The National Company Law Tribunal, NCLT in the case M/s. Edelweiss Asset Reconstruction Company Limited vs Sadguru Multitrade Private Limited, wherein the bench comprising of Judicial Member, Shri Kuldip Kumar Kareer and the Technical Member, Smt. Anuradha Sanjay Bhatia observed wherein an application was filed under section 7 of Insolvency and Bankruptcy Code, 2016 in M/s. Edelweiss Asset Reconstruction Company Limited vs Sadguru Multitrade Private Limited has held that the insolvency proceedings can be initiated against both the Corporate Debtor and the Corporate Guarantor simultaneously a petition which is moved against the Corporate Guarantor and the same cannot be dismissed by the court which being simply on the ground that a Resolution Plan being under consideration.
The Tribunal in the case observed that the Borrower in the case availed a Loan Facility from the Original Lender and there was no dispute regarding the Deed of Guarantee or the Deed of Assignment. Therefore, the financial Creditor in the case observed and has initiated the insolvency proceedings against both the Corporate Debtor and the Corporate Guarantors. Thus, it has also been contended by the Corporate Debtor in the case that since the Borrower was already in an advanced stage of CIRP and the Resolution plan in the case was likely to be approved by the said court, thus, the debt of the Borrower was likely to be resolved, following which the liability of the Corporate Debtor will be extinguished.
However, it has also been observed by the Tribunal in the case that the Financial Creditor can proceed simultaneously which being against the Principal Borrower and the Corporate Guarantor. Thus, the plea moved against the Corporate Guarantor cannot be dismissed by the court simply because Corporate Insolvency Resolution Plan, CIRP was pending against the Principal Borrower or that some Resolution Plan was under consideration. The court in the case placed reliance on the judgment of National Company Law Appellate Tribunal in the case State Bank of India Vs. Athena Energy Ventures Private Limited, wherein it has been held by the court that the Financial Creditors can proceed against both the Principal Borrower and the Corporate Guarantors.
Accordingly, the Tribunal in the case accepted the petition.
The counsel, Adv. Bhalchandra Palav appeared for the applicant.
The counsel, Adv. Rishabh Jain represented the Respondent.