Union Bank of India Vs Bengal Shelter Housing Development Limited (NCLT Kolkata)
Held that the liability of the corporate guarantor is co-extensive with the principal borrower, and accordingly, both the principal borrower and corporate guarantor are equally liable for the default. Accordingly, CIRP application u/s. 7 of IBC allowed.
Facts- Union Bank of India (Petitioner/ Financial Creditor), has preferred this petition u/s. 7 of the Insolvency and Bankruptcy Code, 2016 against Bengal Shelter Housing Development Ltd. (Respondent/ Corporate Debtor), praying for admission of the Corporate Debtor into Corporate Insolvency Resolution Process. Notably, the corporate debtor Bengal Shelter is the corporate guarantor to the principal borrower M/s. Barnaparichay Book Mall Private Limited.
The total amount claimed to be in default is Rs. 103,52,61,481.58/- as on 09.08.2019, which includes principal dues of Rs. 102,52,52,919/- on account of the credit facilities extended to the corporate debtor, and the unpaid interest dues of Rs. 1,00,08,562.58/-. The number of days of default is claimed as 3242 commencing from 12.07.2013, when the loan was recalled, till 27.05.2022.
Conclusion- Thus, the liability of the guarantor is co-extensive with the principal borrower, and it is open to the financial creditor to proceed against the corporate guarantor of its principal borrower, and CIR Process can be initiated against a corporate entity who has given a guarantee to secure the dues of a non-corporate entity as a financial debt accrues to the corporate person. Held that the liability of the corporate guarantor is co-extensive with the principal borrower, and accordingly, both the principal borrower and corporate guarantor are equally liable for the default.
