Kapil Kumar, a prominent businessman, had provided personal guarantees to several financial institutions for loans extended to his company, "KK Enterprises Limited", institutions invoked Kapil's personal guarantees and i

CS Professional · Insolvency and Bankruptcy - Law and Practice · PYQS · June 2025
Kapil Kumar, a prominent businessman, had provided personal guarantees to several financial institutions for loans extended to his company, "KK Enterprises Limited", institutions invoked Kapil's personal guarantees and initiated insolvency proceedings against him under the Insolvency and Bankruptcy Code, 2016 (IBC, 2016), specifically under the provisions related to personal guarantors to corporate debtors. Kapil challenged the validity of these proceedings, arguing that the notification bringing personal guarantors within the ambit of the IBC was arbitrary and discriminatory. On this background, mentioning relevant provisions of the IBC, 2016 and applicable case laws answer the following questions: Which other provision (of a commercial law) had a significant bearing on the decision of the Supreme Court in the above case?

Answer & Explanation:

Section 128 of the Indian Contract Act, 1872 though not part of the Insolvency and Bankruptcy Code had a profound bearing and relevance in the judgment, as it deals with the liability of the surety (personal guarantor).

Topics: Personal Guarantors

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