INTRODUCTION
In ICICI Bank Limited v. ERA Infrastructure (India) Limited & Ors. and connected matters, 2026 INSC 201, decided on 26 February 2026, the Supreme Court of India, speaking through Justice Dipankar Datta, conclusively held that simultaneous insolvency proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) can be initiated against both a principal borrower and its corporate guarantor.
The Judgment resolves conflicting views of the NCLT/NCLAT and affirms the earlier ruling in BRS Ventures Investments Ltd. v. SREI Infrastructure Finance Ltd.
BRIEF FACTS
The batch of appeals involved multiple financial creditors who had initiated CIRP proceedings against Principal Borrowers and their Corporate Guarantors on the same debt.
Certain NCLT and NCLAT Orders had rejected such parallel applications, relying on Vishnu Kumar Agarwal v. Piramal Enterprises Ltd., which held that once a Section 7 Application is admitted against one corporate debtor, another application for the same claim cannot be admitted against a different debtor.
Other tribunals allowed simultaneous proceedings, leading to conflicting positions and appeals before the Supreme Court.
ISSUES OF LAW
The principal issue was whether a financial creditor can maintain simultaneous CIRP proceedings against both the principal borrower and the corporate guarantor for the same debt.
Associated issues included applicability of the doctrine of election, concerns of double recovery and whether IBC proceedings are purely recovery mechanisms.
ANALYSIS OF THE JUDGMENT
The Court held that simultaneous proceedings are legally permissible. Referring to Section 60(2) of the IBC and Section 128 of the Indian Contract Act, 1872, it reiterated that the liability of a guarantor is co-extensive with that of the principal debtor. There is no statutory bar against initiating CIRP against both.
The Court rejected the “one debt, one proceeding” theory and clarified that Vishnu Kumar Agarwal does not lay down a binding prohibition in light of BRS Ventures.
On the doctrine of election, the Court held that it is inapplicable because proceedings against borrower and guarantor are not inconsistent remedies. Forcing creditors to elect would undermine contractual guarantees and the “clean slate” principle under the IBC.
Regarding concerns of double enrichment, the Court noted that Regulation 12A and Regulation 14 of the CIRP Regulations require creditors and resolution professionals to update and revise claims. A creditor cannot recover more than what is due.
Finally, the Court declined to frame judicial guidelines on group insolvency, observing that such reforms fall within legislative domain.
CONCLUSION
The Supreme Court has clarified that the IBC permits separate or simultaneous CIRP proceedings against a principal debtor and its guarantor. The ruling aligns insolvency law with settled principles of guarantee and prevents artificial restrictions not found in the statute.
The decision strengthens creditor rights while preserving safeguards against double recovery, thereby bringing much-needed certainty to insolvency jurisprudence.
SUSHILA RAM VARMA
Advocate & Chief Consultant
The Indian Lawyer & Allied Services
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