Tribunal upholds joint liability in CIRP case against Doshi Holdings

The Tribunal upheld the initiation of Corporate Insolvency Resolution Process (CIRP) against Doshi Holdings, recognizing its joint liability for the loan disbursed to Premier Ltd. The Tribunal deemed Doshi Holdings a Co-borrower, not merely a pledgor, and thus liable for loan repayment. Additionally, the Tribunal affirmed Doshi Holdings' status as a Financial Debtor under the Insolvency and Bankruptcy Code, dismissing the appeal and finding no merit in the Appellant's arguments.

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Issues Involved:
1. Whether the Corporate Debtor, Doshi Holdings Pvt. Ltd., is liable for the loan disbursed to Premier Ltd. under the Loan cum Pledge Agreements.
2. Whether the initiation of Corporate Insolvency Resolution Process (CIRP) against Doshi Holdings is justified when CIRP has already been initiated against Premier Ltd. for the same debt.
3. Whether Doshi Holdings can be considered a Financial Debtor under the Insolvency and Bankruptcy Code, 2016 (IBC).

Issue-wise Detailed Analysis:

1. Liability of Doshi Holdings for the Loan Disbursed to Premier Ltd.:
The Appellant argued that Doshi Holdings was merely a pledgor of shares and not liable for the loan disbursed to Premier Ltd. However, the Loan cum Pledge Agreements explicitly referred to Doshi Holdings as "Borrower 2/Pledgor" and collectively with Premier Ltd. as "Borrower(s)." The agreements and related documents, such as the Sanction Letter and Demand Promissory Note, were executed by both entities, indicating joint liability. The Tribunal concluded that Doshi Holdings was a Co-borrower, not just a pledgor, and thus jointly liable for the loan repayment.

2. Initiation of CIRP Against Doshi Holdings:
The Appellant contended that CIRP against Doshi Holdings was not maintainable since CIRP had already been initiated against Premier Ltd. for the same debt, citing the judgment in 'Dr. Vishnu Kumar Agarwal Vs. M/s Piramal Enterprises Ltd.' The Tribunal, however, distinguished this case from Piramal, noting that Doshi Holdings and Premier Ltd. were Co-borrowers, not a Principal Borrower and Guarantor. The Tribunal referenced the judgment in 'State Bank of India vs. Athena Energy Ventures Pvt. Ltd.' and the Supreme Court's decision in 'Lalit Kumar Jain vs. Union of India,' which clarified that multiple proceedings for the same debt against different debtors are permissible under IBC.

3. Financial Debtor Status of Doshi Holdings:
The Appellant argued that Doshi Holdings could not be considered a Financial Debtor as it merely pledged shares and did not receive any loan disbursement. The Tribunal examined the agreements and found that Doshi Holdings was a Co-borrower who received the loan jointly with Premier Ltd. The Tribunal referenced the Supreme Court's judgments in 'Phoenix ARC Pvt. Ltd. vs. Ketulbhai Ramubhai Patel' and 'Anuj Jain vs. Axis Bank Ltd.' to differentiate between a mere pledgor and a Co-borrower. The Tribunal concluded that Doshi Holdings, being a Co-borrower, fell within the definition of a Financial Debtor under Section 5(7) and (8) of IBC.

Conclusion:
The Tribunal upheld the initiation of CIRP against Doshi Holdings, affirming its joint liability for the loan disbursed to Premier Ltd. and recognizing it as a Financial Debtor under IBC. The appeal was dismissed, and the Tribunal found no merit in the arguments presented by the Appellant.

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