Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(NCLT) 1328

NATIONAL COMPANY LAW TRIBUNAL
Sanjiv Jain, Judicial Member, Venkataraman Subramaniam, Technical Member
Central Bank Of India – Appellant
Versus
Candid Industries Ltd. – Respondent
CP(IB)/109(CHE)/2025

Advocates:
For the Appellants/Petitioners: Clara Hepsiba S.
For the Respondents: Ashlin Christo

The liability of a corporate guarantor is co-extensive with the principal debtor, and a financial creditor can initiate separate or simultaneous insolvency proceedings against both under section 7 of the Insolvency and Bankruptcy Code, 2016.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 7 - Corporate Insolvency Resolution Process - Default of financial debt by Corporate Guarantor - Liability of guarantor is co-extensive with principal debtor - Financial creditor can file separate or simultaneous applications against corporate debtor and corporate guarantor - (Para 14, 17)

(B) Insolvency and Bankruptcy Code, 2016 - Section 60(2) - Jurisdiction - Adjudicating Authority may entertain insolvency applications against corporate guarantors where proceedings against the principal borrower are already pending - (Para 17)

Facts of the case:
The petitioner extended credit facilities to a company for which the respondent served as a corporate guarantor. Upon the principal debtor’s default and classification as a Non-Performing Asset, the consortium banks initiated recovery proceedings. Despite a Recovery Certificate being issued by the Debt Recovery Tribunal, the debt remained unpaid. The principal debtor was already admitted into Corporate Insolvency Resolution Process (CIRP) in a separate petition.

Findings of Court:
The tribunal observed that the respondent guaranteed the financial debt and remained in default. Relying on judicial precedents regarding the co-extensive liability of guarantors and the maintainability of simultaneous proceedings under the Code, the tribunal directed the initiation of CIRP against the respondent.

Issues: Whether the petition is maintainable against the corporate guarantor for the debt of the principal borrower and whether CIRP can be initiated against a guarantor when the principal borrower is already undergoing insolvency proceedings.

Ratio Decidendi: The liability of a surety is co-extensive with that of the principal debtor, and the code explicitly permits separate or simultaneous applications against corporate debtors and corporate guarantors. When insolvency proceedings against the principal debtor are pending, the NCLT having jurisdiction can adjudicate the insolvency of the corporate guarantor.

Result: Petition admitted; Corporate Insolvency Resolution Process initiated against the respondent.

Table of Content
1. petition details, background of financial debt, and existence of default by the corporate guarantor. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10)
2. analysis of maintainability, jurisdiction, and the co-extensive liability of the corporate guarantor. (Para 11 , 12 , 13 , 14 , 15 , 16 , 17)
3. admission of the petition, appointment of irp, and declaration of moratorium under the code. (Para 19 , 20 , 21 , 22 , 23)

IN THE NATIONAL COMPANY LAW TRIBUNAL

DIVISION BENCH–I, CHENNAI

ATTENDANCE CUM ORDER SHEET OF THE HEARING

HELD ON 02.04.2026 THROUGH VIDEO CONFERENCING

CORAM: HON’BLE SHRI. SANJIV JAIN, MEMBER (JUDICIAL)

HON’BLE SHRI. VENKATARAMAN SUBRAMANIAM, MEMBER (TECHNICAL)

APPLICATION NUMBER :

PETITION NUMBER : CP(IB)/109(CHE)/2025

NAME OF THE PETITIONER(S) : Central Bank of India

NAME OF THE RESPONDENT(S) : M/s. Candid Industries Ltd.

UNDER SECTION : Sec 7 Rule 4 of IBC, 2016

ORDER

Present: Ms. Clara Hepsiba S., Ld. Counsel for the Petitioner/.

Shri. Ashlin Christo, Ld. Counsel for the Respondent/Corporate Debtor.

Vide separate order pronounced in the Open Court, petition is admitted. CIRP is initiated against the Corporate Debtor, Candid Industries Ltd.

Shri. Duraisamy is appointed as the IRP.

O R D E R

(Heard Through Hybrid Mode)

1. This petition CP IB 109 CHE 2025 has been filed by Central Bank of India, financial creditor on 22.04.2025 under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “the Code”) read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred to as “the AAA Rules”) through Mr. Santosh Kumar Santosh , Assistant General Manager for initiating Corporate Insolvency Resolution Process (hereinafter referred to as “CIRP”) in respect of Candid Industries Limited, the Corporate Debtor (CD).

2. It is stated that Petitioner Bank along with other banks sanctioned credit facility to Best & Crompton Engineering Projects Limited for which respondent Candid Industries Limited (Future Tech Industries Limited) stood as Corporate Guarantor.

3. In Part III , the petitioner recommended the name of V.Duraisamy with registration no IBBI/IPA-002/IP-N00609/2018-2019/11862 as Interim Resolution Professional . Written consent is also obtained.

4. Part IV deals with the details of financial debt. The petitioner sanctioned various working capital limits to the Principal Debtor for Rs. 120 crores on 30.11.2010. It is stated that amount in default as per Demand Notice issued by DRT on 14.08.2018 was Rs.507,22,85,234.93 (Rupees Five Hundred and Seven Crores Twenty-two Lakhs Eighty-five Thousand Two Hundred Thirty-four and paise Ninety-three Only) out of which Rs.213,34,70,741/- (Rupees Two Hundred and Thirteen Crores and Thirty-four Lakhs and Seventy Thousand and Seven Hundred and Forty-one Only) were due and payable to the petitioner. It is stated that as on 08.07.2024 the amount due to petitioner Central Bank of India was Rs. 318,89,95,472/-. A separate calculation sheet has been enclosed.

5. The petitioner relies on following documents to substantiate its claims:

PARTICULARS OF FINANCIAL DEBT [DOCUMENTS, RECORDS AND EVIDENCE OF DEFAULT]
1. Particulars of security held, if any, the date of its creation, and its estimated value as per the creditor: Security for due repayment of the credit facilities of Rs.300 Cr. availed by M/s Best and Crompton Engineering Projects Ltd., Chennai from CBI Consortium by mortgage of the Immovable Property of the Company situated at within the Thiru-Vik-Ka Industrial Estate, Guindy, Chennai 600 032 in the state of Tamilnadu in addition to the property situated at B/1- 504, Marathon Innova, Opp. Peninsula Corporate Park, off. Ganapatrao Kadam Marg, Lower Parel, Mumbai, already charged. Date of Creation: 12.10.2011 and subsequently modified and registered. Estimated Value: Not Valued Certificate of registration of charge issued by the registrar of companies is annexed and marked as Annexure - I(3)
2. Part

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2026 Supreme(Online)(NCLT) 1328

NATIONAL COMPANY LAW TRIBUNALSanjiv Jain, Judicial Member, Venkataraman Subramaniam, Technical MemberCentral Bank Of India – AppellantVersusCandid Industries Ltd. – RespondentCP(IB)/109(CHE)/2025

The liability of a corporate guarantor is co-extensive with the principal debtor, and a financial creditor can initiate separate or simultaneous insolvency proceedings against both under section 7 of the Insolvency and Bankruptcy Code, 2016.

NATIONAL COMPANY LAW TRIBUNAL
Sanjiv Jain, Judicial Member, Venkataraman Subramaniam, Technical Member
Central Bank Of India – Appellant
Versus
Candid Industries Ltd. – Respondent
CP(IB)/109(CHE)/2025