Mumbai: The National Company Law Tribunal (NCLT) has admitted a corporate insolvency resolution process (CIRP) against Citron Infraprojects Limited on a petition filed by Canara Bank over an alleged default of Rs 119.64 crore, rejecting the company’s objections on limitation, maintainability and the pendency of insolvency proceedings against the principal borrower.
The petition was filed under Section 7 of the Insolvency and Bankruptcy Code (IBC) by Canara Bank, which claimed that Citron Infraprojects had executed multiple corporate guarantees in favour of a consortium of lenders for loans extended to Shrivallabh Pittie Industries Ltd. According to the bank, the principal borrower defaulted in repayment in March 2022, following which the corporate guarantee was invoked through a recall notice issued on March 17, 2023. The outstanding dues were stated to be Rs 119.64 crore as of August 31, 2025.
Citron Infraprojects opposed the insolvency plea, contending that the petition was barred by limitation, had been filed merely as a recovery mechanism and was premature because the principal borrower was already undergoing CIRP, with a resolution plan under consideration. The company also argued that simultaneous proceedings against the guarantor could result in double recovery by lenders.
Rejecting these submissions, the NCLT held that the corporate guarantor’s liability arose only after the guarantee was invoked through the recall notice. Since the guarantor failed to honour the demand within seven days, the date of default was held to be March 25, 2023, making the petition filed on November 5, 2025 well within the prescribed limitation period. “ Upon a meticulous perusal of the record, we are of the considered view that the Financial Creditor has placed sufficient and cogent evidence on record to substantiate that the financial debt is due and payable, and that the Corporate Debtor has defaulted in making the said payment. Consequently, the contentions raised by the Corporate Debtor fail to hold water.”
The tribunal further observed that the pendency of CIRP against the principal borrower does not bar initiation of insolvency proceedings against a corporate guarantor. Relying on Supreme Court and NCLAT precedents, it held that insolvency proceedings can continue simultaneously against both entities, with safeguards under the IBC ensuring that creditors cannot recover more than the amount actually due. “The initiation of CIRP is only for resolution of the Corporate Debtor and any recovery of the dues of the creditor is upon approval of a resolution plan is only incidental to the resolution of the Corporate Debtor,” the order copy reads.
It also rejected the company’s argument that the insolvency petition was intended solely for debt recovery, observing that the objective of the IBC is resolution of the corporate debtor and that recovery is only incidental to the insolvency process. The tribunal found that Canara Bank had established the existence of financial debt and default, satisfying the statutory requirements for admission under Section 7 of the Code.
Accordingly, the NCLT admitted the insolvency petition against Citron Infraprojects Limited and commenced the corporate insolvency resolution process.
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