Simultaneous CIRP Against Principal Borrower and Corporate Guarantor Held Maintainable

The Principal Bench of the National Company Law Appellate Tribunal dismissed an appeal challenging liquidation proceedings against Chamber Constructions Private Limited and upheld the continuation of liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016. 

The Appellate Tribunal rejected the contention that insolvency proceedings against the corporate guarantor should remain stayed because parallel CIRP proceedings were already pending against the principal borrower, RNA Corp Pvt. Ltd. 

The Tribunal relied upon the subsequent Supreme Court ruling in ICICI Bank Ltd. v. Era Infrastructure (India) Ltd. to hold that simultaneous CIRP proceedings against a principal borrower and corporate guarantor are legally maintainable. 

The judgment also reiterates that withdrawal under Section 12A of the IBC is impermissible once liquidation has commenced and that any post-liquidation settlement must necessarily proceed through the Section 230 route under the Companies Act, 2013.