Under right of subrogation guarantor is entitled to initiate cirp against principal borrower

Last updated: 02 July 2022
Quick Summary
The National Company Law Tribunal (NCLT) has ruled that a guarantor who pays a debt on behalf of a principal borrower effectively steps into the shoes of the creditor. This means the guarantor gains all the creditor's rights, including the ability to initiate Corporate Insolvency Resolution Process (CIRP) against the principal borrower. The ruling clarifies that this right exists under the 'right of subrogation' as per the Indian Contract Act, 1872, even without a direct agreement between the guarantor and the borrower.

Court :
Kolkata NCLT Bench

Brief :
A contract of guarantee is of between three persons Creditor, Debtor and the Surety. The Contract of Guarantee generally made to protect interest of the creditor and provide him trust and security for payment of debt advanced to the Corporate Debtor. T

Citation :
C.P (IB) NO. 2046/KB/2019

Daily Limit Reached

You have reached your daily limit of 2 Free Judgements

Subscribe to CCI PRO for unlimited access

Why Upgrade to CCI PRO?
  • No Ads
  • WhatsApp Broadcasts
  • Daily E-Newsletter
  • Unlimited Judgements Access
BEST VALUE
2 YEAR PLAN
3,499
(Inclusive of GST)
1 YEAR PLAN
1,999
(Inclusive of GST)
Buy CCI PRO Now

Already a PRO member? Login here for an ad-free experience.

 
Comments

Join CAclubindia WhatsApp Finance Community & stay updated with the latest TAX news, compliance alerts and important updates all in one place!

Recent Judgments :

  1. Supreme Court to examine whether the six-month time limit for issuance of show cause notice under Section 74(2) of the CGST Act is mandatory or directory
  2. Advocates ought to be summoned only in rare and exceptional circumstances
  3. Unsigned Assessment Order in Form GST DRC-07 is Invalid as Absence of the Assessing Officer's Signature is an Incurable Jurisdictional Defect
  4. SC to examine whether an assessee can be relegated to the appellate remedy, when the challenge is to a binding Circular
  5. Mere Expiry of E-Way Bill Without Intent to Evade Tax Cannot Justify 200% Penalty
  6. No GST Levy on Assignment of Leasehold Rights of Industrial Plots as Supreme Court Dismisses Revenue's SLPs
  7. Supreme Court affirms the constitutional validity of Section 16(2)(c) of the CGST Act: No ITC to the recipient unless the supplier actually deposits tax to the Government
  8. No Addition under Income Tax Law on Bogus Purchases, Where Sales Are Accepted and Supplies Are Backed by GST Records and Banking Trail
  9. Voluntary Tax Payment Does Not Bar Proceedings Under Section 74 Where Suppression Allegation Remains Uncontested
  10. Appellate Authority Cannot Pass "Copy-Paste" Orders Without Independent Application of Mind

View More Judgments »


Trending Online Classes

view all classess

CCI Pro
Meet our CAclubindia PRO Members
Pro Member Dinesh KotwaniDinesh KotwaniPro Member Tanuj Kumar SharmaTanuj Kumar SharmaPro Member Anoop KKAnoop KKPro Member ketul vakilketul vakilPro Member Kalyan GuhaKalyan Guha
Subscribe to Pro
Join an elite circle of professionals

Browse by Category




Latest Job Openings

View all
Company
31 July 2026
Senior Accountant - Bunia, Democratic Republic of Congo

AD GLOBAL LTD

Mumbai

B.Com

View Details
Company
ARTICLESHIP 10 July 2026
Article Assistant

N S Gokhale & Co

Thane

CA Inter

View Details
Company
29 July 2026
ACCOUNTANT

ONESTEP GST SOLUTION

New Delhi

B.Com

View Details
Company
ARTICLESHIP 11 July 2026
Article

SNCO

Mumbai

CA Inter

View Details
Company
28 July 2026
Senior accountant

RJ Public School

Bengaluru

B.Com

View Details
Company
16 July 2026
Manager - Finance & Accounts

Aliens Group

Hyderabad

CA Final

View Details
Company
ARTICLESHIP 16 July 2026
CA Article

Pipara & Co. LLP.

Mumbai

CA Inter

View Details
Company
23 July 2026
Senior Accountant

Felicity Adobe LLP

Bengaluru

CA Inter

View Details
Follow