NCLAT: Simultaneous Proceeding before NCLT after Admission not Permissible

NCLAT, New Delhi: On the same set of facts/ claim Simultaneous Proceeding  before NCLT after Admission not Permissible

Dr. Vishnu Kumar Agarwal  Vs M/s. Piramal Enterprises Ltd.[08/01/2019]: In the referred case the matters for consideration were as under—

• Whether application under Sections 7 or 9 can be filed against the ‘Principal Borrower’ not being a Company/ Corporate Person? If no, whether the application under Section 7 for same claim and debt can be filed against the ‘Corporate Guarantors’?
• Whether CIRP proceeding under Section 7 of IBC can be initiated against the Corporate Guarantors without initiating ‘Corporate Insolvency Resolution Process’ against the ‘Principal Borrower’?
• Whether two ‘Corporate Insolvency Resolution Processes’ against two ‘Corporate Guarantors’ based on same sets of claim; debt, default and record are maintainable.

In the said case the Financial Creditor (M/s. Piramal Enterprises) had already filed suit for recovery against the borrowal company and the two corporate guarantors. Besides, the financial creditor also filed  two separate CIRP applications under Section 7 of IBC, 2016 were filed against two Corporate Guarantors. While settling the query raised as above, the NCLAT held as under—

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’. However, once for same set of claim application under Section 7 filed by the ‘Financial Creditor’ is admitted against one of the ‘Corporate Debtor’ (‘Principal Borrower’ or ‘Corporate Guarantor(s)’), second application by the same ‘Financial Creditor’ for same set of claim and default cannot be admitted against the other ‘Corporate Debtor’ (the ‘Corporate Guarantor(s)’ or the ‘Principal Borrower’). Further, though there is a provision to file joint application under Section 7 by the ‘Financial Creditors’, no application can be filed by the ‘Financial Creditor’ against two or more ‘Corporate Debtors’ on the ground of joint liability (‘Principal Borrower’ and one ‘Corporate Guarantor’, or ‘Principal Borrower’ or two ‘Corporate Guarantors’ or one ‘Corporate Guarantor’ and other ‘Corporate Guarantor’), till it is shown that the ‘Corporate Debtors’ combinedly are joint venture company.

To read judgment please follow the link: https://nclat.nic.in/Useradmin/upload/2233762365c34633dbd7b3.pdf