Page 21 - Banking Finance January 2024

LEGAL UPDATE

Legal

News

SC decision will increase settlement procedure is still beset by showing kindness and if he or she suf-
excessive delays, with over 270 days fers in the process, the law must come
IBC process recoveries, ac- having passed since the first case. to the rescue, Delhi High Court has

cording to a report. said.
According to a report, recoveries from SC affirms the group of The court's observation came while

personal guarantees-which have been companies doctrine in ar- granting interim payment of over Rs 5
averaging in the low single digits thus lakh as compensation to the widow of
far-are anticipated to increase dra- bitration law a truck driver who died in 2018 while
matically in the wake of the recent The 'group of companies' doctrine per- helping a victim of a road accident.
Supreme Court decision upholding the mits non-signatory enterprises to be "While he was returning to his vehicle,
legality of the IBC's provisions pertain- bound by arbitration agreements, ac- which by all probabilities was properly
ing to personal guarantees. cording to a Supreme Court ruling.
parked on the side way, he got struck
Recoveries from personal guarantees This implies that businesses that are by another unknown speeding vehicle
are currently only 5.22%, according to part of the same group of businesses and sustained injuries...We have to as-
a Care Edge analysis, and the latest but did not sign the arbitration agree- sume that being a good Samaritan, he
verdict by the Supreme Court suggests ment may still be obligated to abide by stopped his truck and responded to
that guarantors' personal assets may its terms. somebody in distress," Justice
now be used to recoup unpaid debt. "In the Cox and Kings vs. SAP India Pvt Dharmesh Sharma stated in a recent
Following the filing of over 200 appli- Ltd ruling, the Bench of Chief Justice of order.
cations contesting the validity of these India (CJI) DY Chandrachud, Justices "A person who chooses to take steps
clauses, personal guarantors received Hrishikesh Roy, PS Narasimha, JB to aid a person in distress should not
their decision. Pardiwala, and Manoj Misra stated be harassed for showing kindness and
that the 'group of companies' doctrine
Only 5.2%, or Rs 91.27 crore, of the if in the process the good Samaritan
284 cases involving personal guaran- must be preserved in the Indian arbi- suffers some injury or fatal conse-
tors worth Rs 17,974.2 crore that were tration jurisprudence considering its quence, the law must come to his res-
utility in determining the intention of
admitted since FY20 were recovered. cue," the court added, allowing the
the parties."
The total amount demanded in these plea of the widow against the claims
instances was Rs 1,45,942.6 crore. commissioner's refusal to grant com-
Only 21 of these 200 cases have re- Law must help Good Sa- pensation to her on the ground that
sulted in repayment approvals, indicat- maritans: HC her husband met with an accident at
ing a delayed recovery.
A good Samaritan helping a person in own will, which was not in the course
With over 2,000 cases still pending, the distress should not be harassed for of his employment.

18 | 2024 | JANUARY | BANKING FINANCE