Hackbridge Hewittic And Easun Ltd Vs State Bank of India (NCLT Chennai)
NCLT Chennai held that as per section 128 of the Indian Contract Act, the liability of guarantor is coextensive with that of the Borrower. Accordingly, application u/s. 7 of Insolvency and Bankruptcy Code against Corporate Guarantor admitted.
Facts- This petition under section 7 read with Rule 4 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) has been filed by State Bank of India against the Respondent/Corporate Guarantor, Hackbridge Hewittic and Easun Limited for initiating insolvency process against the Corporate Guarantor. Notably, the petition sets out the details of the amount of debt as Rs. 275,01,28,558.93 and date of default as 31.07.2019.
Conclusion- The Respondent was the Guarantor to the loan in respect of which default was committed by the Corporate Debtor VEL. As per Section 128 of the Indian Contract Act, the liability of the guarantor is coextensive with that of the Borrower. It is well settled that simultaneous to the initiation of CIRP against the Corporate Debtor, insolvency proceedings can be initiated against the Guarantor. In the instant case, the debt of the Financial Creditor has not been cleared. As such, by virtue of the Guarantee Deed, the Respondent/Corporate Guarantor is liable to pay the dues of the Corporate Debtor.
