Till payment is received in one, lender's claim maintainable in CIRP against both Principal Borrower, Corporate Guarantor: NCLAT

The National Company Law Appellate Tribunal has held that till payment is received in one Corporate Insolvency Resolution Process (CIRP), the claim of the lender for the same amount can be maintained in the insolvency proceedings against both the Principal Borrower and Corporate Guarantor (SBI Vs. Animesh Mukhopadhyay)..The judgement was passed by a two-member bench of Justice AIS Cheema, Member (Judicial) and Dr. Alok Srivastava, Member (Technical)..In the present case, State Bank of India (Appellant) had granted credit facility in the nature of Term Loan to Purple Advertising Services Pvt. Ltd. (Principal Borrower). .Zenith Finesee India Pvt. Ltd (Respondent No 1/Corporate Guarantor) was the guarantor for securing the dues of the Principal Borrower. .Subsequently, the Principal Borrower and the Corporate Guarantor became NPAs. Their liability being co-extensive, they became liable to pay outstanding dues to the Appellant bank..NCLT initiated CIRP against the Principal Borrower on an application filed by the United Bank of India. The Appellant Bank filed its claim before the Resolution Professional and at present, the CIRP is pending and the Resolution Plan is being evaluated. .According to the Appellant, it might not get any substantial sum in the CIRP of the Principal Borrower even if any resolution is found..Meanwhile, CIRP was initiated against Corporate Guarantor as well on an application filed by the United Bank of India..The Appellant bank filed its claim before Resolution Professional of the Corporate Guarantor. However, this Resolution Professional, after discussing the claim with the Committee of Creditors, opined that the claim was not tenable in the eye of law..The Appellant, thereafter, moved the NCLT for acceptance of its claim and its inclusion in CoC. The same was, however, turned down by the NCLT which held that the claim of the Appellant against the Corporate Guarantor was not admissible as it had filed a claim in the Principal Borrower's CIRP..In its order, the NCLAT opined that the impugned order had failed to discuss the IBC provisions or judgments on this aspect..Considering Section 60 IBC and its own judgments, the NCLAT held that when two CIRPS are maintainable, claim in both (subject to adjustments on receipts) would also be maintainable.."Till payment is received in one CIRP, claim can be maintained in both CIRPs for same amount and representation in CoC in both CIRPs to the extent of amount due will be justified. This is the reason why Section 60 (3) provides for transfer of proceeding to Adjudicating Authority where already there is a pending proceeding. There is no question of looking into Judgments when Section 60 of IBC is clear and makes the two CIRPs maintainable in such matters. If they are maintainable, claim in both (subject to adjustments on receipts) would also be maintainable.".The Appeal was accordingly allowed with a direction to the Resolution Professional of the Corporate Guarantor to consider the claim of the Appellant and to appropriately deal with the Appellant as Financial Creditor in the CoC..Advocates VM Kannan, Sanjay Kapur, Megha Karnwal, Sambit Panja appeared for the Appellant. .Advocates Rishav Banerjee, Pranay Agarwal, Ankita Baid appeared for the RP. .[Read Judgement]