CIRP can be initiated against Principal Borrower even during ongoing CIRP of Corporate Guarantor where Section 7 application filed by different financial creditors for different projects and filing of claim in the ongoing CIRP against Corporate Guarantor does not preclude the Financial Creditor from filing a CIRP application u/s 7 of IBC against Principal Borrower – Assets Care and Reconstruction Enterprise Ltd. Vs. Supertech ORB Project Pvt. Ltd. – NCLT Allahabad Bench
In this important case of Section 7 application, the issue is that whether the application filed by the Financial Creditor against Principal Borrower(Supertech Orb Project Pvt. Ltd., Corporate Debtor herein) is admissible in the light of the fact that CIRP has already been initiated against the Corporate Guarantor i.e. M/s Supertech Ltd.
NCLT Allahabad Bench held that:
(i) The CIRP initiated against M/s. Supertech Ltd. is by different financial creditors for different projects under the separate agreement.
(ii) The judgement in Dr. Vishnu Kumar Agarwal Vs. M/s. Piramal Enterprises Ltd. [2019] ibclaw.in 16 NCLAT does not apply here.
(iii) Filing of claim in the ongoing CIRP of Corporate Guarantor does not preclude the Financial Creditor from filing a CIRP application u/s 7 of IBC against Principal Borrower (Corporate Debtor).
(iv) The application under Section 7, has been admitted.