# In the matter of Doshi Holdings Private Limited C.P. (IB) 1220/MB/2020

> NCLT judgment dated 2021-02-19. Citation: TCN-2021-NCLT-02987. Anand Rathi Global Finance Limited filed a Company Petition seeking to initiate the Corporate…

- **Court:** NCLT
- **Order date:** 19 Feb 2021
- **Citation:** TCN-2021-NCLT-02987
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/doshi-holdings-private-limited-cp-ib-1220mb2020-8a5805a7

## Summary

### Background

Anand Rathi Global Finance Limited filed a Company Petition seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against Doshi Holdings Private Limited, alleging default in payment of Rs. 8,35,25,398/-. The petitioner, a Non-Banking Financial Company, had extended loan facilities to Premier Limited, with Doshi Holdings as a co-borrower, under Loan cum Pledge Agreements. The corporate debtor pledged 53,01,000 shares held by it in Premier Limited in favor of the Petitioner to secure the repayment of amounts disbursed under the Loan Agreements. The petitioner invoked Section 7 of the Insolvency & Bankruptcy Code, 2016.

## Facts

Anand Rathi Global Finance Limited (Petitioner), a Non-Banking Financial Company, extended loan facilities to Premier Limited, with Doshi Holdings Private Limited (Corporate Debtor) as a co-borrower, under Loan cum Pledge Agreements. The loans were secured by pledging 53,01,000 shares of Premier Limited held by the Corporate Debtor. The Petitioner claimed that the Corporate Debtor defaulted in payment of Rs. 8,35,25,398/-. The Corporate Debtor argued that it only acted as a security provider and did not directly avail any loan amounts. The tenure of the loan agreements expired, and Premier Limited made a partial payment of ₹2,00,00,000/-. The Petitioner issued shortfall notices and invoked the pledged shares. The CIRP against Premier Limited was admitted on 29.01.2021.

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## Issues and analysis

### Issue 1: Whether the 'Corporate Insolvency Resolution Process' can be initiated against a 'Corporate …

**Ratio:** The liability of the principal borrower and the guarantor is coextensive under Section

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**Reasoning:** The NCLT relied on the judgment of Hon'ble NCLAT in Company Appeal No. 633 of 2020, which

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**Interpretation:** The principle of co-extensive liability means that the creditor can pursue

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**Application:** In this case, the Corporate Debtor acted as a co-borrower/pledgor, and Premier

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## Parties

- **Judges:** SUCHITRAKAN…; Chandra Bha…
- **Appellants:** Anand Rathi…
- **Respondents:** Doshi Holdings…
- **Advocates:** Prateek Se…; Saket…; +7 more

## Timeline

- **2015-06-29 — Loan cum Pledge…**: Loan cum Pledge Agreement dated 29.06.2015 between Anand Rathi Global Finance Limited and…
- **2016-05-04 — Loan cum Pledge…**: Loan cum Pledge Agreement dated 04.05.2016 between Anand Rathi Global Finance Limited and…

## 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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