Empowering The Guarantor Under The IBC

1. INTRODUCTION:

In a recent judgment passed on 27^th June 2022 in the case of Orbit Towers Pvt. Ltd. v. Sampurna Suppliers Pvt. Ltd., (hereinafter the "Case"), the NCLT Kolkata (hereinafter the "NCLT") held that a Corporate Guarantor can initiate insolvency proceedings under Section 7 of the Insolvency & Bankruptcy Code, 2016 (hereinafter the "IBC") against Principal Borrower using the Right of Subrogation even in the absence of any agreement between the Guarantor and the Principal Borrower. The NCLT has observed that the rights of the Creditor to recover the money from the Debtor would automatically be transferred in favor of the Surety/Guarantor. The Guarantor, who has performed the obligations of the Principal Debtor which are the subject of his guarantee, is entitled to stand in the shoes of the Creditor and to enjoy all the rights that the Creditor had as against the Principal Debtor. The present article seeks to analyze the current position of law regarding