Corporate Guarantor Cannot Resist CIRP on Ground of Available Primary Security

The National Company Law Tribunal, Ahmedabad Bench, has held that a financial creditor is entitled to initiate Corporate Insolvency Resolution Process (CIRP) against a corporate guarantor without first enforcing the primary security created by the principal borrower. 

Reiterating that the liability of a guarantor under Section 128 of the Indian Contract Act is co-extensive with that of the principal borrower, the Tribunal admitted the Section 7 application after finding that the existence of financial debt and default stood established and were, in fact, admitted by the corporate guarantor.