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2026 Supreme(Online)(SC) 1066
SUPREME COURT OF INDIA
HON'BLE MR. JUSTICE DIPANKAR DATTA, HON'BLE MR. JUSTICE AUGUSTINE GEORGE MASIH
ICICI BANK LIMITED – Appellant
Versus
ERA INFRASTRUCTURE (INDIA) LIMITED – Respondent
C.A. No.-006094-006094 - 2019
For the Appellants/Petitioners: []
For the Respondents: []
Simultaneous insolvency proceedings against a principal debtor and its guarantor are maintainable under the Code. The principle of co-extensive liability applies, and creditors are not required to elect between remedies, provided mechanisms exist to update claims and prevent double recovery.
Headnote:(A) Insolvency and Bankruptcy Code - Sections 7, 60(2) - Indian Contract Act - Section 128 - Simultaneous proceedings against principal debtor and guarantor - Corporate Insolvency Resolution Process - Co-extensive liability of surety - Creditor has right to proceed against principal borrower and surety simultaneously - Statute does not prevent concurrent insolvency initiation against both parties. (Paras 47-50, 77-78)
(B) Doctrine of Election - Applicability - Doctrine not attracted to proceedings under the Code - Creditor is not required to choose between remedies against principal debtor and guarantor - Lack of statutory provision mandating election - Simultaneous claims are permissible and not repugnant. (Paras 90-95)
(C) Double Enrichment - Safeguards - Debt recovery must not exceed amount due - Regulations 12A and 14 of the 2016 regulations provide mechanisms to update claims - Resolution professional responsible for assessment - Mechanisms sufficiently prevent unjust enrichment without barring simultaneous actions. (Paras 96-100)
Facts of the case:
Several appeals were filed before the Court involving instances where creditors initiated insolvency proceedings against both a principal debtor and a corporate guarantor. Lower authorities had delivered conflicting orders, with some rejecting the second application based on a belief that only one proceeding could be maintained for a single debt, while others permitted simultaneous action, citing the nature of guarantee contracts.
Findings of Court:
The Court held that simultaneous proceedings against both the principal debtor and the guarantor are legally maintainable. It emphasized that the statutory framework does not prohibit the creditor from pursuing recovery against multiple entities simultaneously when such rights exist under contract law.
Issues: The central question was whether simultaneous insolvency processes can be maintained against both a principal borrower and its guarantor, and whether a creditor must elect between these remedies to avoid double enrichment.
Ratio Decidendi: Because the liability of a surety is co-extensive with that of the principal debtor, the creditor is entitled to initiate proceedings against both. The Code lacks a provision for mandatory election of remedies, and existing regulations ensuring the update and disclosure of claims adequately protect against the risk of recovering more than the total admitted debt.
Result: Appeals allowing simultaneous proceedings were allowed; appeals challenging the maintainability of such proceedings were dismissed.
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 |
I. INTRODUCTION
The Judge is not to innovate at pleasure. He is not a knight errant roaming at will in pursuit of his own ideal of beauty or of goodness.11 Eera v. State (NCT of Delhi), (2017) 15 SCC 133 (Nariman, J. quoting Cardozo, Nature of Judicial Process, p. 141)
1. These appeals, arising out of different orders of the National Company Law Appellate Tribunal22 NCLAT and the National Company Law Tribunal33 NCLT, 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 Corporate Insolvency Resolution Process44 CIRP under the Insolvency and Bankruptcy Code, 201655 IBC or Code, used interchangeably 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 Investments Ltd. v. SREI Infrastructure Finance Ltd. & Anr.66 (2025) 1 SCC 456. 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 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 touch
