Maitreya Doshi Ex-Director of Doshi Holdings Pvt. Ltd. Vs. Anand Rathi Global Finance Ltd. - Recovery of debt in one of the proceedings can always be taken note of and set off in the other proceeding so that the Co-borrowers are not put to disadvantage.

NCLAT (25.08.2021) in Maitreya Doshi Ex-Director of Doshi Holdings Pvt. Ltd. Vs. Anand Rathi Global Finance Ltd. [Company Appeal (AT) (Insolvency) No. 191 of 2021] held that; 

• Hon’ble Supreme Court held in the matter of ‘Phoenix ARC Pvt. Ltd. vs. Ketulbhai Ramubhai Patel’, (2021) SCC Online SC 54, relying on judgment in the matter of ‘Anuj Jain vs. Axis Bank Ltd., (2020) 8 SCC 401, “where a Corporate Debtor has only extended a security by pledging shares, the Applicant will “at best be secured debtor qua above security but shall not be a financial creditor within the meaning of Section 5 sub-sections (7) and (8)”.

• Hon’ble Supreme Court in the matter of ‘Lalit Kumar Jain vs. Union of India & Ors’– Civil Original Jurisdiction, Transferred Case (Civil) No.245/2020, where it has been held that approval of the Resolution Plan in relation to Corporate Debtor does not discharge Guarantor of the Corporate Debtor.

• A Co-borrower is as much a Borrower like the other entity and is fully liable to repay the loan taken and it is immaterial as to in which account Co-borrowers received the money, when receipt is an admitted position.

• “Financial Creditor who had extended loan to these joint Borrowers and we find no bar in IBC to proceed against both the Co-borrowers when the debts are outstanding, as has been found by the Adjudicating Authority.

• It is stated that in the present matter proceedings were before the same Adjudicating Authority with regard to Premier Ltd. and Doshi Holdings. As such, the requirement to have both the proceedings before the same Adjudicating Authority is already there. Recovery of debt in one of the proceedings can always be taken note of and set off in the other proceeding so that the Co-borrowers are not put to disadvantage.

Excerpts of the order;

The Appellant, Maitreya Doshi is Suspended Director of ‘M/s Doshi Holdings Pvt. Ltd.’ (the Corporate Debtor). Respondent No.1 – ‘Anand Rathi Global Finance Ltd.’ filed application under Section 7 of Insolvency and Bankruptcy Code, 2016 (‘IBC’ in short) being C.P. (IB) No. 1220/MB/2020 against the Corporate Debtor before the Adjudicating Authority (National Company Law Tribunal), Court No. 5, Mumbai Bench. The Adjudicating Authority after hearing the parties admitted the application under Section 7 of IBC and CIRP was initiated, by impugned order dated 19th February, 2021. Thus, the present Appeal.

# 4. Appeal claims that the Adjudicating Authority erred in holding that the amounts under Loan cum Pledge Agreements were disbursed by Respondent No.1 in favour of both M/s Premier Ltd. and M/s Doshi Holdings. It is argued (in substance) that Doshi Holdings was merely a Pledgor of shares and for Doshi Holdings it cannot be said to be a Financial Debt; and that for the loan issued to Premier Ltd., CIRP had already started and so for same debt CIRP could not be initiated against Doshi Holdings, especially when Adjudicating Authority earlier observed in its order initiating CIRP against Premier Ltd., that after CIRP starts against Premier Ltd., claim against Doshi Holdings would not be maintainable.

# 5. In Written Submissions filed by the Appellant and oral arguments, the Learned Counsel for the Appellant claimed that by order dated 29.01.2021 passed in C.P. No. (IB) 1224/MB/2020 application under Section 7 which was filed against M/s Premier Ltd. (Annex A-11 of the Appeal), the Adjudicating Authority in earlier order relied on the decision of this Tribunal in the case of ‘Dr. Vishnu Kumar Agarwal Vs. M/s Piramal Enterprises Ltd.’, (2019) SCC Online NCLAT 542 and had observed while admitting application under Section 7 against M/s Premier Ltd. that if the claim against Premier Ltd. was admitted then for the same set of loans, arising under the same loan documents, the same debt/claim against Doshi Holdings would not be permissible. It is argued that if the Adjudicating Authority which had heard both the Applications pending against M/s Premier Ltd. and M/s Doshi Holdings had made such observations by now in the earlier order of admission with regard to Premier Ltd., the Adjudicating Authority while passing present impugned order went back from those observations relying on judgment of this Tribunal in the matter of ‘State Bank of India vs. Athena Energy Ventures Pvt. Ltd.’, (2020) SCC Online NCLAT 774. Thus, according to the Appellant, this was breach of judicial discipline.

The Appellant claims that there is no financial debt in existence against Doshi Holdings as the disbursement was to Premier Ltd. and no amount was disbursed to Doshi Holdings. According to the Appellant, liability of Doshi Holdings was only as a Pledgor of the shares and that Hon’ble Supreme Court held in the matter of ‘Phoenix ARC Pvt. Ltd. vs. Ketulbhai Ramubhai Patel’, (2021) SCC Online SC 54, relying on judgment in the matter of ‘Anuj Jain vs. Axis Bank Ltd., (2020) 8 SCC 401, “where a Corporate Debtor has only extended a security by pledging shares, the Applicant will “at best be secured debtor qua above security but shall not be a financial creditor within the meaning of Section 5 sub-sections (7) and (8)”. It is also claimed that Respondent No. 1 cannot claim to be Financial Creditor with regard to the Corporate Debtor. It is also argued that pledging of shares would not amount to guarantee or indemnity. It is argued that the Adjudicating Authority interchangeable used the words “Co-borrower/ Guarantor/Pledgor” and wrongly relied on the judgment in the matter of ‘State Bank of India vs. Athena Energy Ventures Pvt. Ltd.’. Relying on the judgment in the matter of ‘Dr. Vishnu Kumar Agarwal Vs. M/s Piramal Enterprises Ltd.’, it is argued that when for the same debt an Application under Section 7 had been admitted against the M/s Premier Ltd., another proceeding against the Corporate Debtor – Doshi Holdings could not have been admitted.

# 7. Counsel for Respondent No.1 submits that judgment in the matter of ‘Dr. Vishnu Kumar Agarwal Vs. M/s Piramal Enterprises Ltd.’ (Supra) is not good law considering the judgment of this Tribunal in the matter of ‘State Bank of India vs. Athena Energy Ventures Pvt. Ltd.’ and recent judgment of Hon’ble Supreme Court in the matter of ‘Lalit Kumar Jain vs. Union of India & Ors’– Civil Original Jurisdiction, Transferred Case (Civil) No.245/2020, where it has been held that approval of the Resolution Plan in relation to Corporate Debtor does not discharge Guarantor of the Corporate Debtor. The argument is that there is no bar in IBC to file separate applications against two entities liable to pay same debt. It is argued that the contention raised by the Appellant that the debt amount of Rs.8,35,25,398/- should stand reduced considering the value of pledged shares is irrelevant, as even if the said amount is reduced, the default is of more than Rupees One Crore. It is stated by the Respondent No. 1 that the claim was rightly admitted by the Adjudicating Authority and the Appeal deserves to be dismissed.

 

# 8. Although the parties have raised various grievances, the dispute gets narrowed down if documents are perused. Before considering the arguments, it would be appropriate to first refer to documents executed between the Corporate Debtor and M/s Premier Ltd. with Respondent No. 1 – Financial Creditor so as to have a clear picture regarding the legal relations between the parties. This will curtail need to refer to detailed arguments which have been made without connecting to facts of the case.

 

# 10. Firstly, there is a Sanction Letter dated 27.06.2015 issued by Respondent No. 1 to (i) M/s Premier Ltd. (ii) M/s Doshi Holdings Pvt. Ltd. By this letter dated 27.06.2015, Respondent No.1 conveyed to M/s Premier Ltd. and M/s Doshi Holdings sanction of financial facilities extended to them and that the facility was subject to the terms and conditions contained in the Loan Agreement. The loan sanctioned as per this document was of Rs.3 Crore to these parties. The document bears stamp of “Accepted” with signature and stamps of M/s Premier Ltd. as well as Doshi Holdings. As authorized signatory the same present Appellant signed separately for both the entities.

 

# 11. Then there is Loan cum Pledge Agreement dated 29.06.2015 (page 170). Part of the first page of document may be reproduced:

• LOAN CUM PLEDGE AGREEMENT

• THIS AGREEMENT is made at Mumbai this, 29th June 2015 between Anand Rathi Global Finance Ltd., a Non Banking Finance Company registered with Reserve Bank of India and incorporated under the Companies Act, 1956, having its registered office at 4th Floor, Silver Metropolis, Jnl Conch Compound, Opp. Bimbisar Nagar, Goregaon (East), Mumbai- 400 063 (hereinafter called the “Lender” or “Pledgee” which expression shall unless repugnant to the meaning or context thereof, shall be deemed to mean and include its successors in title and permitted assigns) of the ONE PART;

• And

• Premier Limited, a company incorporated under Companies Act 1956, having its registered office at Mumbai- Pune Road, Chinchwad, Pune, Maharashtra 411019 (hereinafter referred to as the “Borrower 1” which expression shall, unless it be repugnant to the meaning or context thereof, mean and include its successor in title and permitted assign appointed or coopted of the SECOND PART:

• And

• Doshi Holdings Pvt. Ltd., a company incorporated under Companies Act 1956, having its registered office at 58, Nariman Bhavan Nariman Point, Mumbai, Maharashtra400021 (hereinafter referred to as the Borrower(s) 2” or “Pledgor” which expression shall, unless it be repugnant to the meaning or context thereof, mean and include its successor in title and permitted assign appointed or co-opted of the THIRD PART;

• Borrower 1 and Borrower 2/ Pledgor are collectively referred to as “Borrower(s)” and individually as a “Borrower or Pledgor” (as the case may be) . . . . . 

 

# 12. In this Loan cum Pledge Agreement, it is clear that the Premier Ltd. is the Borrower 1 and Doshi Holdings is Borrower 2/ Pledgor and collectively they are referred as “Borrower(s)” and individually as “Borrower or Pledgor”, as the case may be. . . 

 

# 13. Going through the recitals it is clear to us that in addition to Premier Ltd. the present Corporate Debtor also had undertaken to repay the lender i.e. Respondent No.1. The Loan cum Pledge Agreements have various clauses binding Premier Ltd. and Doshi Holdings to repay the loan and the Appellant signed this Agreement on behalf of Premier Ltd. as well as separately for Doshi Holdings as Authorized Signatory. There is loan receipt (at page 188 of Dy. No. 28041) where the endorsement is:

• “Received with thanks a Loan of Rs.3,00,00,000/- (Rupees Three Crores) from M/s Anand Rathi Global Finance Ltd. vide RTGS drawn on HDFC Bank, as loan @16% p.a. for _______ days from _______ 2015 to ______ 2015”

 

The loan received has been signed by the Appellant as Chairman and Authorized Signatory on behalf of M/s Doshi Holdings and separately as Authorized Signatory/Pledgor of M/s Premier Ltd.

 

# 17. Considering the documents executed between the parties, perusal of the documents shows that M/s Premier Ltd. and M/s Doshi Holdings were Co-borrowers and promised to pay back the loan with interest. Their liability to pay is joint and several liability. The Promisee may recover the amounts jointly or severally. Here we are not concerned with rights and liabilities inter-se between the Co-borrowers when debt is enforced against one or the other or both of them.

 

# 18. A Co-borrower is as much a Borrower like the other entity and is fully liable to repay the loan taken and it is immaterial as to in which account Co-borrowers received the money, when receipt is an admitted position.

 

# 22. . . . The Respondent No. 1 has to be treated as Financial Creditor who had extended loan to these joint Borrowers and we find no bar in IBC to proceed against both the Co-borrowers when the debts are outstanding, as has been found by the Adjudicating Authority. In the set of facts, we need not enter into the question if in Pledgor-Pledgee relationship would it be Financial Debt. Doshi Holdings, in addition to stepping into the shoes of Co-borrower, which is financial debt, additionally pledged shares. The liability invoked by Financial Creditor is on the basis of Corporate Debtor being Co-borrower and not merely Pledgor. It is surprising to find that the Appellant is denying liability on account of Doshi Holdings when the Appellant has signed joint documents after documents in favour of Respondent No.1 as Authorised Signatory for both the Companies. The Corporate Debtor cannot be permitted to back out from the documents and promises made.

 

# 23. It is stated that in the present matter proceedings were before the same Adjudicating Authority with regard to Premier Ltd. and Doshi Holdings. As such, the requirement to have both the proceedings before the same Adjudicating Authority is already there. Recovery of debt in one of the proceedings can always be taken note of and set off in the other proceeding so that the Co-borrowers are not put to disadvantage.

 

# 26. In judgment in the matter of ‘Anuj Jain vs. Axis Bank Ltd.’ (supra), the issue before the Hon’ble Supreme Court was whether the Respondents (Lenders of Jai Prakash Associate Ltd. – JAL) could be recognized as Financial Creditors of the Corporate Debtor – Jaypee Infratech Limited (JIL) on the strength of the mortgage created by the Corporate Debtor, as collateral security of the debt of its holding company JAL. In Para 33.2 of the judgment, Hon’ble  Supreme Court referred to Para 13 and 14 of the judgment of NCLT in that matter where Resolution Professional had pointed out contents of the mortgage deed concerned to submit that Corporate Debtor had only agreed to create the mortgage in favour of the Applicant towards the financial assistance granted to the holding company JAL. On facts in that matter it was pointed out before NCLT that perusal of the mortgage made it clear that the Corporate Debtor had neither given any guarantee to repay or any indemnity qua the repayment of loans granted by the Applicant to JAL. With such and other facts discussed by the Hon’ble Supreme Court, Hon’ble Supreme Court in Para 47.2 of the judgment concluded the question of law as under:

• “47.2. Therefore, we have no hesitation in saying that a person having only security interest over the assets of corporate debtor (like the instant third party securities), even if falling within the description of ‘secured creditor’ by virtue of collateral security extended by the corporate debtor, would nevertheless stand outside the sect of ‘financial creditors’ as per the definitions contained in subsections (7) and (8) of Section 5 of the Code. Differently put, if a corporate debtor has given its property in mortgage to secure the debts of a third party, it may lead to a mortgage debt and, therefore, it may fall within the definition of ‘debt’ under Section 3(10) of the Code. However, it would remain a debt alone and cannot partake the character of a ‘financial debt’ within the meaning of Section 5(8) of the Code.

• The respondent mortgagees are not the financial creditors of corporate debtor JIL”

• [Emphasis supplied]

 

# 27. Thus on facts the matter is different here. If there had been ‘only a security interest’ like pledging of shares, it would have been different.  However, in the present set of facts considering the documents executed between the parties, apart from the pledging of shares, the Corporate Debtor –Doshi Holdings entered into agreement with the Financial Creditor as Co-borrower and as the Co-borrower a loan was received.

 

# 28. We thus, agree with the Adjudicating Authority when the Adjudicating Authority admitted the Application under Section 7 of IBC although there was error in observations where reference is made interchangeably to Co-borrower and Guarantor. The Adjudicating Authority at the same time dealt with the case as a matter of Co-borrower. It is a case of Co-borrower and for reasons recorded by us in this judgment we decline to interfere with the impugned order admitting the Application.

 

# 29. There is no substance in the Appeal. The Appeal is dismissed. No costs.

 

----------------------------------

State Bank of India Vs Animesh Mukhopadhyay - Creditors Double-dip, “We do not find that there is bar for the Financial Creditor to proceed against the Principal Borrower as well as Corporate Guarantor at the same time, either in CIRPs or file claims in both CIRPs”.

NCLAT (08.03.2021) in State Bank of India Vs Animesh Mukhopadhyay, Resolution Professional of Zenith Finesee India Pvt. Ltd.  [Company Appeal (AT) (Ins.) No. 186 of 2021] held that;

• If the above provisions of Section 60 (2) and (3) are kept in view, it can be said that IBC has no aversion to simultaneously proceeding against the Corporate Debtor and Corporate Guarantor. If two Applications can be filed, for the same amount against Principal Borrower and Guarantor keeping in view the above provisions, the Applications can also be maintained

• We are also of the view that simultaneously remedy is central to a contract of guarantee and where Principal Borrower and surety are undergoing CIRP, the Creditor should be able to file claims in CIRP of both of them.

• Under the Contract of Guarantee, it is only when the Creditor would receive amount, the question of no more due or adjustment would arise. It would be a matter of adjustment when the Creditor receives debt due from the Borrower/ Guarantor in the respective CIRP that the same should be taken note of and adjusted in the other CIRP.

• 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. There is no need to be tied down with Judgments if we see Section 60 which has been reproduced (supra). That is the law.

 

Excerpts of the order;

08.03.2021 : The Appeal has been filed by the State Bank of India against Impugned Orders dated 02.02.2021 passed in IA (IB) No. 755/KB/2020 in CP (IB) 159/KB/2019. The Appellant claims that the question of law involved in this matter is whether for the debt due is it admissible for the Financial Creditor to file separate claims:-

• (i) In the CIRP of the Corporate Guarantor; and

• (ii) In the CIRP of the Principal Borrower.

# 2. Appellant claims that the bank had granted credit facility in the nature of Term Loan to Purple Advertising Services Pvt. Ltd. (Principal Borrower). The present Respondent No. 1 was Guarantor for securing the dues of the Principal Borrower. The Principal Borrower became the NPA as well as the present Respondent No.1 (Corporate Guarantor), their liability being co-extensive, they became liable to pay outstanding dues to the Appellant bank. A sum of Rs. 29 crore approx. as on 20.11.2019, was due.

# 3. It is stated that vide its order dated 29.10.2019 in C.P. No. 108/KB/2019, the Ld. NCLT initiated CIRP against the Principal Borrower on an application filed by the United Bank of India. The Appellant Bank has filed its claim before the Resolution Professional and the CIRP is pending and the Resolution Plan is being evaluated. According to the Appellant it may not get any substantial sum (approx. less than 10% of the dues) in the CIRP of the Principal Borrower even if any resolution is found.

# 4. The Appellant claims that by order dated 20.11.2019 in C.P. No. 159/KB/2019, the Ld. NCLT initiated CIRP against Corporate Guarantor, on an application filed by the United Bank of India. On 11.02.2020, the Appellant bank filed its claim before Respondent/Resolution Professional and provided all necessary proof pertaining to its claim. However, the Resolution Professional after discussing the claim with the CoC, intimated the Appellant bank that the claim appears to be “not tenable in the eye of law” and that the “onus on the admissibility” of the claim is with the CoC. As the Resolution Professional failed to admit the claim of the Appellant, the Appellant had filed IA (IB) No. 755/KB/2020 in CP (IB) 159/KB/2019 inter alia praying for a direction to the Respondent to accept the Appellant’s claim as submitted by the Appellant on 11.02.2020 and to reconstitute the CoC by including the Appellant as a member of CoC. According to the Appellant the Adjudicating Authority failed to appreciate that co-extensive liability and erroneously held that the claim of the Appellant Bank against the Corporate Guarantor was not admissible as Appellant had filed claim in the CIRP which was filed against the Principal Borrower also. Thus, in the present Appeal, the Learned Counsel for the Appellant has made submissions on above lines. The Learned Counsel for the Appellant referred to Judgment of this Tribunal in the matter of “State Bank of India Vs. Athena Energy Ventures Pvt. Ltd. (2020) SCC online NCLAT 774”.

# 6. The Learned Counsel for the Resolution Professional has made submissions distinguished Judgment in the matter of “Athena Energy Ventures Pvt. Ltd.” and submits that in the Judgment, if the Resolution Professional in both the CIRP was common such claim could be made and looked into.

# 7. The Learned Counsel for the Resolution Professional has further submitted that the Resolution Professional considered another Judgment of another Bench of this Tribunal which was larger Bench and in which Judgment in the matter of “Dr. Vishnu Kumar Agarwal Vs. M/s Piramal Enterprises Ltd.” has been followed.

# 9. It is further submitted that under Section 21 (4) (a) of the IBC the Financial Creditor to the extent of the Financial debt owed by the Corporate Debtor, can be included in the Committee of Creditor, with voting share proportionate to the extent of financial debt. It is stated when claim is made in CIRP of Principal Borrower, the same benefit in CIRP of Guarantor cannot be taken as amount would not be known what is recovered in other CIRP.

# 10. We have heard parties. From the Impugned Order it is apparent that the Impugned Order failed to discuss the provisions or Judgments. It was simply observed in paras 16 to 21 as under:

• “16. Heard the Ld. Counsel for the Applicant and the Ld. Counsel for the Resolution Professional and have perused the application.

• 17. The main issue in this application is whether the Applicant can be permitted to file its claim for the entire amount with two Resolution Professionals in the CIRP of two Corporate Debtors, one being the Principal Borrower and other the Guarantor. The claim admittedly has not been satisfied from the Principal Borrower’s side. At this stage it is not possible to determine what percentage of the claim may be satisfied from the side of the Principal Borrower. It is needless to say that in case the whole of the Principal debt is satisfied from the side of the Principal Borrower then the Applicant is not entitled to claim anything from the Respondent herein. So, the amount the Applicant is entitled to claim at this stage from the Respondent is nebulous, at the stage.

• 18. Moreover, the Applicant claims to be a Financial Creditor, in such circumstances if the Applicant is allowed to participate in the CoC of the Guarantor, then it will be difficult to determine the voting share of the Applicant and the other Financial Creditors as the claim has not been crystallised from the side of the Principal Borrower. For this reason too, I am not inclined to allow the Applicant to lodge another claim relating to the same debt of the Borrower in the CIRP of the Guarantor.

• 19. With regard to the second issue at hand, it is clear that there is an error of judgement committed by the Resolution Professional in discussing the claim with the CoC. It is the RP’s prerogative to collect and collate the claims and the CoC has no role to play in this. For this reason I hold that the CoC is not a necessary party in these proceedings. If at all any member of CoC is aggrieved by any decision of the RP which would result in reduction of voting shares of such CoC member then such aggrieved party is at liberty to move this Adjudicating Authority in terms of section 60(5) of the Code. The fact that a claim, if admitted, would result in variation of the shares of the existing constituents of the CoC, is no reason for the RP to consult with the CoC prior to decision on collating claims.

• 20. In view of the above the issues framed at paragraph 4 are answered as follows:

• a. Whether the Applicant can file a claim for the same debt with respect to the same loan in CIRP of two Corporate Debtors?---No

• b. Whether the Resolution Professional has dealt with the rejection of claim in accordance with the Code?---No

• c. Whether the Committee of Creditor can decide about the claim lodged by the Applicant?---No

• d. Whether the CoC is required to be heard in the present application?---No

• 21. The IA (IB) No. 755/KB/2020 shall stand disposed of.”

11. Thus, the Adjudicating Authority did not consider the provisions or Judgments. In Judgment in the matter of “State Bank of India Vs. Athena Energy Ventures Pvt. Ltd." (2020) SCC online NCLAT 774, we had referred to Section 60 of the IBC and the amendment made to sub-Section 2 in the following manner:

• If the above provisions of Section 60 (2) and (3) are kept in view, it can be said that IBC has no aversion to simultaneously proceeding against the Corporate Debtor and Corporate Guarantor. If two Applications can be filed, for the same amount against Principal Borrower and Guarantor keeping in view the above provisions, the Applications can also be maintained. It is for such reason that Sub-Section (3) of Section 60 provides that if insolvency resolution process or liquidation or bankruptcy proceedings of a Corporate Guarantor or Personal Guarantor as the case may be of the Corporate Debtor is pending in any Court or Tribunal, it shall stand transferred to the Adjudicating Authority dealing with insolvency resolution process or liquidation proceeding of such Corporate Debtor. Apparently and for obvious reasons, the law requires that both the proceedings should be before same Adjudicating Authority.”

# 12. We have further observed in para 16 is as under:

• “16. We find substance in the arguments being made by the learned Counsel for Appellant which are in tune with the Report of ILC. The ILC in para – 7.5 rightly referred to subsequent Judgment of “Edelweiss Asset Reconstruction Company Ltd. V. Sachet Infrastructure Ltd.” dated 20th September, 2019 which permitted simultaneously initiation of CIRPs against Principal Borrower and its Corporate Guarantors. In that matter Judgment in the matter of Pirmal was relied on but the larger Bench mooted the idea of group Corporate Insolvency Resolution Process in para -34 of the Judgment. The ILC thus rightly observed that provisions are there in the form of Section 60 (2) and (3) and no amendment or legal changes were required at the moment. We are also of the view that simultaneously remedy is central to a contract of guarantee and where Principal Borrower and surety are undergoing CIRP, the Creditor should be able to file claims in CIRP of both of them. The IBC does not prevent this. We are unable to agree with the arguments of Learned Counsel for Respondent that when for same debt claim is made in CIRP against Borrower, in the CIRP against Guarantor the amount must be said to be not due or not payable in law. Under the Contract of Guarantee, it is only when the Creditor would receive amount, the question of no more due or adjustment would arise. It would be a matter of adjustment when the Creditor receives debt due from the Borrower/ Guarantor in the respective CIRP that the same should be taken note of and adjusted in the other CIRP. This can be conveniently done, more so when IRP/RP in both the CIRP is same. Insolvency and Bankruptcy Board of India may have to lay down regulations to guide IRP/RPs in this regard.”

# 13. There is no substance in the submissions of Counsel for Respondent that case would be different if same IRP/RP is there in the two CIRPs. It would be just a matter of co-ordination between the two IRPs/RPs. 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. There is no need to be tied down with Judgments if we see Section 60 which has been reproduced (supra). That is the law.

14. We have yet passed another Judgment, incidentally today, in Company Appeal (AT) (Ins.) No. 1186 of 2019 in “Edelweiss Asset Reconstruction Company Ltd.” in which in para 8, we have held that:

• “We do not find that there is bar for the Financial Creditor to proceed against the Principal Borrower as well as Corporate Guarantor at the same time, either in CIRPs or file claims in both CIRPs”.

# 15. For the above reasons we find that the orders of the Adjudicating Authority as passed cannot be maintained.

# 16. Although this Appeal came up today for the first time but as the issue involved is only of law and time in CIRP is material, we have heard counsel of both sides and we are passing the present order.

# 17. The Appeal is allowed. The Impugned Order is set aside. The Respondent will consider the claim of the Appellant Borrower and appropriately deal with the Appellant as Financial Creditor in the CoC. The Appeal is disposed of accordingly.

-------------------------------------------------------