The case involved a question upon the duties of corporate debtor to its creditors implicating a coherent set of conceptually distinct moral principles governing the conduct of debtors towards their creditors. Furthermore, the arguing contention whether guarantor’s liability stands separate and distinct from principle debtor, for such condition gives creditors liberty to file independent suit against either of them rather bringing them under same discord.
The interest of a creditor in corporate debtors’ business affairs, suffering from financial difficulty, can face adverse consequences for improper participation in management of the corporate debtor, the creditor shall be responsible for losses accumulated on account of such participation. However, the case of BRS Ventures Investment Ltd. Vs. SREI Infrastructure Finance Ltd. And Ors., the factual statement showed no such intervention by financial creditor, to the corporate debtor, neither showing contention for improper participation, stating the corporate debtor shall not file suit for damages arising out of any such suit of debt-repayment.
The duty of contractual obligation in notes of guarantee requires reasonable efforts to minimize losses by legally binding the borrower in-confidence, for whenever intervening events impede contractual objectives of debt restructure or overdue, recognizing confidence the party’s responsibility inextricably linked to repayment of debt according to his contractual obligation as key step fitting towards environment for perfect creditor, debtor, and guarantor.
