Joint promise

Corporate & Other Laws

In the example given in the image, X's obligation is 2k. He became insolvent. But his assets are sufficient to pay one half of his debts. So, 1k can be got from him. Then what about the the remaining 1k. Should the co-promisors bear it? But in this example, they didn't bear it. Pls explain

Sibi Srinivasan

CA Final

★ 22K+

30-Aug-21 10:28

603

Answers (6)

In this question it is given that Z is being forced to pay the full amount to A. X, being insolvent & only half can be recovered so x is liable for 1000. Y is liable for 2000. But it said that z has been forced to pay the full amount, so if Z has paid the full amount then he has right to recover 1000 from X and 2000 from Y(being x & y's shares respectively)

phanindra raj

CA Final

★ 9K+

30-Aug-21 11:03

They shared the liability equal only but being the entire amount is paid by Z he is eligible to recover the share of liability from X(1000) & y(2000)

phanindra raj

CA Final

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30-Aug-21 11:05

Remaining 1000 irrecoverable?

Thread Starter

Sibi Srinivasan

CA Final

★ 22K+

30-Aug-21 11:55

Yes since he cannot pay

phanindra raj

CA Final

★ 9K+

30-Aug-21 12:16

Ok. Thank you!

Thread Starter

Sibi Srinivasan

CA Final

★ 22K+

30-Aug-21 12:17

Thread Starter

Sibi Srinivasan

Ok. Thank you!

And also keep it in mind that until all assets are compensated for liabilities, a person can't be declared insolvent by court. All assets will be cleared off to compensate as much as liabilities possible and thereafter an individual is declared insolvent. So , no insolvent has assets owned .

Varun Mulay

CA Final

★ 39K+

07-Sep-21 09:41