NCLAT Rules, Financial Creditor Can't File Same Claim Twice For Same Loan In Multiple Insolvency Proceedings Without Proper Adjustment
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, comprising Justice Rakesh Kumar Jain (Judicial Member), Mr. Naresh Salecha and Mr. Indevar Pandey (Technical Members), has held that a financial creditor is not entitled to lodge the same claim for a single debt in more than one insolvency proceeding without proper adjustment. The Tribunal dismissed an appeal filed by Moneywise Financial Services Pvt. Ltd., which had challenged the rejection of its claim in the CIRP of M/s Dream Procon Pvt. Ltd., a corporate guarantor for a loan advanced to a third party.
The case revolved around a loan of ₹10 crores sanctioned by Moneywise Financial Services to Indirapuram Habitat Centre Pvt. Ltd. (IHCPL), a group company of the Corporate Debtor. The Appellant’s claim was premised on a purported corporate guarantee extended by Dream Procon Pvt. Ltd. under a Master Loan Agreement (MLA) dated 22.04.2016. The Corporate Debtor was described in the agreement as one of the four guarantors, and the Appellant sought recognition as a financial creditor of Dream Procon on this basis.
According to the Appellant, Clause 28 of the MLA amounted to a binding and enforceable corporate guarantee, even though no separate deed was executed. It was argued that the IBC, under Section 5(8)(i), recognizes a financial debt to include obligations arising from a guarantee. The Appellant also submitted that invocation of the guarantee was not essential before the insolvency commencement date and that the liability of the guarantor is coextensive under Section 128 of the Indian Contract Act, 1872. Additionally, reliance was placed on authoritative judicial pronouncements including Laxmi Pat Surana v. Union of India [(2021) 8 SCC 481] and BRS Ventures Investments Ltd. v. SREI Infrastructure Finance Ltd [(2025) 1 SCC 456], to support the argument that a financial creditor can initiate insolvency proceedings or lodge claims against a guarantor, even when funds are disbursed solely to the principal borrower.
However, the Tribunal noted that while the law permits filing of a claim based on a guarantee, the existence of such a guarantee must be established through valid documentation. In the present case, the Appellant initially referred to a separate deed of guarantee dated 22.04.2016 but failed to produce it at any stage—neither before the Adjudicating Authority nor before the Tribunal. Instead, the Appellant shifted its reliance entirely to Clause 28 of the MLA, which, while expressing a form of guarantee, was not accompanied by a board resolution or any corporate authorization permitting Dream Procon Pvt. Ltd. to undertake such a liability.
The Tribunal observed that Clause 28 was embedded within a broader tripartite loan agreement, and although the language of the clause suggested an intent to guarantee, there was no invocation of the clause prior to the insolvency commencement date. The absence of such invocation was held to be crucial. The Tribunal noted that “the guarantee, even assuming its validity, had therefore not matured into an enforceable claim against the Corporate Debtor as of the date when CIRP commenced. A mere default by IHCPL does not suffice to convert a contingent obligation into a live financial debt enforceable against the guarantor in the absence of invocation.”
It was further observed that the Appellant had filed a separate claim for ₹14.59 crores in the CIRP of IHCPL on 07.09.2019, which had already been admitted. The CIRP against Dream Procon Pvt. Ltd. commenced on 06.09.2019, and the last date for filing claims was 29.10.2019. The Appellant, who had already filed another claim in the CIRP of Dream Procon for a different transaction within time, filed this disputed claim only on 20.10.2020—388 days after the cut-off date. The Tribunal rejected the justification offered and held that the delay was inexcusable, especially since the Appellant was fully aware of the ongoing CIRP and had already participated in it.
Addressing the issue of duplication, the Tribunal held that a creditor cannot assert the same debt in two CIRPs without appropriate disclosure and adjustment. Filing an identical claim for the same loan in two separate insolvency proceedings, without a mechanism to proportionately reduce recovery in one upon receipt in the other, violates the IBC’s principle of equitable distribution. The Tribunal relied on its own earlier judgment in Piramal Capital & Housing Finance Ltd. v. Hydric Infrastructure Pvt. Ltd [CA (AT)(INS) No. 851 of 2023], which expressly held that such overlapping claims are impermissible unless recovery is properly coordinated.
The Tribunal also emphasized that insolvency proceedings must be guided by procedural discipline and statutory timelines. It held that “the delay in submission of the claim is solely attributable to the Appellant, who was well aware of the timelines and who has already submitted one of his claims well within timeline, but submitted the second one with 388 days delay for which it has no explanation.”
Additionally, the Tribunal took note of the fact that the resolution plan for Dream Procon Pvt. Ltd. had already been approved by the Committee of Creditors (CoC) with 90.66% vote share. Entertaining such a delayed and duplicative claim would have disrupted the plan and prejudiced the interest of other stakeholders, particularly more than 500 homebuyers who were part of the resolution framework.
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The Appellate Tribunal conclusively held that the Appellant failed to establish an enforceable corporate guarantee, did not invoke the alleged guarantee prior to the insolvency commencement date, submitted the claim belatedly without justification, and duplicated a previously admitted claim without any disclosure or adjustment mechanism. Consequently, the Appellant was found not to be a financial creditor in respect of the alleged guarantee. Accordingly, the appeal was dismissed, and the Tribunal upheld the decision of the NCLT rejecting the Appellant’s claim.
Appearance
For Appellant: Mr. Abhishek Garg and Mr. Yash Gaiha, Advocates.
For Respondent: Ms. Varsha Banerjee, Advocate.
Cause Title: Moneywise Financial Services Pvt. Ltd. V. Mr. Arunava Sikdar
Case No: Company Appeal (AT) (Ins.) No. 310 of 2024
Coram: Justice Rakesh Kumar Jain [Judicial Member], Mr. Naresh Salecha, Mr. Indevar Pandey [Technical Members]
