Even without resorting to CIRP against the Principal Borrower it is always open to the Financial Creditor to commence CIRP u/s 7 of the Code against the Corporate Debtor / Guarantor- Bijay Kumar Agarwal vs. State Bank of India and Anr.-NCLAT
NCLAT held that a contract of Guarantee is a contract to perform the promise or discharge the liability of 3rd party, in case of his default. In this connection, it is to be pointed out that it may not be necessary to start CIRP against the Principal Borrower before initiating against the Corporate Debtor. Even without resorting to CIRP against the Principal Borrower it is always open to the Financial Creditor to commence CIRP u/s 7 of the Code against the Corporate Debtor / Guarantor. Further NCLAT held that there is no two opinion of a prime fact that there is no fetter in the Code for projecting simultaneously two applications u/s 7 of IBC against (i) the Principal Borrower as well as (ii) the Corporate Guarantor(s) or against both the Guarantors but if, for the same set of claim, when an Application filed by the Financial Creditor is admitted against one of the Corporate Debtor/Principal Borrower or Corporate Guarantor, the second application filed by the same Financial Creditor for the same set of claim and default is not to be admitted against the other Corporate Debtor (The Corporate Guarantor(s) or the Principal Borrower.
