CIRP Can Be Initiated even against Two Borrowers Falling under Ambit of Corporate Debtors: SC

Maitreya Doshi Vs Anand Rathi Global Finance Ltd. (Supreme Court)

Apex Court held that 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.

FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER

This appeal under Section 62 of theInsolvency and Bankruptcy Code 2016, hereinafter referred to as the ‘IBC’, is against a Judgement and Order dated 25^th August 2021, passed by the National Company Law Appellate Tribunal (NCLAT), dismissing the Company Appeal (AT) (Insolvency) No. 191 of 2021 filed by the Appellant, against an order dated 19^th February 2021, passed by the Adjudicating Authority (National Company Law Tribunal), NCLT, Mumbai Bench admitting a Company Petition C.P. (IB) No. 1220/MB/2020 filed by the Respondent No. 1 – Anand Rathi Global Finance Limited as Financial Creditor, for initiation of the Corporate Insolvency Resolution Process (CIRP) of M/s Doshi Holdings Pvt. Ltd., hereinafter referred to as “Doshi Holdings”, under Section 7 of the IBC. The Appellant is a suspended Director of Doshi Holdings.

2. The Respondent No 1, a Non-banking Financial Company, hereinafter referred to as the “Financial Creditor” disbursed loan to the tune of Rs.6 Crores to M/s Premier Limited, hereinafter referred to as “Premier” under three separate Loan-cum-Pledge Agreements, dated 29^th June 2015, 4^th May 2016 and 5^th October 2016, respectively. According to the Appellant, Doshi Holdings pledged shares held by it in Premier, in favour of the Financial Creditor, by way of security for the loan.

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