Co-extensive guarantor liability under IBC does not permit duplicate Section 7 admission for the same debt and default.

A financial creditor may proceed under Section 7 of the Insolvency and Bankruptcy Code against a corporate guarantor because the guarantor's liability is co-extensive with that of the principal debtor. However, where a Section 7 application for the same debt and default has already been admitted against the principal borrower, a second application on the same claim against the corporate guarantor is not maintainable. On the stated facts, the application against the principal borrower had already been admitted, so the Section 7 petition against the corporate guarantor was liable to be dismissed.

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Issues: Whether an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 could be maintained against a corporate guarantor for the same debt and default after an application on the same claim had already been admitted against the principal borrower.

Analysis: The liability of a guarantor is co-extensive with that of the principal debtor, and a financial creditor may proceed against the guarantor under Section 7 of the Insolvency and Bankruptcy Code, 2016. However, where the same financial creditor has already obtained admission of a Section 7 application against one corporate debtor for the very same debt and default, a second application for the same claim cannot be admitted against the other corporate debtor. On the facts, the application against the principal borrower had already been admitted on the same date as the application against the corporate guarantor.

Conclusion: The Section 7 application against the corporate guarantor was not maintainable and was liable to be dismissed; the appeal succeeded.

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