Resolution plan for one debtor does not extinguish separate secured debt of borrower or guarantor under insolvency law.

A resolution plan addressing one debtor's unsecured obligations does not, by itself, extinguish a separate secured debt owed by the principal borrower or corporate guarantor. Where the Section 7 claim arises from distinct term loan facilities supported by separate security documents and a corporate guarantee, the debt remains enforceable unless it has been discharged, waived, or satisfied in law; the Section 7 application is therefore maintainable. The appellant was also treated as a person aggrieved because admission of insolvency proceedings against the principal borrower could affect implementation of its approved plan, so it had locus under Section 61. The intervention petitions were nevertheless rejected, and the insolvency admission was upheld.

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Issues: (i) Whether approval of the appellant's resolution plan extinguished the separate debt owed by the principal borrower and the corporate guarantor so as to bar a subsequent application under Section 7 of the Insolvency and Bankruptcy Code, 2016. (ii) Whether the appellant had locus to challenge admission of the Section 7 application and rejection of its intervention petitions.

Issue (i): Whether approval of the appellant's resolution plan extinguished the separate debt owed by the principal borrower and the corporate guarantor so as to bar a subsequent application under Section 7 of the Insolvency and Bankruptcy Code, 2016.

Analysis: The claim filed in the appellant's CIRP related to the sponsor's shortfall undertaking, which was an unsecured liability of the appellant. The debt sought to be enforced in the Section 7 proceeding arose from separate term loan facilities granted to the principal borrower and was supported by distinct security documents and a corporate guarantee. The resolution plan and the clarification affidavit showed that the treatment of unsecured financial creditors in the appellant's CIRP did not release the secured debt of the principal borrower, and the unsecured financial creditors were to retain their rights against the principal debtor and any other guarantor. The arbitral proceeds arrangement also did not amount to waiver, novation, or satisfaction of the separate secured debt.

Conclusion: The separate debt of the principal borrower and the corporate guarantor was not extinguished by approval of the appellant's resolution plan, and the Section 7 application was maintainable.

Issue (ii): Whether the appellant had locus to challenge admission of the Section 7 application and rejection of its intervention petitions.

Analysis: The appellant's challenge was not confined to its status as a shareholder. It asserted that admission of insolvency proceedings against the principal borrower would affect implementation of its approved resolution plan and the treatment of claims already dealt with in its CIRP. In those circumstances, the appellant was a person aggrieved for the purposes of appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016. The corporate debtor had also been heard before the adjudicating authority, and no error was found in rejection of the intervention petitions.

Conclusion: The appellant had locus to maintain the appeal, but no infirmity was found in the rejection of intervention or in the admission order.

Final Conclusion: The admitted default remained enforceable against the principal borrower and the corporate guarantor, and the impugned insolvency admissions were upheld.

Ratio Decidendi: A resolution plan dealing with one debtor's unsecured obligations does not extinguish a separate secured debt of a principal borrower or guarantor, and a financial creditor may proceed under Section 7 unless the debt itself has been discharged or released in law.

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