both the corporate debtor and its sureties under the Code.
The Committee noted that since the Code does not prevent this, no legal changes were required at that time, and the issue was left to judicial determination. The Committee also observed that creditors should necessarily carry out adequate due diligence regarding the debtor’s financial position and should not extend a loan solely by relying on a contract of guarantee without assessing the financial and technical feasibility of the respective project.
On the issue of filing of claims in both proceedings, the Committee recommended that where both the principal borrower and the surety are undergoing CIRP, the creditor should be permitted to file claims in both, and that upon recovery of any portion of the claims in one proceeding, there should be a corresponding revision of the claim amount recoverable from the other proceedings.
Considerable jurisprudence of the IBC — including concepts such as simultaneous proceedings and group insolvency — has, the Court observed, flowed from judgments of this Court as well as of the NCLAT and the NCLT, and the legislature as well as the IBBI has been receptive to the judicial nudges and has brought out necessary policy changes from time to time.
The Court, however, declined to lay down guidelines as proposed, and for good reason. The Court observed: ‘IBC is a product of a well-thought, deliberated, and extensively researched policy framework. The rules and regulations, too, are framed thereunder after rigorous research. Furthermore, though the IBC primarily operates in the judicial and quasi-judicial arena, its effects are far reaching, often affecting banking, economy, and other sectors. To venture into unchartered territories, wearing the legislative hat, would be nothing short of judicial exploration, which we do not propose to do.’ The Court expressly left it to the wisdom of the legislature and the IBBI to frame appropriate policy framework and guidelines with an inclusive consultative process of all the stakeholders, if so required.
V. Way Forward — Implications for Lenders and Creditors in India
The ruling in ICICI Bank Limited v. Era Infrastructure (India) Limited & Connected Matters is a watershed pronouncement in Indian insolvency jurisprudence. By decisively settling the question of simultaneous CIRP proceedings against the principal corporate debtor and its corporate guarantor, and by rejecting the application of the doctrine of election to IBC proceedings, the Supreme Court has provided much-needed clarity to the financial sector. The implications of this ruling are wide-ranging and are analysed below.
A. Affirmation of the Creditor’s Co-Extensive Right of Recourse
The most fundamental implication of this ruling is the unequivocal affirmation of the co-extensive nature of the liability of the principal debtor and the corporate guarantor under Section 128 of the Indian Contract Act, 1872, and its seamless incorporation into the IBC framework. For lenders and financial creditors, this means that the guarantee obtained at the time of sanctioning a credit facility retains its full commercial value even in the insolvency context. A financial creditor is not required to choose between proceeding under the IBC against the principal debtor or against the corporate guarantor — it may initiate and maintain CIRP proceedings against both, simultaneously.
This has significant practical ramifications for lending institutions, particularly in the context of large infrastructure and real estate projects where guarantees by parent companies, group companies, or promoter entities are routinely taken as additional security. The ruling ensures that the failure of one entity in the group does not extinguish the creditor’s rights against another.
B. No Forced Election of Claims — Full Debt May Be Asserted in Each CIRP
The Court’s rejection of the doctrine of election means that a financial creditor is entitled to assert the full quantum of its debt in the CIRP of both the principal debtor and the corporate guarantor. It is not required to bifurcate its claim between the two proceedings. This is particularly significant in light of the ‘clean slate’ principle: since any debt not claimed in a CIRP is extinguished upon completion of the resolution process, creditors who were previously compelled by the Vishnu Kumar Agarwal interpretation to elect one proceeding were at risk of permanently losing part of their debt. This ruling eliminates that risk.
Lenders should, however, ensure meticulous compliance with Regulation 12A of the 2016 Regulations — updating their claims as and when they are satisfied, either partly or fully, from any source after the insolvency commencement date. While the Court held that this obligation constitutes a sufficient safeguard against double enrichment, it is imperative for creditors to maintain rigorous internal tracking systems to ensure timely revisions are communicated to the respective Resolution Professionals in each CIRP.
C. Overruling of the Vishnu Kumar Agarwal Principle
The practical consequence of this ruling is the effective disavowal of the principle laid down in Vishnu Kumar Agarwal v. M/s Piramal Enterprises Ltd. (2019 SCC OnLine NCLAT 81). While the Supreme Court had already, in BRS Ventures Investments Ltd., held simultaneous proceedings to be permissible, the present ruling consolidates that position across a batch of conflicting matters and provides a comprehensive legal analysis supporting it. The line of NCLT and NCLAT orders that had followed Vishnu Kumar Agarwal and rejected simultaneous CIRP applications have now been set aside. Cases falling under the Vishnu Kumar Agarwal line of reasoning — CA Nos. 6093 and 6094 of 2019, SLP (C) No. 21778 of 2019, and CA No. 2715 of 2020 — were all allowed, while those consistent with the permissibility of simultaneous proceedings were upheld.
D. Preservation of Voting Rights Across Multiple CoCs
The ruling recognizes, though does not treat as a problem, the possibility that a financial creditor may hold voting rights in the CoCs of both the principal debtor and the corporate guarantor in their respective CIRPs. The Court held that such benefit is in respect of separate CoCs for different debtors, and the proceedings against the guarantor and the debtor are separate and independent. While this is a boon for creditors, it carries within it the possibility of a dominant creditor exercising disproportionate influence across multiple resolution processes — a concern that the Court acknowledged but declined to address judicially, leaving it to the legislature and the IBBI. Lenders must, therefore, be cognizant of this dynamic when formulating strategy in parallel insolvency proceedings.
E. Reinforcement of the NCLT’s Discretion Under Section 7(5)(a)
The ruling reiterates and reinforces the position in Vidarbha Industries Power Ltd. (supra) that the NCLT exercises a discretionary power under Section 7(5)(a) of the IBC, as opposed to the mandatory admission under Section 9(5)(a) for operational creditors. The Court held that if the rigours and conditions prescribed by the statute are met, it must be left to the wisdom of the adjudicating authority to admit a petition for initiation of CIRP. This means that even in simultaneous proceedings, the NCLT retains the power and duty to examine the application independently and on its own merits. A creditor should not assume that simultaneous proceedings will automatically be admitted — the NCLT may, in the exercise of sound judicial discretion, decline admission if facts and circumstances so warrant.
For lenders, this means that the quality and completeness of Section 7 applications assume even greater importance. Applications must be carefully drafted to satisfy the threshold conditions of a financial debt and default — and must also address any possible grounds on which the debtor may oppose admission.
F. Role of the Resolution Professional in Preventing Double Recovery
The Court placed reliance on both Regulation 12A and Regulation 14 of the 2016 Regulations as the primary institutional safeguards against double enrichment. The Resolution Professional is not a passive recipient of claims — under Regulation 14, the RP is obligated to independently assess and revise the amounts of claims admitted as soon as practicable upon coming across additional information. This imposes a duty of vigilance on resolution professionals to track parallel proceedings and adjust claims accordingly.
For lenders and creditors, this also creates a corresponding duty — the creditor must proactively disclose recoveries made from any source in any manner. Failure to update claims under Regulation 12A may not only attract penal consequences under Section 235A (fines between Rs. 1 lakh and Rs. 2 crore), but could also attract adverse findings in future litigation. In practice, lenders ought to institute internal protocols to communicate partial or full recovery to Resolution Professionals across all parallel CIRPs in a timely manner.
G. The Unfinished Business — Group Insolvency and Regulatory Reform
While the ruling resolves the immediate controversy, it candidly acknowledges the unfinished business in this area of law. The Court recognized that the absence of modalities for simultaneous proceedings or group insolvency is of considerable significance and that there is a need for a robust framework. The Court expressly noted that the issue of simultaneous proceedings has gained traction only recently, and that there exists considerable jurisprudence — including concepts such as consolidation of CIRPs with a common information memorandum and a common resolution professional as mooted in SBI v. Videocon — that await legislative and regulatory attention.
The Court, conscious of the limits of judicial legislation, expressly declined to lay down guidelines and left the field to the legislature and the IBBI. This is a clear signal to the IBBI and the Ministry of Corporate Affairs to expedite the development of a group insolvency framework — something the Insolvency Law Committee Report of 2020 had already flagged. Until such a framework is in place, lenders and practitioners must navigate the parallel CIRP landscape without the benefit of clear procedural consolidation rules.
H. Potential Challenges and Areas of Uncertainty
While the ruling provides substantial clarity, certain challenges and areas of residual uncertainty remain, which creditors, practitioners and the tribunals will need to grapple with going forward:
i. Risk of Disproportionate Voting Influence
As acknowledged by the Court, a financial creditor asserting the full debt in multiple CoCs of the principal debtor and the corporate guarantor stands to accumulate voting rights across those CoCs disproportionately. In the absence of a legislative framework for group insolvency or consolidation, this creates a structural imbalance that could result in creditor-driven resolutions that are not optimal from the perspective of all stakeholders. This concern is particularly acute in large infrastructure group insolvencies where a single secured creditor may be present in the CoCs of multiple connected entities.
ii. Inadequacy of the Penalty Mechanism Under Section 235A
The Court relied on Regulation 12A as a safeguard against double enrichment. However, critics of the ruling — and those who opposed simultaneous proceedings — pointed out that non-compliance with Regulation 12A carries only a fine between Rs. 1 lakh and Rs. 2 crore under Section 235A, with no corresponding obligation of refund of excess recovery. This, they contended, is an insufficient deterrent. While the Court rejected this argument as a ground for prohibiting simultaneous proceedings entirely, it did not address the adequacy of the sanction regime. This remains a gap that the legislature or the IBBI may need to plug — particularly by introducing an obligation to refund or credit back any recovery received in excess of the actual debt, with interest.
iii. Absence of a Mandatory Disclosure Regime for Parallel Claims
A significant lacuna identified during arguments — and noted by the Court — is the absence of any obligation on a financial creditor, at the time of filing an application under Section 7 or Form C, to disclose claims made against co-borrowers or guarantors. Without such mandatory disclosure, Resolution Professionals in different CIRPs may not be aware of parallel proceedings or partial recoveries in a timely manner. This creates an informational asymmetry that could delay claim revisions and invite disputes within the CoC. The IBBI would do well to introduce such a disclosure requirement as part of the 2016 Regulations.
iv. Interplay with Personal Guarantees and Part III of the IBC
The ruling is confined to corporate guarantors and CIRP proceedings under Part II of the IBC. The interplay between simultaneous CIRP proceedings against corporate debtors and proceedings against personal guarantors under Part III of the IBC (adjudicated before Debt Recovery Tribunals) is a separate field of litigation with its own jurisprudence. Lenders should be careful not to conflate the two regimes or assume that the present ruling applies with equal force to personal guarantee proceedings before the DRT.
v. Complexities of Cross-Border Insolvency
In transactions involving international finance corporations such as the International Finance Corporation (which was one of the appellants in the batch), the issue of simultaneous CIRP proceedings may intersect with cross-border insolvency considerations, particularly where the guarantor or debtor has assets or operations abroad. The IBC does not yet have a fully operative cross-border insolvency framework (Part IV having not been notified), which adds a further layer of complexity to simultaneous proceedings involving multinational entities.
vi. Tension with the NCLT’s Section 7 Discretion
The Court reaffirmed that the NCLT has a discretion under Section 7(5)(a) and need not mandatorily admit every application that satisfies the threshold conditions of financial debt and default. This creates a residual zone of uncertainty: it is possible that an NCLT, confronted with an application for simultaneous proceedings, may exercise its discretion to decline admission based on equitable or contextual grounds, even if the legal threshold is satisfied. The precise scope of this discretion — and whether it can be used to effectively re-impose a version of the election doctrine through the back door — will likely be the subject of future litigation.
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This IBC update is intended for general guidance only and does not constitute legal advice. For more information, please reach out to Shubham Sharma at 2636@cnlu.ac.in.
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