The Supreme Court has held that simultaneous Corporate Insolvency Resolution Process (CIRP) proceedings can be initiated against both the principal borrower and the corporate guarantor for the same debt. The proceedings are legally permissible and consistent with established principles of guarantee under contract law.
The bench of Justice Dipankar Datta has observed that the doctrine of election applies only where remedies are inconsistent. Proceedings against a borrower and guarantor are not mutually exclusive. Safeguards within the IBC framework prevent unjust enrichment or double recovery.
The appeals arose from multiple NCLT and NCLAT orders where financial creditors had either been denied permission to initiate CIRP against a corporate debtor because insolvency proceedings were already pending against its guarantor, or faced challenges to parallel proceedings initiated against both borrower and guarantor.
Several tribunals had relied on the NCLAT’s decision in Vishnu Kumar Agarwal v. Piramal Enterprises Ltd., which held that once a Section 7 application for a particular debt was admitted against one corporate debtor (principal borrower or guarantor), a second application for the same debt could not be admitted against another.
However, other benches relied on SBI v. Athena Energy Ventures Pvt. Ltd., which permitted simultaneous proceedings, citing the co-extensive liability of guarantors.
The principal question before the Court was whether simultaneous insolvency proceedings under Section 7 of the IBC can be maintained against both the principal debtor and its corporate guarantor for the same debt?
The Court reaffirmed its earlier decision in BRS Ventures Investments Ltd. v. SREI Infrastructure Finance Ltd. (2025) and held that section 60(2) of the IBC expressly contemplates proceedings against corporate debtors and guarantors before the same adjudicating authority. The liability of a guarantor under Section 128 of the Indian Contract Act, 1872 is co-extensive with that of the principal borrower. There is no statutory bar in the IBC against initiating simultaneous CIRP proceedings.
The Court clarified that insolvency proceedings against the guarantor do not extinguish the creditor’s right to proceed against the principal borrower, and vice versa.
Addressing arguments that parallel proceedings would convert insolvency into a recovery tool, the Court reiterated the IBC is a resolution-centric statute aimed at maximization of asset value and balancing stakeholder interests. Recovery may be incidental to the process, but is not its sole objective. The admission test under Section 7 focuses on “debt” and “default,” not the creditor’s motives.
While acknowledging that insolvency should not become an arm-twisting mechanism, the Court held that once debt and default are established, admission cannot ordinarily be denied.
Opponents of simultaneous proceedings argued that financial creditors must “elect” whether to proceed against the borrower or guarantor to prevent double recovery.
The Court noted that resolution professionals are required to update claims and voting shares to ensure transparency and fairness in the Committee of Creditors (CoC).
Some appellants urged the Court to frame guidelines for “group insolvency” and mandate disclosures of parallel claims.
While recognizing the complexities of group structures and interlinked guarantees, the Court declined to frame new judicial guidelines, observing that the legislative framework already provides adequate mechanisms. Any structural reforms are better addressed through legislative or regulatory intervention.
Case Details
Case Title: ICICI Bank Limited Versus Era Infrastructure (India) Limited
Citation: JURISHOUR-144-SC-2026
Case No.: CIVIL APPEAL NO.6094 OF 2019
Date: 26/02/2026
