The release or discharge of a principal borrower from the debt owed by it due to insolvency does not absolve the surety/guarantor of his or her liability


Quick Summary
The Supreme Court has ruled that if a principal borrower is released from debt due to insolvency, it does not automatically absolve the surety or guarantor of their own liability. This decision clarifies the legal position concerning personal guarantees provided for corporate debts, particularly in light of the Insolvency and Bankruptcy Code, 2016.

Court :
Supreme Court of India

Brief :
This judgment will dispose of common questions of law, which arise in various proceedings preferred under Article 32 of the Constitution of India, as well as transferred cases under Article 139A; those causes were transferred to the file of this court, from various High Courts , as they involved interpretation of common questions of law, in relation to provisions of the Insolvency and Bankruptcy Code,2016 (hereafter “the Code”).I The Petitions and Common Grievances.

Citation :
TRANSFERRED CASE (CIVIL) NO. 245/2020

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