UCO Bank Vs Vasupujya Enterprise Private Limited (NCLT Kolkata)
NCLT Kolkata held that financial creditors can file simultaneously two application under section 7 of the Insolvency and Bankruptcy Code, 2016 against the principal borrower and corporate guarantor. Accordingly, CIRP application against corporate debtor allowed as debt and default proved.
Facts- The present Company Petition has been filed by the Financial Creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, seeking initiation of the Corporate Insolvency Resolution Process against the Corporate Debtor, who had executed a corporate guarantee in favour of the Financial Creditor in respect of the loan facilities extended to the Principal Borrower, Ankit Metal & Power Limited.
Conclusion- Hon’ble NCLAT in the matter of Naresh Kumar Aggarwal v/s CFM Asset Reconstruction Pvt. Ltd. held that 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’.
Held that the financial creditors can initiate CIRP against both principal borrowers and corporate guarantors, independently and simultaneously, so long as the claim is not doubly enforced. Therefore, no legal infirmity arises from the Financial Creditor having filed separate petitions for different entities liable for the same debt.
