Whether the right of subrogation shall stand extinguished after approval of the Resolution Plan under the Code or the same will continue to vest with Personal Guarantors in terms of the Indian Contract Act, 1872 – Sapna Aggarwal Vs. Asian Colour Coated Ispat Ltd. and Ors. – Supreme Court
Hon’ble Supreme Court upholds the decision of NCLAT where it was held that Doctrine of subrogation is an absolute right of Guarantor, however, the issue becomes different, if it falls within the domain of IBC. A Resolution Plan itself can vary and modify the rights of Creditors and Guarantors and provide for continuation of Personal Guarantees which do not need any confirmation from Personal Guarantor.