In Brief
A corporate company (Maharaja Theme Parks and Resorts) had provided a guarantee for loans given by a bank to non-corporate borrowers. When the borrowers defaulted, the bank initiated insolvency proceedings against the company as a corporate debtor. The company argued it was not a corporate debtor since it did not directly owe the bank. The Court held that a guarantor's liability is co-extensive with the principal borrower's. Upon default, a corporate guarantor becomes a corporate debtor under the IBC, and a bank may initiate insolvency proceedings against it without first suing the principal borrower. The appeal was dismissed.
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