Icici Bank Limited vs. Era Infrastructure (India) Limited

REPORTABLE
2026 INSC 201
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.6094 OF 2019
ICICI BANK LIMITED …APPELLANT
VERSUS
ERA INFRASTRUCTURE (INDIA) LIMITED …RESPONDENTS
WITH
CIVIL APPEAL NOS.827-828 OF 2021
ANUBHAV ANILKUMAR AGARWAL …APPELLANT
VERSUS
BANK OF INDIA & ANR. …RESPONDENT
CIVIL APPEAL NO.6093 OF 2019
ICICI BANK LIMITED …APPELLANT
VERSUS
HYDERABAD RING ROAD
PROJECT PRIVATE LIMITED …RESPONDENT

SLP (C.) NO.21778 OF 2019
Signature Not Verified
INTERNATIONAL FINANCE CORPORATION …APPELLANT
Digitally signed by
rashmi dhyani pant
Date: 2026.02.26
17:19:28 IST
Reason:
VERSUS




PUNJ LLOYD UPSTREAM LIMITED …RESPONDENT
CIVIL APPEAL NO.40 OF 2020
PHOENIX ARC PRIVATE LIMITED …APPELLANT
VERSUS
G.R.K. REDDY & ORS. …RESPONDENTS
CIVIL APPEAL NO.2715 OF 2020
STATE BANK OF INDIA …APPELLANT
VERSUS
BIJAY KUMAR AGARWAL & ANR. …RESPONDENTS
CIVIL APPEAL NO.4018 OF 2023
MOHAN NATHURAM SAKPAL …APPELLANT
VERSUS
STATE BANK OF INDIA & ANR. …RESPONDENTS
CIVIL APPEAL NO.7231 OF 2024
NOIL CHRISTURAJ,
SUSPENDED DIRECTOR,
M/S. FOSSIL LOGISTICS PRIVATE LIMITED …APPELLANT
VERSUS
STATE BANK OF INDIA & ANR. …RESPONDENT

2



J U D G M E N T

DIPANKAR DATTA, J.
I. Introduction ................................................................................................... 4
II. The impugned orders ...................................................................................... 5

A. Impugned order in Civil Appeal No. 6094 OF 2019 ........................................... 5

B. Impugned order in Civil Appeal No. 6093 of 2019 ............................................ 8
C. Impugned order in Civil Appeal Nos. 827 – 828 of 2021 ................................... 9
D. Impugned order in Special Leave Petition No. 21778 of 2019 .......................... 10

E. Impugned order in Civil Appeal No. 40 of 2020 ............................................. 11

F. Impugned order in Civil Appeal No. 2715 of 2020 .......................................... 12
G. Impugned order in Civil Appeal No. 4018 of 2023 .......................................... 13

H. Impugned order in Civil Appeal No. 7231 of 2024 .......................................... 14

III. Submissions by Counsel ................................................................................ 15
A. Submissions opposing simultaneous proceedings .......................................... 16

B. Submissions in support of simultaneous proceedings ..................................... 20

IV. Analysis ...................................................................................................... 23
A. History of laws relating to insolvency, reconstruction, recovery of dues, etc. and

the objects/purposes of the Ibc ................................................................... 24

B. Re: simultaneous proceedings .................................................................... 31
C. Re: IBC as recovery proceedings ................................................................. 33

D. Re: Election of Claims ................................................................................ 38

E. Re: double enrichment ............................................................................... 40
F. The need for reform .................................................................................. 41

V. Conclusion ................................................................................................... 46


3



I. I NTRODUCTION
The Judge is not to innovate at pleasure. He is not a knight errant
1
roaming at will in pursuit of his own ideal of beauty or of goodness.
1. These appeals, arising out of different orders of the National Company
2 3
Law Appellate Tribunal and the National Company Law Tribunal ,
raise a common question of law; one which would appear to be well
settled, yet, has been canvassed before us in its entirety.
2. The issue, at large, is, whether simultaneous proceedings for
4
Corporate Insolvency Resolution Process under the Insolvency and
5
Bankruptcy Code, 2016 against the principal debtor as well as its
corporate guarantor, or vice-versa, are maintainable?
3. It would seem, as has been mentioned earlier, that the issue stands
squarely covered by a decision of this Court in BRS Ventures
6
Investments Ltd. v. SREI Infrastructure Finance Ltd. & Anr. .
However, since elaborate arguments were advanced spanning over a
couple of days, covering a wide array of arguments, we have
considered the matter in some depth.
4. It is also imperative to mention, in all fairness to learned senior
counsel/counsel for either side, that we are not tasked with assessing

1
Eera v. State (NCT of Delhi), (2017) 15 SCC 133 (Nariman, J. quoting Cardozo, Nature
of Judicial Process , p. 141)
2
NCLAT
3
NCLT
4
CIRP
5
IBC or Code, used interchangeably
6
(2025) 1 SCC 456
4



the correctness of BRS Ventures Investments Ltd. (supra). The
submissions have been made, and so does this judgment proceed, on
the premise of the law as it stands to-date. Thus, being bound by
Article 141 of the Constitution, we proceed to analyze the facts and
submissions in view of the law laid down by this Court so far and
render our opinion touching the points raised.
II. T HE IMPUGNED ORDERS
A. I MPUGNED ORDER IN C IVIL A PPEAL N O . 6094 OF 2019
5. In the lead appeal, the order impugned has been passed by the NCLT,
th
Principal Bench, Delhi dated 7 May 2019. Appellant herein, ICICI
7
Bank , sought initiation of CIRP as the Financial Creditor against the
respondent, ERA Infrastructure (India) Limited, the Corporate Debtor.
6. ICICI had advanced loans to group/related companies of Era Infra
Engineering Private Limited, namely, the respondent i.e. ERA
Infrastructure (India) Limited, Hyderabad Ring Road Project Private
Limited, Apex Buildsys Limited, Dehradun Highway Projects Limited,
Gwalior Bypass Project Limited. For the credit facilities granted to
these companies, the parent company, Era Infra Engineering Private
Limited, gave certain guarantees and contractual comforts.
7. Of these group companies, ERA Infrastructure (India) Limited, the
respondent, was sanctioned a loan of Rs. 300 crore by a Credit

7
ICICI
5



8
Arrangement Letter , which was subsequently reduced to Rs. 200
crore. Era Infra Engineering Private Limited entered into an
9
arrangement with ICICI wherein, upon occurrence of a default by
ERA Infrastructure (India) Limited, Era Infra Engineering Private
Limited guaranteed payment to ICICI. Era Infra Engineering Private
10
Limited also entered into a Non-Disposal Undertaking/Arrangement
whereby 30% shares of ERA Infrastructure (India) Limited were
placed in a designated Non-Disposal Undertaking Account, along with
a power of attorney in favor of ICICI, which allowed it sell, transfer,
assign, dispose, or encumber these shares.
8. Pursuant to a default by ERA Infrastructure (India) Limited, a Joint
11
Lenders’ Forum came to be formed by ICICI along with Yes Bank,
which restructured the account while continuing the securities and
guarantees.
9. ICICI claimed that, first , Era Infra Engineering Private Limited failed
to comply with the NDU arrangement, despite being called upon to do
so, and secondly, ERA Infrastructure (India) Limited and Era Infra
Engineering Private Limited, both failed to comply with its payment
obligations under the restructured facility. Thus, Era Infra Engineering
12
Private Limited was declared Non-Performing Asset .

8
CAL
9
Loan Purchase Agreement
10
NDU
11
JLF
12
NPA
6



10. Era Infra Engineering Private Limited, under the Loan Purchase
Agreement, was called upon to purchase the Restructured Facilities at
a price of Rs.199.5 crore which, ICICI claims, it failed to comply with.
ICICI then invoked a recall-cum-invocation of guarantee notice to Era
Infra Engineering Private Limited to pay the entire liability of 198.8
crore with interest and charges.
th
11. On 8 May 2018, CIRP came to be initiated against Era Infra
Engineering Private Limited. ICICI lodged its claim under the Loan
Purchase Agreement, based on the guarantee. The claim was initially
13
rejected by the Resolution Professional , after which ICICI
approached the NCLT against the rejection which was allowed and the
claim was admitted; consequently, ICICI was permitted to participate
14
in the Committee of Creditors .
12. After having its claim admitted against Era Infrastructure Engineering
Private Limited, ICICI then filed an application under section 7 of the
IBC for initiation of CIRP against ERA Infrastructure (India) Limited.
Relying on a judgment of the NCLAT in Vishnu Kumar Agarwal v.
15
M/s Piramal Enterprises Ltd , the NCLT, vide the impugned
judgment, rejected the application on the grounds that based on the
same facts and documents, a fresh section 7 application could not be
filed.

13
RP
14
CoC
15
2019 SCC OnLine NCLAT 81
7



B. I MPUGNED ORDER IN C IVIL A PPEAL N O . 6093 OF 2019
13. The facts giving rise to this civil appeal are similar to Civil Appeal
No.6094 of 2019. ICICI filed an application under section 7 of the IBC
against Hyderabad Ring Road Project Private Limited. It claimed that
Hyderabad Ring Road Project Private Limited owed an amount of Rs.
193,60,00,000/- under various facilities, including interest and other
payables. Here too, as is the case above, Era Infrastructure
Engineering Private Limited had provided corporate guarantees to
Hyderabad Ring Road Project Private Limited.
14. When CIRP was initiated against Era Infrastructure Engineering
Private Limited, ICICI lodged its claim on the strength of the corporate
guarantee. This claim came to be admitted by the Interim Resolution
16
Professional for Era Infrastructure Engineering Private Limited.
Later, ICICI approached the NCLT, Principal Bench, seeking initiation
of CIRP against Hyderabad Ring Road Project Private Limited.
rd
15. The NCLT, vide impugned order dated 23 May, 2019, rejected the
application while relying on Vishnu Kumar Agarwal (supra) on the
ground that once a claim, based on the same facts and documents,
was admitted, no such claim could have been made against another
entity.
16. At this juncture, we may add that in civil appeal nos. 6093 of 2019
and 6094 of 2019 applications were filed by the respective

16
IRP
8



respondents being interim application nos. 146714 of 2025 and
146674 of 2025, respectively. These applications by the respondents
were filed to bring on record a settlement between them and ICICI.
When the settlement was put to the counsel for ICICI during the
course of hearing, she denied having such instructions on the
settlement. We granted liberty to the parties to move the Court in
case there was an agreement on the settlement, however, no such
agreement has been brought forth. Thus, we have proceeded to
adjudicate the matter on the presumption that no such settlement
has been entered between the parties.
C. I MPUGNED ORDER IN C IVIL A PPEAL N OS . 827 – 828 OF 2021
17
17. Bank of India filed an application under section 7 of IBC against RNA
18
Corp. Pvt. Ltd. before the NCLT, Mumbai Bench. NCLT, vide its order
th
dated 26 November, 2019, allowed the application for initiation of
CIRP. Against the order initiating CIRP, the appellant herein, Anubhav
Kumar Agarwal, filed an appeal before the NCLAT.
18. The appeal before NCLAT was primarily on two grounds. First, the
application under section 7 was barred by limitation, which the NCLAT
negatived. Second, that CIRP had already been initiated based on the
same debt against one M/s Chamber Constructions, a guarantor to

17
BoI
18
RNA
9



RNA. Thus, a further CIRP based on the same debt could not be
initiated against another entity.
19. Both these contentions came to be rejected vide the impugned order
th
dated 7 February, 2020 passed by the NCLAT. While a review against
the order was preferred on second ground, i.e., simultaneous
proceeding against the guarantor, the same was rejected. This is also
challenged in the present appeal.
D. I MPUGNED ORDER IN S PECIAL L EAVE P ETITION N O . 21778 OF 2019
20. International Finance Corporation, the appellant, granted a loan of
USD 25,000,000/- to Punj Lloyd Upstream Limited, under a Loan
19
Agreement , of which 12,500,000/- came to be disbursed to Punj
Lloyd Upstream Limited. Punj Lloyd Limited stood guarantor to the
th
transaction. On 8 March 2019, CIRP came to be initiated against
Punj Lloyd Limited by ICICI. Upon invitation of claims, International
Finance Corporation filed its claim with the Resolution Professional
based on the Loan Agreement.
21. International Finance Corporation then filed an application under
section 7 of the IBC seeking initiation of CIRP against Punj Lloyd
Upstream Limited, which was rejected vide the impugned order dated
th
13 May, 2019 citing Vishnu Kumar Agarwal (supra).

19 th
Loan Agreement dated 6 June 2008
10



22. International Finance Corporation, instead of filing an appeal before
the NCLAT, has filed an SLP against the impugned order of the NCLT.
E. I MPUGNED ORDER IN C IVIL A PPEAL N O . 40 OF 2020
th
23. NCLT, by its order dated 29 May 2019, directed initiation of CIRP
against Marg Limited at the instance of ICICI, against which its
promoter, Mr. G.R.K. Reddy filed an appeal before the NCLAT. During
the hearing of the appeal, the NCLAT was informed that the promoter
had settled its dues under section 12A of the IBC, which was also
confirmed by the IRP that 95.96% of the CoC had approved the
settlement.
24. Intervention applications came to be filed by SREI Equipment Finance
Limited and Phoenix Arc Limited, alleging that their claims were not
redressed by Mr. G.R.K. Reddy. NCLAT, however, vide the impugned
th
order dated 30 September, 2019, allowed the limited prayer of ICICI
to withdraw the section 7 application and set aside the CIRP initiated
against Marg Limited. NCLAT permitted SREI Equipment Finance
Limited and Phoenix Arc Limited to negotiate the matter with Marg
Limited independently and directed it to grant the same treatment as
was given to other financial creditors within 2 months.
25. Phoenix Arc Limited challenges this order on the ground that the
NCLAT incorrectly permitted withdrawal of the application under
section 7, IBC without properly examining whether 90% of the CoC
had indeed assented to such withdrawal in terms of section 12A
11



thereof. It is Phoenix’s contention that the IRP incorrectly rejected its
claim against Marg Limited which arose out of a Corporate Guarantee
given to New Chennai Township Private Limited, which was already
undergoing CIRP. Due to this rejection, its voting share in the CoC
was reduced substantially and this led the CoC to approve the
withdrawal of CIRP. Had its claim been allowed, it is contended,
Phoenix would have had more than 10% voting share in the CoC,
specifically, 10.57%. Consequently, it could have objected to the
settlement.
MPUGNED ORDER IN IVIL PPEAL O OF
F. I C A N . 2715 2020
nd
26. By an order dated 2 August 2019, the NCLT initiated CIRP against
20
Greengrow Commercial Pvt Ltd against which its ex-director, Bijay
Kumar Agarwal, filed an appeal before the NCLAT. Greengrow had
21
extended a corporate guarantee to Gee Pee Infotech Pvt Ltd against
22
the facilities given by State Bank of India .
27. Relying on Vishnu Kumar Agarwal (supra), the NCLAT allowed the
appeal on the ground that an application by SBI against Gee Pee
already stood admitted and, in such circumstances, CIRP against the
guarantor viz . Greengrow could not have been initiated at all. Thus,
all proceedings under section 7, IBC against Greengrow stood closed.
Another ground that was taken by the appellant was that the

20
Greengrow
21
Gee Pee
22
SBI
12



application before the NCLT was time barred. However, in view of the
adjudication of the first issue in favor of the appellant before the
NCLAT, the same did not consider the issue of limitation.
G. I MPUGNED ORDER IN C IVIL A PPEAL N O . 4018 OF 2023
28. SBI advanced cash credit facilities to A A Estates Private Limited for
Rs. 70 crore. The facilities granted by SBI were secured by, among
others, a corporate guarantee by RNA Corp Pvt Ltd.
29. When A A Estates Private Limited defaulted in paying the loan, SBI,
after having the account declared as NPA, filed an application under
section 7, IBC. NCLT admitted the application and initiated CIRP
against the corporate debtor.
30. Appeal came to be filed by the director of A A Estates Private Limited
on the grounds that the corporate guarantor, RNA Corp Pvt Ltd, had
been admitted in CIRP and SBI had already filed a claim of Rs.
137,55,54,367/-. with the Resolution Professional, which stood
admitted. Relying on Vishnu Kumar Agarwal (supra), it was
contended that simultaneous applications could not have been filed
against the debtor and the guarantor. Another ground of limitation
also came to be raised by the appellant before the NCLAT, claiming
that the date of default in the application filed by SBI was mentioned
st th
as 1 June 2015, whereas, the application came to be filed on 15
January, 2021; it is thus barred by limitation.
13



31. On the count of limitation, it was held that by a letter dated
st
31 January, 2018, A A Estates Private Limited had not only
acknowledged the debt within the existing limitation period (3 years
st st
from 1 June, 2015, ending on 1 June 2018) but had also proposed
a settlement. Thus, the NCLAT held that the limitation period stood
st
revived from 31 January, 2018 and the application was within time.
32. On the count of simultaneous proceedings, the NCLAT differentiated
Vishnu Kumar Agarwal (supra) from the facts of the present case,
in as much as in Vishnu Kumar Agarwal (supra) simultaneous
proceedings were filed against two guarantors whereas, in the present
case, simultaneous proceedings were filed against the debtor and the
guarantor. To support this finding, reliance was placed on SBI v.
23
Athena Energy Ventures (P) Ltd. . The appeal was dismissed by
st
the impugned order dated 31 May, 2023.
MPUGNED ORDER IN IVIL PPEAL O OF
H. I C A N . 7231 2024
33. SBI, as part of a consortium, granted certain loans and facilities to
Coastal Energen Private Ltd of about Rs.1,139.84 crore. Against the
facilities granted to Coastal Energen Private Ltd., Fossil Logistics
Private Ltd. extended corporate guarantees. When Coastal Energen
Private Ltd defaulted on the loans, its account came to be classified
as NPA.

23
(2021) 226 Comp Cas 744
14



34. Coastal Energen Private Ltd. having failed to pay its dues despite
being classified as NPA, SBI filed an application under section 7, IBC
th
against it before the NCLT, which was admitted on 4 February, 2019.
CIRP came to be initiated. Subsequently, SBI also filed an application
against Fossil Logistics Private Ltd., which came to be admitted by the
th
NCLT on 15 June, 2023, and CIRP came to be initiated.
35. Challenging the order of initiation of CIRP against Fossil Logistics
Private Ltd., the suspended director of Fossil Logistics Private Ltd.
claimed that the application could not have been admitted since CIRP
already stood initiated against Coastal Energen Private Ltd. While so
claiming, he relied on Vishnu Kumar Agarwal (supra). Negativing
the contention vide the impugned order, the NCLAT dismissed the
appeal and held that the liability of a guarantor and principal debtor
is co-extensive.
UBMISSIONS BY OUNSEL
III. S C
36. We have heard extensive and elaborate arguments from learned
senior counsel/counsel on either side. A perusal of the impugned
orders would show that certain appellants in the batch of matters are
aggrieved by the initiation of CIRP, whereas others against the denial
thereof. Departing from the conventional manner of setting out
submissions by the appellants and respondents ad seriatim , the
arguments have instead been arranged in favour of and against the
15



proposition of simultaneous proceedings. All other consequential
arguments flow from this glacier and are set out under the same head.
A. S UBMISSIONS OPPOSING SIMULTANEOUS PROCEEDINGS
37. It has been argued that the question which ought to be answered in
these appeals is not whether a financial creditor can maintain a claim
against the principal borrower and a guarantor in insolvency
proceedings, rather, the Court may answer, to what extent can such
claim be maintained.
38. Much emphasis is laid on the object of the resolution proceedings
under the IBC, and the scope of inquiry by the adjudicating authority/
tribunal at the time of admitting the application.
39. While referring to the inceptive judgments of this Court which
analyzed the insolvency jurisprudence under the IBC, it is argued that
proceedings thereunder are not mere recovery proceedings but are
meant to maximize the value of assets of all persons and balance the
interests of the stakeholders. Reference is made to Mobilox
24
Innovations v. Kirusa Software , Dena Bank v. C. Shivakumar
25
Reddy , Ebix Singapore (P.) Ltd. v. Educomp Solutions Ltd.
26 27
(CoC) , HPCL Bio Fuels Ltd v. Shahaji Bhanudas Bhad and

24
(2018) 1 SCC 353
25
(2021) 10 SCC 330
26
(2022) 2 SCC 401
27
2024 SCC OnLine 3190
16



Transmission Corpn. Of A.P. Ltd. v. Equipment Conductors &
28
Cables Ltd. .
40. Interpreting the word default as defined in sub-section (12) of section
3, and used in various provisions of the IBC, as well as its
interpretation by this Court, it is argued that the default by a
corporate debtor must be quantified. Without the default being
crystalized, the CIRP cannot be initiated. Form C as mentioned in
regulation 8 and set out in Schedule I of the Insolvency And
Bankruptcy Board of India (Insolvency Resolution Process for
29
Corporate Persons) Regulations, 2016 also provide that the specific
amount of claim must be mentioned.
41. The financial creditor must exercise the doctrine of election at the
time of filing an application for CIRP. Adopting the reasoning set out
in Vishnu Kumar Agarwal (supra), it is argued that while the
financial creditor has a co-extensive claim, the extent of such claim
must be clear and defined. If this is not done, inequitable
consequence is likely to follow. First, the creditor would have much
larger voting share in the CoC resulting in a disproportionate
resolution. Second, the likelihood of payment being received by the
creditor from more than one source, essentially receiving more than
what the creditor is entitled to, may lead to unjust enrichment. Third,
the practice of impermissible duplication of the same claim in multiple

28
(2019) 12 SCC 697
29
2016 Regulations
17



CIRPs was deprecated by the NCLAT in Moneywise Financial
30
Services Pvt Ltd v. Arunava Sikdar .
42. Countering the argument that the creditor is bound to update its
claims under regulation 12A of the 2016 Regulations, it is contended
that non-compliance of these regulations has no serious
consequences, except for a fine up to Rs. 2 crores as per section 235-
A, IBC. The fine is not a sufficient deterrent against duplication of
claims. Further, there is no requirement to refund the money.
43. Thus, the financial creditor must elect the extent of claim sought from
the debtor and the surety. Drawing support from Tettempudi
31
Salalith v. SBI , it is contended that the doctrine of election applies
even to IBC proceedings.
44. To this effect, intervention of this Court is sought to lay down
appropriate principles and guidelines for, what is termed as group
insolvency. Illustrations are drawn from the judgment of the NCLT in
32
SBI v. Videocon , referred by the NCLAT in Radico Khaitan Ltd.
33
v. BT & FC (P) Ltd. . In Videocon (supra), the NCLT, for the first
time, mooted the concept of substantial consolidation of CIRPs with a
common information memorandum and a common resolution
professional to address the current problem. The relevant portion of
Videocon (supra) reads thus:

30
2025 SCC OnLine NCLAT 1127
31
(2024) 1 SCC 24
32
2019 SCC OnLine NCLT 34792
33
2021 SCC OnLine NCLAT 55
18



78. Before arriving at any conclusion on ‘Consolidation’, the
existence of certain ingredients are necessary to be examined, viz.;
(1) Common control, (2) Common directors, (3) Common assets,
(4) Common liabilities, (5) Inter-dependence, (6) Interlacing of
finance, (7) Pooling of resources, (8) Co-existence for survival, (9)
intricate link of subsidiaries 10) inter-twined of accounts, 11) inter-
looping of debts, 12) singleness of economics of units, 13) cross
shareholding, 14) Inter dependence due to intertwined consolidated
accounts, 15) Common pooling of resources, etc. This is not an
exhaustive list and cannot be. These are the elementary governing
factors, prima-facie to activate the process of ‘consolidation’. At first
glance the existence of these rudimentary points are required to be
seen to examine whether in a particular case the question of
‘consolidation’ is worth consideration or not? It is also necessary to
put it on record at this juncture when entering to start the
investigation that it is a cumbersome exercise which require time
and patience. Whether the case in hand can fit into these basic
criterion is to be scrutinised in the following paragraphs.
45. Among other things, a direction is also sought for disclosure of claims
to the Resolution Professional as well as to the debtor, to create a
transparent process. Terming the penalty under section 235A, which
shall not be less than Rs. 1 lakh but may extend to Rs. 2 crore, as
insufficient, emphasis is laid for regulations to address the same and
in the interregnum, guidelines are sought to enable refund of excess
recovery by the creditor by the appropriate authority.
46. At the stage of filing of claims, either by filing an application under
section 7 or by filing the claim as per Form C of the 2016 Regulations,
the creditor is not bound to disclose claims made against co-
borrowers or guarantors. It is contended that a guideline to this
effect, mandating disclosure of parallel claim, is necessary to facilitate
effective CIRP proceedings for the resolution professional as well as
other stakeholders.
19



B. S UBMISSIONS IN SUPPORT OF SIMULTANEOUS PROCEEDINGS
47. At the very outset, it is contended that the issue stands settled in
view of BRS Ventures Investments Ltd. (supra). The primary
contention hinges on section 60(2), IBC which reads thus:
60. Adjudicating authority for corporate persons —

(2) Without prejudice to sub-section (1) and notwithstanding
anything to the contrary contained in this Code, where a corporate
insolvency resolution process or liquidation proceeding of a corporate
debtor is pending before a National Company Law Tribunal, an
application relating to the insolvency resolution or liquidation or
bankruptcy of a corporate guarantor or personal guarantor, as the
case may be, of such corporate debtor shall be filed before such
National Company Law Tribunal.

48. Thus, it is contended that section 60(2), IBC enables the adjudicating
authority, being the NCLT, before which the application of the principal
debtor is pending, to adjudicate the application of the corporate or
personal guarantor as well.
49. Learned senior counsel supporting the proposition of simultaneous
proceedings would primarily argue that under the common law
principles as well as under section 128 the Indian Contract Act,
34
1872 , the liability of the surety or the guarantor is co-extensive with
that of the principal debtor. Reliance is placed on Bank of Bihar Ltd.
35
v. Damodar Prasad & Anr. , State Bank of India v. Indexport
36
Registered and Ors. , Industrial Investment Bank v.

34
Contract Act
35
AIR 1969 SC 297
36
AIR 1992 SC 1740
20



Bishwanath Jhunjhunwala and State Bank of India v. V.
37
Ramakrishnan .
50. They have argued that the very object of guarantee is to be a fail-
safe mechanism against the default of the principal debtor. The
purpose of a guarantee would be rendered futile if the creditor is to
wait for the process against the principal debtor is over. The
interpretation in that case would mean that the guarantor would be
exempt, in the interregnum, from paying the debt, which the IBC does
not provide for.
51. Countering the contention of election of claims, it has been contended
that the law does not require the creditor to elect its claims. CIRP
initiated at the behest of any creditor would require the financial
creditor who is owed a financial debt, either under a guarantee or
principal debt, to file entire of its claim. If the creditor does not file its
entire claim, the right to recover that part of the debt would be lost
forever.
52. In view of the ‘clean slate’ principle as postulated in Ghanshyam
Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co.
38
Ltd. and Essar Steel (India) Ltd. (CoC) v. Satish Kumar
39
Gupta , no part of debt of the debtor can continue once the CIRP is
completed. Thus, if claim is not submitted or a part of it is submitted,

37
(2018) 17 SCC 394
38
(2021) SCC 9 657
39
(2020) 8 SCC 531
21



the creditor would be relinquishing its part of the claim against the
corporate debtor.
53. It was also argued that the creditor cannot be asked to wait or defer
the initiation of proceedings while the proceedings against the
principal debtor or the guarantor is completed. A creditor who is
legally entitled to initiate proceedings against the debtor or the
guarantor, cannot be deprived of such right.
54. IBC as well as the 2016 Regulations, it was next contended, provide
sufficient mechanisms to avoid unjust enrichment. The duty is cast
upon the Resolution Professional to maintain an updated list of
creditors and adjust the list according to the modification, and the
consequential change in voting rights.
55. Opposing the argument in relation to the doctrine of election, reliance
was placed on A.P. State Financial Corporation v. M/s Gar Re-
40
rolling Mills & Anr . to contend that the doctrine does not apply in
the present case. For the doctrine of election to be applicable, three
41
conditions, as laid down in Transcore v. Union of India would be
necessary, viz . (i) existence of two or more remedies, (ii)
inconsistency between such remedies, and (iii) a choice of one of
them. It was contended that in the present case, none of the elements
are applicable. The relevant portion of Transcore (supra) reads thus:

40
(1994) 2 SCC 647
41
(2008) 1 SCC 125
22



64. In the light of the above discussion, we now examine the
doctrine of election. There are three elements of election, namely,
existence of two or more remedies; inconsistencies between such
remedies and a choice of one of them. If any one of the three
elements is not there, the doctrine will not apply. According
to American Jurisprudence, 2d, Vol. 25, p. 652, if in truth there is
only one remedy, then the doctrine of election does not apply. In the
present case, as stated above, the NPA Act is an additional remedy
to the DRT Act. Together they constitute one remedy and, therefore,
the doctrine of election does not apply. Even according to Snell's
Principles of Equity (31st Edn., p. 119), the doctrine of election of
remedies is applicable only when there are two or more co-existent
remedies available to the litigants at the time of election which are
repugnant and inconsistent. In any event, there is no repugnancy
nor inconsistency between the two remedies, therefore, the doctrine
of election has no application.
(emphasis by counsel)
56. The lack of inconsistency between the two proceedings would make
the doctrine of election inapplicable. It was thus the contention that
doctrine of election has no relevance in the present case.
IV. A NALYSIS
57. Having heard and considered the submissions advanced by learned
senior counsel/counsel for the parties, we now proceed to analyse the
law at hand.
58. The common thread that runs through each of the impugned orders
is one of guarantee. In all these orders, the NCLAT or the NCLT, has
either rejected or permitted initiation of CIRP against the corporate
debtor in question. The underlying corporate debtor is either the
principal debtor in a guarantee or the surety/guarantor itself. Thus,
all the issues herein run within the four corners of guarantee and the
IBC.
23



A. H ISTORY OF LAWS RELATING TO INSOLVENCY , RECONSTRUCTION , RECOVERY
OF DUES , ETC . AND THE OBJECTS / PURPOSES OF THE I BC
59. It would not be inapt at this stage to trace the objects/purposes the
IBC seeks to achieve and the history of the laws in India in related
fields.
60. IBC is a comprehensive legislation which has ushered in a regulatory
regime governing all aspects of insolvency and bankruptcy and
providing for insolvency resolution of all entities in India, be it
corporate or individual.
61. The preamble of the IBC introduces it is an “Act to consolidate and
amend the laws relating to reorganisation and insolvency resolution
of corporate persons, partnership firms and individuals in a time
bound manner for maximisation of value of assets of such persons,
to promote entrepreneurship, availability of credit and balance the
interests of all the stakeholders including alteration in the order of
priority of payment of Government dues and to establish an
Insolvency and Bankruptcy Board of India, and for matters connected
therewith or incidental thereto .”
62. The key objectives of the IBC, evident from its preamble, are as
follows:
i) to consolidate and amend the laws relating to re-organisation
and insolvency resolution of corporate persons, partnership
24



firms and individuals to provide for a time bound insolvency
resolution mechanism;
ii) to ensure maximization of value of assets;
iii) to promote entrepreneurship;
iv) to increase availability of credit;
v) to balance the interests of all the stakeholders including
alteration in the order of priority of payment of Government
dues;
vi) to establish an Insolvency and Bankruptcy Board of India as a
regulatory body; and
vii) to provide procedure for connected and incidental matters.
63. Historically, prior to the enactment of the IBC, several laws pertaining
to insolvency and recovery were in operation in different fields
throughout the country. While the IBC subsumed most of them, the
expanse of the remaining few have been limited to recovery only
subject to certain provisions of the IBC.
64. To wit, the Presidency Towns Insolvency Act, 1909 was there for the
three-presidency towns of Calcutta, Madras and Bombay and the
Provincial Insolvency Act, 1920 covered areas beyond the presidency
towns. These two legislations governed individuals and partnerships.
However, they stand repealed with the enactment of the IBC.
Insolvency of corporate entities was dealt with initially under the
Companies Act, 1956 and thereafter under its successor legislation,
i.e., the Companies Act, 2013. It is however, important to note that
25



the provisions relating to winding up and liquidation of a company in
the new avatar of the Companies Act, i.e., the Act of 2013 were not
notified and therefore till the time of enactment of the IBC, the
provisions of the earlier version of the Companies Act, i.e., the Act of
1956 governed proceedings for winding up and liquidation of
companies. Yet another legislation called the Sick Industrial
42
Companies (Special Provisions) Act, 1985 was enacted with the
stated purpose of timely detection of sick and potentially sick
industrial companies and speedy determination of remedial and/or
preventive measures. Though the repealing Act of SICA was enacted
much earlier, it was notified upon the IBC coming into effect.
65. Two other legislations, viz. the Recovery of Debts Due to Banks and
43
Financial Institutions Act, 1993 and the Securitization and
Reconstruction of Financial Assets and Enforcement of Security
44
Interest Act, 2002 were suitably amended to ensure that the
provisions of the IBC held sway over the provisions thereof.
Interestingly, the DRT Act was rechristened to Recovery of Debts and
45
Bankruptcy Act, 1993 symbolizing that recovery and bankruptcy
(i.e., insolvency resolution) were to go hand in hand. In fact, Debt
Recovery Tribunals have been specified or designated to be the

42
SICA
43
DRT Act
44
SARFAESI Act
45
RDB Act
26



Adjudicating Authorities in Part III of the IBC for insolvency resolution
of individuals and partnership firms.
66. The need for enactment of the IBC may be noted, briefly. As outlined
above, prior to the advent of the IBC, the insolvency regime was
multi-pronged and highly fragmented. The two Insolvency Acts of
1909 and 1920, apart from being archaic, posed practical difficulties
inasmuch as the two created different fora and different procedures
for insolvency adjudication of similarly circumstanced persons at two
different places. There was one set of procedure and fora for the
Presidency towns of Calcutta, Bombay and Madras and another for
the rest of India. The same failed to adapt to the needs of the quick-
changing commercial world, leading to delays in adjudication. Insofar
as the Companies Act, 1956 is concerned, the same provided for
initiation of proceedings for winding up of a company if the company
was unable to pay its debt; and if a petition for winding up were
admitted by the Company Court, liquidation was inevitable unless a
viable scheme for restructuring and repayment passed muster before
such Court. There was no provision mandating resolution of
insolvency prior to liquidation. Furthermore, there was no timeline
within which even liquidation of the company was to be accomplished.
This too led to delays. SICA also proved to be ineffective. Dishonest
persons at the helm of the sick industrial company took advantage of
the suspension of all legal proceedings against the subject company
coupled with the procedural delays in conclusion of the proceedings
27



before the two Boards (i.e., the Board for Industrial and Financial
Reconstruction and the Appellate Authority Industrial and Financial
Reconstruction) and continued to remain in control of the subject
company. The worth of the company in almost all such cases got
eroded to such an extent that revival became impossible. The
DRT/RDB Act and the SARFEASI Act also failed to achieve timely
recovery despite statutorily prescribed timelines. This led to the
deterioration of the value of assets of the debtor, which were the
ultimate security for the debts owed by the secured creditor.
67. The aforesaid drawbacks in the then existing bankruptcy framework
necessitated a more unified and focused legislation which ultimately
took the shape of the present Code. There are numerous judgments
by now starting from Innoventive Industries Limited v. ICICI
46
Bank that have touched upon the scheme of the IBC and provided
an overview thereof. The same is, thus, not being repeated here
again.
68. It has consistently been found that recovery is not the object of
proceedings under the IBC. We propose to discuss this in some detail,
in a later segment. Suffice to observe, the idea behind such a
statement is that a proceeding under the IBC is primarily focused on
insolvency resolution of the debtor (whether corporate or otherwise)
and although recovery is incidentally effected, the proceeding is

46
(2018) 1 SCC 407
28



actually not meant to facilitate recovery of dues only of the person
who initiated the proceeding. The expression “ availability of credit and
balance the interests of all the stakeholders including alteration in the
order of priority of payment of Government dues and to establish an
Insolvency and Bankruptcy Board of India” in the preamble indicates
that only. In fact, it is a time bound composite process involving
insolvency resolution and recovery upon shifting the control of the
corporate debtor and its assets from the hands of its
promoters/directors to a Resolution Professional, who is ultimately
guided by the Committee of Creditors, such that the interests of all
stakeholders are balanced.
69. However, if an application for initiation of CIRP is filed, it would be
nigh impossible for one to probe the mental process or thought of any
applicant and ascertain as to what drove him/her/it to file the
application. This is so because any proceeding based on an application
either under section 7 or section 9 of the IBC for initiation of a CIRP
would necessarily be summary in nature and is, therefore, to be
decided on the basis of affidavit evidence. In such a situation, if an
application filed by either a financial creditor under section 7 of the
IBC or an operational creditor under section 9 thereof is otherwise fit
to be admitted, can the Adjudicating Authority (NCLT) refuse to admit
such an application on the ground that the object of the said
application was recovery?
29



70. Pertinently, the common ground provided under both section 7 as well
as section 9 for lodging an application before the Adjudicating
Authority (NCLT) is default only. None of the two sections bar
approach to the NCLT for the purpose of recovery. At the same time,
it cannot be gainsaid that there can also be malicious proceedings
aimed at arm twisting the debtors whether corporate or otherwise.
71. The question as to whether or not an application under section 7 or
section 9 should be admitted, would have to be answered upon an
analysis of two major aspects, i.e., default and legally enforceable
debt, i.e., debt that has fallen due. As already indicated by this Court
in Innoventive Industries Limited (supra), the test for admission
of an application under section 7 is different from that under section
9 of the IBC, i.e., if there is a bona fide dispute as regards the debt
due, an application under section 9 would not be admitted; however,
presence of such dispute is inconsequential insofar as an application
under section 7 is concerned. If the analysis of the aforesaid two
aspects leads to affirmative results, i.e., if the records before the NCLT
convincingly demonstrate default and legally enforceable debt (which
is not disputed in case of operational creditor), admission would be
inevitable irrespective of the motive with which the application might
have been filed.
72. The fact that recovery is as central to the process of insolvency
resolution as resolution itself would also be evident from the fact that
upon an application under section 7 or section 9 being admitted, the
30



decision as regards the viability of the resolution plan which, inter
alia , provides for payment of the dues of the creditors is taken by the
CoC, which is constituted chiefly by the financial creditors. It is any
body’s guess that decision taken by the creditors would be in their
best interest, i.e., to bolster recovery. In fact, it cannot be denied that
maximization of the value of the corporate debtor's assets is also to
enure to the benefit of creditors.
B. R E : SIMULTANEOUS PROCEEDINGS
73. In cases where the application was rejected, reliance was chiefly
placed on Vishnu Kumar Agarwal (supra). The relevant portion
from such decision reads thus:
32. 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.
74. It was, thus, held that once an application stood admitted, either
against the principal borrower or the guarantor, no further application
could be maintained against the guarantor or co-guarantor or
31



principal borrower. Following this, the impugned orders too, were
passed by the respective tribunals, rejecting the initiation of CIRP.
75. An appeal was carried to this Court from Vishnu Kumar Agarwal
(supra); however, the parties having reached a settlement, the
47
appeal stood disposed of without expression of any opinion on the
merits thereof.
76. Conversely, the impugned order(s) allowing CIRP to be initiated
simultaneously placed reliance on a judgment of the NCLAT in Athena
Energy Ventures (supra). NCLAT in Athena Energy Ventures
(supra) preferred not to follow Vishnu Kumar Agarwal (supra) for
the reason as under:
19. It is clear that in the matter of guarantee, CIRP can proceed
against Principal Borrower as well as Guarantor. The law as laid down
by the Hon’ble High Courts for the respective jurisdictions, and law
as laid down by the Hon’ble Supreme Court for the whole country is
binding. In the matter of Piramal, the Bench of this Appellate Tribunal
“interpreted” the law. Ordinarily, we would respect and adopt the
interpretation but for the reasons discussed above, we are unable to
interpret the law in the manner it was interpreted in the matter of
Piramal. For such reasons, we are unable to uphold the Judgement
as passed by the Adjudicating Authority.
77. The reasoning against simultaneous proceedings, at first blush, would
seem simple: one debt, one proceeding. However, this reasoning was
considered and negatived by this Court in BRS Ventures (supra),
which held as under:
28. Sub-section (2) of Section 60 contemplates separate or
simultaneous insolvency proceedings against the corporate debtor
and guarantor. Therefore, sub-section (3) of Section 60 provides that
if CIRP in respect of the corporate guarantor is pending before an
adjudicating authority and if the CIRP against the corporate debtor is

47 th
Order dated 16 December, 2024 in Civil Appeal No. 878 of 2019.
32



pending before another adjudicating authority, CIRP proceedings
against the corporate guarantor must be transferred to the
adjudicating authority before whom CIRP in respect of the corporate
debtor is pending. Thus, consistent with the basic principles of the
Contract Act that the liability of the principal borrower and surety is
coextensive, the IBC permits separate or simultaneous proceedings
to be initiated under Section 7 by a financial creditor against the
corporate debtor and the corporate guarantor.
78. Thus, the question, whether simultaneous proceedings against the
corporate debtor and/or the guarantor(s) can be maintained or not,
is no longer res integra . All the arguments that have been canvassed
before us, including the interpretation of sub-section (8) of section 5
and sub-section (2) of section 60 of the IBC, as well as regulation 8
of the 2016 Regulations read with Schedule-I, Form C, have been
considered by the coordinate bench in BRS Ventures Investments
Ltd. (supra).
79. The appeals could be disposed of on this finding itself. However, there
is something more that lies ahead. The aggrieved parties urge us to
go beyond merely restating the law and applying it to the dispute at
hand, asserting that this by itself would be inadequate. What they call
upon us is to lay down further modalities and restrictions governing
the process. We consider these submissions hereafter.
C. R E : IBC AS RECOVERY PROCEEDINGS
80. The arguments against simultaneous proceedings are also premised
on the contention that the process under the IBC is not intended to
be converted to recovery proceedings. To initiate insolvency against
33



several companies for recovery of just one debt would be against the
object and ethos of the Code.
81. That the IBC is not purely recovery proceedings has been noticed. In
view of the preamble of the Code which envisions maximization of
value of assets , principles of the Contract Act cannot be made
applicable to the IBC stricto sensu . Reliance has been placed on
48
Swiss Ribbons (P) Ltd. v. Union of India and Essar Steel
49
(India) Ltd. Committee of Creditors v. Satish Kumar Gupta .
82. This submission is further buttressed by the discretionary powers
vested with the adjudicating authority, being the NCLT, at the time of
admission of a petition by the financial creditor. The use of ‘may’ in
section 7 as against ‘shall’ in section 9 — its analogous provision —
signifies that the adjudicating authority can and must consider
circumstances beyond the obvious debt, default, and the conditions
prescribed under section 7. Should the adjudicating authority
consider, in its prudence, not to initiate proceedings against the
creditor, it may decline admission of the petition. To further this
contention, reliance is placed on Axis Bank Ltd. v. Vidarbha
50
Industries Power Ltd. , relevant portion whereof reads thus:
76. The fact that Legislature used ‘may’ in Section 7(5)(a) of the IBC
but a different word, that is, ‘shall’ in the otherwise almost identical
provision of Section 9(5)(a) shows that ‘may’ and ‘shall’ in the two
provisions are intended to convey a different meaning. It is apparent
that Legislature intended Section 9(5)(a) of the IBC to be mandatory
and Section 7(5)(a) of the IBC to be discretionary. An application of

48
(2019) 4 SCC 17
49
(2020) 8 SCC 531
50
(2022) 8 SCC 352
34



an Operational Creditor for initiation of CIRP under Section 9(2) of
the IBC is mandatorily required to be admitted if the application is
complete in all respects and in compliance of the requisites of the IBC
and the rules and regulations thereunder, there is no payment of the
unpaid operational debt, if notices for payment or the invoice has
been delivered to the Corporate Debtor by the Operational Creditor
and no notice of dispute has been received by the Operational
Creditor. The IBC does not countenance dishonesty or deliberate
failure to repay the dues of an operational creditor.
77. On the other hand, in the case of an application by a Financial
Creditor who might even initiate proceedings in a representative
capacity on behalf of all financial creditors, the Adjudicating Authority
might examine the expedience of initiation of CIRP, taking into
account all relevant facts and circumstances, including the overall
financial health and viability of the Corporate Debtor. The
Adjudicating Authority may in its discretion not admit the application
of a Financial Creditor.
78. The Legislature has consciously differentiated between Financial
Creditors and Operational Creditors, as there is an innate difference
between Financial Creditors, in the business of investment and
financing, and Operational Creditors in the business of supply of
goods and services. Financial credit is usually secured and of much
longer duration. Such credits, which are often long term credits, on
which the operation of the Corporate Debtor depends, cannot be
equated to operational debts which are usually unsecured, of a
shorter duration and of lesser amount. The financial strength and
nature of business of a Financial Creditor cannot be compared with
that of an Operational Creditor, engaged in supply of goods and
services. The impact of the non-payment of admitted dues could be
far more serious on an Operational Creditor than on a financial
creditor.
79. As observed above, the financial strength and nature of business
of Financial Creditors and Operational Creditors being different, as
also the tenor and terms of agreements/contracts with financial
creditors and operational creditors, the provisions in the IBC relating
to commencement of CIRP at the behest of an Operational Creditor,
whose dues are undisputed, are rigid and inflexible. If dues are
admitted as against the Operational Creditor, the Corporate Debtor
must pay the same. If it does not, CIRP must be commenced. In the
case of a financial debt, there is a little more flexibility. The
Adjudicating Authority (NCLT) has been conferred the discretion to
admit the application of the Financial Creditor. If facts and
circumstances so warrant, the Adjudicating Authority can keep the
admission in abeyance or even reject the application. Of course, in
case of rejection of an application, the Financial Creditor is not
denuded of the right to apply afresh for initiation of CIRP, if its dues
continue to remain unpaid.
35



*
86. Even though Section 7 (5)(a) of the IBC may confer discretionary
power on the Adjudicating Authority, such discretionary power cannot
be exercised arbitrarily or capriciously. If the facts and circumstances
warrant exercise of discretion in a particular manner, discretion would
have to be exercised in that manner.
87. Ordinarily, the Adjudicating Authority (NCLT) would have to
exercise its discretion to admit an application under Section 7 of the
IBC of the IBC and initiate CIRP on satisfaction of the existence of a
financial debt and default on the part of the Corporate Debtor in
payment of the debt, unless there are good reasons not to admit the
petition.
88. The Adjudicating Authority (NCLT) has to consider the grounds
made out by the Corporate Debtor against admission, on its own
merits. For example when admission is opposed on the ground of
existence of an award or a decree in favour of the Corporate Debtor,
and the Awarded/decretal amount exceeds the amount of the debt,
the Adjudicating Authority would have to exercise its discretion under
Section 7(5)(a) of the IBC to keep the admission of the application of
the Financial Creditor in abeyance, unless there is good reason not to
do so. The Adjudicating Authority may, for example, admit the
application of the Financial Creditor, notwithstanding any award or
decree, if the Award/Decretal amount is incapable of realisation. The
example is only illustrative.
83. Vidarbha Industries Power Ltd. (supra) is a decision which
expounds the law in great detail, inter alia , by considering the modal
verbs “may” and “shall” in sections 7(5)(a) and 9 (5)(a), IBC,
respectively, in the context of the only question arising for decision,
i.e., whether section 7(5)(a) is mandatory or a discretionary provision
(paragraph 57 of the report) and stresses on a reasonable and well-
founded, not arbitrary or capricious, judgment in the exercise of
discretion under section 7(5)(a) by the adjudicating authority.
84. We read in such decision abidance by the fundamental principle of
statutory interpretation: that the plain language of the statute
governs its express terms with all other interpretive aids, including
36



the preamble and the secondary sources serving only to clarify, and
not contradict, that meaning. In simple terms, when the words of
statute are clear and unambiguous, it must be given effect to as it
stands. A right created by statute cannot be restricted or taken away,
except by express statutory provision or necessary implication.
85. Having said so, if the rigours and conditions prescribed by the statute
are met, it must be left to the wisdom of the adjudicating authority
to admit a petition for initiation of CIRP. Precedents of this Court which
interpret section 7 to confer discretion upon the adjudicating
authority, have laid down the limitations thereto in considerable
detail. This view stands further fortified by this Court’s recent
decision, pronounced after orders were reserved in the present
appeals, in Power Trust (Promoter of Hiranmaye Energy Ltd.)
v. Bhuvan Madan (Interim Resolution Professional of
51
Hiranmaye Energy Ltd.) .
86. Thus, whilst approving that the IBC is not a recovery proceeding, we
negate the contention that CIRP can be prohibited against a guarantor
or co-borrower only on that ground. It seems prudent that the
rationale of a creditor obtaining a guarantee for its debt must be
realized to its fullest. A financial creditor, vested with rights under the
Code, must be able to exercise it. Equally so, the adjudicating
authority has the obligation to examine the application independently,
on its own merits.

51
2026 SCC OnLine SC 248
37



D. R E : E LECTION OF C LAIMS
87. The submissions extrapolated hereinabove would also raise a seminal
issue – one of election. It is settled law that a creditor can pursue
proceedings against multiple debtors, simultaneously. The question
is how the debt gets split. Can the creditor be compelled to claim part
against the debtor and the rest against the guarantor?
88. The argument before us has been that letting the creditor claim 100%
of the debt from both the principal debtor and the guarantor would
invariably allow the creditor two shots at recovery and voting rights
in two CoCs. This is against the object of the IBC.
89. We are not impressed and find no reason to accept this argument.
90. Restricting the claim of a creditor against a debtor or a guarantor is
likely to defeat the purpose of a guarantee. Since a guarantor’s
liability is co-extensive, forcing the creditor to elect would essentially
make it sacrifice part of its claim. This is not how a guarantee works,
particularly when the Code does not provide for such election.
91. Contentions were rightly advanced on the ‘clean slate’ doctrine under
the IBC. Reliance was placed on Ghanshyam Mishra (supra) and
Essar Steel (supra). If the argument is accepted that a creditor must
elect which part of the debt to enforce against the debtor or the
guarantor, the creditor might lose the right to claim the remaining
debt from either party after the CIRP concludes.
92. When election of remedies or claims is intended by the statute, such
a provision must be expressly provided for. For instance, under the
38



Motor Vehicles Act, 1988, claimants must choose between seeking
compensation under Section 163A (structured formula) or Section
166 (fault-based claim), as both are alternative and not cumulative
remedies. Section 163A provides no-fault liability, enabling claimants
to receive compensation on a fixed formula based on the second
schedule without proving negligence or wrongful conduct of the driver
or owner, whereas Section 166 requires the claimant to prove
negligence and just compensation is then determined as per the
guidance provided by judicial decisions pronounced from time to time.
93. The conspicuous absence of any such provision in the IBC implies that
no such restriction can be imposed on the creditor. The effect of
imposing a mandatory election of claims upon the creditor would
effectively take away the statutorily vested right to approach the NCLT
against one or both. In the absence of any statutory proscription
against filing such a claim, it would be unwarranted for this Court to
impose such a restriction.
94. Further, the argument that the creditor gets double voting power in
each of the CoCs is also incorrect. Albeit true that the creditor could
have such a benefit, but it must be borne in mind that such benefit is
in respect of separate CoCs for different debtors. The proceedings
against the guarantor and the debtor are separate and independent.
95. We, thus, agree with the contention advanced on behalf of the
creditors. The doctrine of election is not attracted since the pre-
requisites therefor are not satisfied.
39



E. R E : DOUBLE ENRICHMENT
96. If a creditor is permitted to initiate CIRP against multiple debtors, an
apprehension is raised that it might lead to recovery of dues more
than what it is entitled and, thereby, doubly enriching itself. It is
contended that the Code, as it stands today, does not envisage a
mechanism for prohibition of such double enrichment. There lies no
onus upon the creditor to disclose recovery of the debt or a part
thereof due to the debtor, from any other sources. Thus, the argument
flows, that permitting simultaneous proceedings against the corporate
debtor and the guarantor(s) would lead to a situation where the
creditor may realize more than what is due.
97. The concern underlying this submission is well founded. However, to
entirely bar proceedings against guarantors solely on this ground
would be an overextension of the principle. That apart, we are of the
view that sufficient safeguards exist as on date to prevent such double
enrichment. Regulation 12A of the 2016 Regulations sets up an
obligation upon the creditor to update its claim as and when it is
satisfied, either partly or fully, from any other source. Regulation 12A
reads as under:
12A. Updation of claim.
A creditor shall update its claim as and when the claim is satisfied,
partly or fully, from any source in any manner, after the insolvency
commencement date.
98. In addition to regulation 12A, obligation is also cast upon the
resolution professional to independently assess and update the claims
40



from time to time. Reference may be made to regulation 14 of the
2016 Regulations, which reads as under:
14. Determination of amount of claim:
(1) Where the amount claimed by a creditor is not precise due to any
contingency or other reason, the interim resolution professional or
the resolution professional, as the case may be, shall make the best
estimate of the amount of the claim based on the information
available with him.
(2) The interim resolution professional or the resolution professional,
as the case may be, shall revise the amounts of claims admitted,
including the estimates of claims made under subregulation (1), as
soon as may be practicable, when he comes across additional
information warranting such revision.
99. Profitable reference may also be made to the decision of this Court in
52
Maitreya Doshi v. Anand Rathi Global Finance Ltd. where it was
held:
37. If there are two borrowers or if two corporate bodies fall within
the ambit of corporate debtors, there is no reason why proceedings
under Section 7 of the IBC cannot be initiated against both the
Corporate Debtors. Needless to mention, the same amount cannot be
realised from both the Corporate Debtors. If the dues are realised in
part from one Corporate Debtor, the balance may be realised from
the other Corporate Debtor being the co-borrower. However, once the
claim of the Financial Creditor is discharged, there can be no question
of recovery of the claim twice over.
100. To reiterate, the contention that simultaneous proceedings must be
necessarily barred apprehending double enrichment is far-fetched
and stands rejected, particularly in view of the safeguards mentioned
hereinabove.
F. T HE NEED FOR REFORM

52
(2023) 17 SCC 606
41



101. It cannot be gainsaid that the issue of simultaneous proceedings has
gained traction only recently in view of judgments of this Court.
Submissions have been advanced by the learned senior
counsel/counsel regarding the absence of modalities for simultaneous
proceedings or group insolvency which are, according to them, of
considerable significance. Consequently, during the course of
arguments, we were urged to lay down guidelines and modalities for
the path ahead. These submissions, though not directly determinative
of the present controversy, could assume considerable importance in
addressing the broader issue involved.
102. What, however, cannot be ignored is that the legislature as well as
53
the Insolvency and Bankruptcy Board of India are aware of the
pitfalls and lacunae that follow. The Insolvency Law Committee in its
54
Report of February, 2020 had also noted the issue. The report was
referred by the NCLAT in Athena Energy Ventures (supra). We find
it apposite to refer to the relevant portion of the report as under:
7. ISSUES RELATED TO GUARANTORS
7.1. Under Section 128 of the Indian Contract Act, 1872, the liability
of a surety towards a creditor is coextensive with that of the principal
borrower. When a default is committed, the principal borrower and
the surety are jointly and severally liable to the creditor, and the
creditor has the right to recover its dues from either of them or from
55
both of them simultaneously. The Committee discussed whether in

53
IBBI
54
Insolvency and Bankruptcy Board of India, Report of the Insolvency Law Committee
(Mar. 2021), available at
https://ibbi.gov.in/uploads/whatsnew/7c9bde175431a4abb8c33bb105e1f2dd.pdf . (last
th
accessed on 24 December, 2025)
55
Pollock and Mulla, Indian Contract and Specific Relief Acts vol. II (12th edn.,
LexisNexis Butterworks 2006) p. 1814-1816
42



light of this rule of co-extensive liability of the surety and the principal
borrower, a creditor should be permitted to initiate CIRP against both
the principal borrower and its surety and whether it should be
permitted to file its claims in the CIRPs of both the principal borrower
and its surety.
Initiation of Concurrent Proceedings against the Principal Borrower &
the Guarantor
7.2. The Committee noted that the Appellate Authority, in Dr. Vishnu
56
Kumar Agarwal v M/s. Piramal Enterprises Ltd., has prevented
admission of multiple CIRP applications which were filed by the same
creditor for the same set of claims against different corporate debtors
by holding that: “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
57
Borrower’).”
7.3. The Committee noted that while, under a contract of guarantee,
a creditor is not entitled to recover more than what is due to it, an
action against the surety cannot be prevented solely on the ground
that the creditor has an alternative relief against the principal
58
borrower. Further, as discussed above, the creditor is at liberty to
proceed against either the debtor alone, or the surety alone, or jointly
59
against both the debtor and the surety. Therefore, restricting a
creditor from initiating CIRP against both the principal borrower and
the surety would prejudice the right of the creditor provided under
the contract of guarantee to proceed simultaneously against both of
them.
7.4. Further, Section 60(2) of the Code provides that when a CIRP or
liquidation process against a corporate debtor is pending before an
Adjudicating Authority, any insolvency resolution, liquidation or
bankruptcy proceeding against any guarantor of that corporate
debtor should also be initiated before the same Adjudicating
Authority. Similarly, Section 60(3) requires transfer of any such
proceeding which may be pending before any court or tribunal to the
Adjudicating Authority dealing with the CIRP or liquidation process of
the corporate debtor. Therefore, as the Code does require

56
Company Appeal (AT) (Insolvency) No. 346/2018, NCLAT. Decision Date - 8 January
2019
57
Dr. Vishnu Kumar Agarwal v M/s. Piramal Enterprises Ltd, Company Appeal (AT)
(Insolvency) No. 346/2018, NCLAT. Decision Date - 8 January 2019
58
Bank of Bihar Ltd v Damodar Prasad & Another AIR 1969 SC 297
59
State Bank of India v Indexport Registered and Ors. AIR 1992 SC 1740; Jagannath
Ganeshram Agarwala v Shivnarayan Bhagirath AIR 1940 Bom 247
43



proceedings against a corporate debtor and its guarantors to be
simultaneously heard by the same Adjudicating Authority, the
Committee was of the view that the Code in fact, envisages initiation
of concurrent proceedings against both a corporate debtor and its
sureties. Given this, the Committee recommended that a
creditor should not be prevented from proceeding against
both the corporate debtor and its sureties under the Code.
7.5. However, the Committee noted that the Appellate Authority has,
in certain cases, taken a view contrary to its decision taken in the
60
Piramal Enterprises Ltd. case. For example, in Edelweiss Asset
Reconstruction Company Limited v Sachet Infrastructure Pvt. Ltd. &
61
Ors., the Appellate Authority has permitted simultaneous initiation
of CIRP against the principal borrower and its corporate guarantors.
Further, the Appellate Authority has also admitted a petition to review
62
its aforesaid judgement in the Piramal Enterprises Ltd. case. Given
this, the Committee decided that no legal changes may be
required at the moment, and this issue may be left to judicial
determination.
7.6. It was also represented before the Committee that in certain
cases creditors extend loans to a debtor solely by relying on the
contract of guarantee provided by a thirdparty surety, and without
considering the commercial viability of the debtor and its ability to
repay the debt. The Committee deprecated this practice, and agreed
that creditors should necessarily carry out adequate due diligence
regarding the debtor’s financial position and should not extend a loan
solely by relying on a contract of guarantee without assessing the
financial and technical feasibility of the respective project.
Filing of Claims by a Creditor in Proceedings of the Principal Borrower
& the Guarantor
7.7. The Committee further discussed whether, in cases where CIRP
has already been initiated against the principal borrower and the
surety, a creditor should be allowed to file claims (with respect to the
same set of debts) in the CIRP of both the corporate debtors. The
Appellate Authority, in Dr. Vishnu Kumar Agarwal v M/s. Piramal
63
Enterprises Ltd., had opined that “ for same set of debt, claim cannot
be filed by same ‘Financial Creditor’ in two separate ‘Corporate
Insolvency Resolution Processes ’”.

60
Dr. Vishnu Kumar Agarwal v M/s. Piramal Enterprises Ltd., Company Appeal (AT)
(Insolvency) No. 346/2018, NCLAT. Decision date – 8 January 2019
61
Company Appeal (AT) (Insolvency) No. 377/2019, NCLAT. Decision date – 20 September
2019
62
TUF Metallurgical Pvt. Ltd. v Wadhwa Glass Processors Pvt. Ltd., Company Appeal (AT)
(Insolvency) No. 611/2019, NCLAT. Decision date – 31 May 2019
63
ibid
44



7.8. However, as discussed above, the principal borrower and the
surety being jointly and severally liable to the creditor is a key feature
of a contract of guarantee. Therefore, the very object of a contract of
guarantee would be prejudiced if the creditor is prohibited from filing
64
claims in the CIRP of both the principal borrower and the surety.
Even in the First ILC Report, this Committee, while discussing the
scope of moratorium under Section 14 vis-à-vis the assets of a surety
of the corporate debtor, had observed that the “ characteristic of such
contracts i.e. of having remedy against both the surety and the
corporate debtor, without the obligation to exhaust the remedy
against one of the parties before proceeding against the other, is of
utmost important for the creditor and is the hallmark of a guarantee
contract, and the availability of such remedy is in most cases the
65
basis on which the loan may have been extended. ” If a creditor is
denied the contractual right to proceed simultaneously against the
corporate debtor and the surety, the ability of the creditor to recover
its debt may be seriously impaired.
7.9. As the right to simultaneous remedy is central to a
contract of guarantee, the Committee suggested that in cases
were both the principal borrower and the surety are
undergoing CIRP, the creditor should be permitted to file
claims in the CIRP of both of them. Since, as the Code does
not prevent this, the Committee recommended that no
amendments were necessary in this regard.
7.10. It was brought to the Committee that this right may be misused
by a creditor to unjustly enrich herself by recovering an amount
greater that what is owed to her. However, the right to simultaneous
remedy under a contract of guarantee does not entitle a creditor to
recover more than what is due to her, and the Committee agreed
that upon recovery of any portion of the claims of a creditor
in one of the proceedings, there should be a corresponding
revision of the claim amount recoverable by that creditor from
the other proceedings.
(in-line citations and emphasis in original)
103. Considerable jurisprudence of the IBC, including concepts such as
simultaneous proceedings and group insolvency has flowed from
judgments of this Court as well as of the NCLAT and the NCLT, the
legislature as well as the IBBI has been receptive to the judicial

64
Bank of Bihar Ltd v Damodar Prasad & Another AIR 1969 SC 297
65
Ministry of Corporate Affairs, Report of the Insolvency Law Committee (2018) para
5.9, accessed 26 November 2019
45



nudges and has brought out necessary policy changes from time to
time.
104. We, however, decline to lay down guidelines as proposed; and for
good reason. IBC is a product of a well-thought, deliberated, and
extensively researched policy framework. The rules and regulations,
too, are framed thereunder after rigorous research. Furthermore,
though the IBC primarily operates in the judicial and quasi -judicial
arena, its effects are far reaching, often affecting banking, economy,
and other sectors. To venture into unchartered territories, wearing
the legislative hat, would be nothing short of judicial exploration,
which we do not propose to do. We leave it to the wisdom of the
legislature and the IBBI to frame appropriate policy framework and
guidelines with an inclusive consultative process of all the
stakeholders, if so required.
ONCLUSION
V. C
105. In view of the foregoing reasons, Civil Appeal Nos. 6093 of 2019,
6094 of 2019, and 2715 of 2020 are allowed and the orders impugned
therein are set aside.
106. For the same reasons, leave is granted in SLP (C) No. 21778 of 2019
and the appeal stands allowed.
107. Civil Appeal Nos.827-828 of 2021, 4018 of 2023 and 7231 of 2024,
however, stand dismissed.
108. Keeping in mind that a settlement was entered by the impugned order
in Civil Appeal No. 40 of 2020 before the NCLAT, and the civil appeal
46



hinges on the narrow compass of constitution of CoC which approved
the withdrawal of petition filed by ICICI, we are inclined to dismiss
the civil appeal. Accordingly, the civil appeal stands dismissed.
However, if so advised, the appellant may pursue independent
proceedings before the Adjudicating Authority in accordance with law.
109. Since we have restricted ourselves to the point of law while deciding
the appeals, all contentions on merits are kept open to be adjudicated
by the adjudicating authority.
110. Pending interim applications stand disposed of. Interim orders, if any,
stand vacated.
111. We record our appreciation for the assistance rendered by learned
senior counsel/counsel for the parties.

………..…………………J.
(DIPANKAR DATTA)



..…………………………………………J.
(AUGUSTINE GEORGE MASIH)


NEW DELHI;
FEBRUARY 26, 2026.
47