Two firms can face IBC proceedings if both are corporate debtors: SC
The Supreme Court on Thursday said if two corporate bodies fall within the ambit of corporate debtors, there is no reason why insolvency proceedings cannot be initiated against both under the IBC.
Section 7 of the Insolvency and Bankruptcy Code (IBC) deals with the initiation of the corporate insolvency resolution process by financial creditors.
The apex court also observed that approval of a resolution in respect of one borrower cannot "certainly discharge" a co-borrower.
A bench of Justices Indira Banerjee and J K Maheshwari delivered its verdict on a plea against the August last year judgement of the National Company Law Appellate Tribunal (NCLAT) which had dismissed an appeal against an order of the adjudicating authority, the National Company Law Tribunal (NCLT), Mumbai.
The NCLT had in its February last year order admitted a petition for initiation of Corporate Insolvency Resolution Process (CIRP) against a firm for the same set of loans arising out of the same loan documents