The Supreme Court on Thursday upheld the Central government notification, bringing into effect the provisions in relation to personal insolvency in respect to personal guarantors to corporate debtors.
A bench of the apex court, headed by Justice L Nageswara Rao and also comprising Justice S Ravindra Bhat, delivered the judgment after the Supreme Court transferred to itself petition challenging a notification dated November 15, 2019, enforcing certain provisions of the IBC relating to insolvency of personal guarantors.
The Constitutional validity of notification of such provisions only to one category of individuals, that is, personal guarantors was challenged before the Supreme Court by way of several writ petitions.
The Supreme Court while pronouncing its decision upholding the validity of the said notification, also held that upon approval of a resolution plan for a corporate debtor, the liability of the personal guarantor for the balance does not get extinguished.
This will help settling the jurisprudence finally on simultaneous initiation and proceeding with insolvency resolution process against principal borrower and guarantors or co-guarantors/co-obligors as well.
( With inputs from ANI )
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