Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + HC Insolvency and Bankruptcy - 2019 (11) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (11) TMI 1169 - HC - Insolvency and BankruptcyCIBIL rating - Removal of name of the petitioner from the list of defaulters maintained by Credit Information Bureau (India) Limited - liability of a guarantor towards a creditor in respect of a guarantee given by such guarantor to secure the claim of a creditor for the credit facilities advanced by such creditor to the company - Whether the liability of a guarantor of a debt of a corporate-debtor stands reduced/extinguished upon an Insolvency Resolution Plan in respect of the corporate debtor, being approved under the Insolvency and Bankruptcy Code, 2016? HELD THAT:- Section 14 of the Code of 2016 does not apply to a personal guarantor. The Code of 2016 does not allow personal guarantors to escape their liability. When an application under Section 7 of the Code of 2016 is admitted by the Adjudicating Authority, the steps taken subsequent thereto flows out of the statute. The two termination points of an application under Section 7 of the Code of 2016, after the admission of such application, do not result in any variance, made without the surety’s consent, in the terms of the contract between the principal debtor and the creditor to constitute a discharge of a surety under Section 133 of the Act of 1872. The ratio of Canonnore Spinning and Weaving Mills Ltd [2002 (4) TMI 943 - SUPREME COURT] being binding precedents and the factual scenarios obtaining therein being same as that obtaining in the present case, the ratio laid down therein are applied in the facts of the present case, wherein it was being held that a definite volition on the part of the creditor is required to take place for the guarantor to stand discharged in terms of section 141 of the Act of 1872. It has held that, the liability of the guarantor cannot but be stated to be a strict liability and even if the principal debtor is discharged from his liability unless such discharge is through the act of the creditor without consent of the surety/guarantor, the creditor’s right of action against the surety is preserved. The issue is answered in the negative and against the writ petitioner - no relief can be granted to the writ petitioner - petition dismissed.
|