48 SEBI & CORPORATE LAWS - MAGAZINE[Vol. 154
default by borrower and not with existence of security interest upon an as-
set of guarantor
Section 7 of the Insolvency and Bankruptcy Code, 2016 - Corporate insolvency
resolution process - Initiation by financial creditor - Principal borrower took a
land on lease from respondent - When principal borrower availed loan facilities
from consortium of banks, as a security it deposited lease deed of said land with
bank and respondent-guarantor deposited title documents of said land with bank
- When principal borrower failed to repay, lenders recalled loan facilities - Cor-
porate guarantee issued by respondent guarantor had also been invoked - Banks
filed recovery proceedings and DRT passed an order in favour of banks - When
CIRP application was filed against guarantor, guarantor raised a dispute that banks
had already initiated execution proceedings, and same was pending for execution
of DRT order and thus, instant application was not maintainable - Further, lease
deed had already been legally terminated and thus, banks were not having a se-
curity interest - Whether present proceedings were not concerned with validity
of lease deed or existence of security interest upon an asset of guarantor but was
only concerned with existence of debt and default - Held, yes - Whether further it
would not make any difference whether bank had a secured interest on an asset
belonging to guarantor or not as banks were having a security interest in assets of
borrower company - Held, yes - Whether thus, instant application to initiate CIRP
against guarantor was to be admitted - Held, yes
CASES REFERRED TO
B.K. Educational Services (P.) Ltd. 213 / 150 v. Parag Gupta & Associates [^2018 ] 98 taxmann.com
[ 2018 ]^ SCL^293 (SC),^ Annapurna Infrastructure (P.) Ltd.^ v.^ Soril Infra Resources Ltd.
90 taxmann.com 277 (NCLT - New Delhi), Deem Roll-Tech Ltd. v. R.L. Steel &
Energy Ltd. [Company Application No. (IB) 24 /PB/^2017 , dated 31 -^3 -^2017 ], Lalan Kumar
Singh
v.
Phoenix ARC (P.) Ltd.[ 2019 ]
102
taxmann.com
63 / 152
SCL
10
(NCL- AT)
and
Innoventive Industries Ltd.
v.
ICICI Bank Ltd.[ 2017 ]
84
taxmann.com
320 / 143
SCL
625
(SC).Shyam Kapadia
,
Ashish Pyasi,
Advs.
and
Naresh S. Trivedi,
PCS
for the Peti-
tioner. Chitranjan Kumar
,
Adv.
for the Respondent.
nn