The Supreme Court has dismissed a plea by various promoter guarantors against lenders launching insolvency proceedings against them.

The apex court has upheld the right of bankers to pursue insolvency proceedings against guarantors of companies facing insolvency resolution.

The decision may impact promoters like Venugopal Dhoot, Anil Ambani and Sanjay Singhal.

Corporate lawyer, HP Ranina said, “The Supreme Court has upheld the contractual obligation, after all when a promoter gives a guarantee there is a contract between the promoter and the lender that the lender will sue against the promoter in case of the company cannot repay the loan. So it is a question of a contract.”

“Now how can a promoter go back on that contract and say that they will not pay, then why did they give a guarantee,” he added.

Ranina further said, “If it can be proved that they have diverted their assets with a view to defeat the interest of the creditors, to whom they have given their guarantee then certainly that will be held void in the court of law. It all depends on facts of each case.”

Watch the accompanying video for more.

(Edited by : Abhishek Jha)

First Published:May 21, 2021 1:59 PM IST