Interim Moratorium under Section 96 of IBC in respect of one of the Guarantors would not ipso facto apply against a Co-Guarantor – Axis Trustee Services Ltd. Vs. Brij Bhushan Singal & Anr. – Delhi High Court
Hon’ble High Court held that in the present case, the defendant no.1 is not the guarantor in respect of the debt of the defendant no.2. They are both independent guarantors in respect of the corporate debtor, with joint and several liability. Creditors would have an independent recourse against either of the guarantors and the inability to recover against one of the guarantors would not come in the way of making recoveries against the other guarantors. Even in terms of Section 43 of the Indian Contract Act, a plaintiff can choose to proceed against one of the co-promisors. Further, Sections 44 and 138 of the Contract Act provide that discharge of one of the parties/sureties does not amount to discharge of the other party/surety. Therefore, I am of the considered view that the interim moratorium under Section 96 in respect of one of the guarantors would not ipso facto apply against a co-guarantor.