# In the matter of Mohan Kumar Garg vs. Omkara Assets Reconstruction Pvt. Ltd. & Anr.

> NCLAT judgment dated 2023-08-21. Citation: TCN-2023-NCLAT-00264. The appeal was filed against an order dated 2023-06-15 passed by the Adjudicating Authority,…

- **Court:** NCLAT
- **Order date:** 21 Aug 2023
- **Citation:** TCN-2023-NCLAT-00264
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/mohan-kumar-garg-vs-omkara-assets-reconstruction-pvt-ltd-anr-e715aec1

## Summary

### Background

The appeal was filed against an order dated 2023-06-15 passed by the Adjudicating Authority, which admitted an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) filed by the Financial Creditor against the Appellant, who was the Corporate Guarantor. The Appellant challenged the initiation of proceedings against the Corporate Guarantor, arguing that proceedings against the Principal Borrower had already been admitted. The Appellant also contended that the Adjudicating Authority did not consider the documents of corporate guarantee and relied on the 'Athena Energy' judgment, while a Coordinate Bench in 'Vishnu Kumar Agarwal's Case' held that simultaneous proceedings against the Principal Borrower and Corporate Guarantor cannot proceed.

## Facts

The Financial Creditor filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) against the Appellant, who was the Corporate Guarantor. The Adjudicating Authority admitted the application, leading the Appellant to file an appeal. The Appellant argued that proceedings against the Corporate Guarantor should not have been initiated because proceedings against the Principal Borrower were already admitted. The Appellant also claimed that the Adjudicating Authority did not consider the documents of corporate guarantee. The Financial Creditor had issued a notice to both the Principal Borrower and the Corporate Guarantor on 2018-03-14 regarding the default in payment. The Corporate Guarantor sent a reply on 2018-03-17, contending that the Financial

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## Issues and analysis

### Issue 1: Whether the proceedings against the Corporate Guarantor ought to have been initiated when …

**Ratio:** Proceedings under Section 7 of the IBC can be initiated against both the Principal

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**Reasoning:** The court relied on previous judgments of the Tribunal, including 'Edelweiss Asset

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**Interpretation:** The interpretation of Section 7 of the IBC allows for proceedings to be

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**Application:** The court applied the ratio to the facts of the case, noting that there was no

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## Parties

- **Judges:** Ashok Bh…; Barun M…; +1 more
- **Appellants:** Mohan Kuma…
- **Respondents:** Omkara Assets…

## Timeline

- **2023-06-15 — Order by Adjudicating…**: The Adjudicating Authority passed an order admitting an application under Section 7 filed…
- **2018-03-14 — Notice Issued by…**: The Financial Creditor issued a notice to the Principal Borrower and the Corporate…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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