SriLanka, May 30 -- The Supreme Court has held that banks are legally entitled to institute legal action directly against guarantors without first proceeding against the principal debtor, where the guarantor has expressly waived that right in the guarantee agreement.

The ruling was delivered in an appeal filed by guarantor challenging a judgement of the Commercial High Court, which held him liable in respect of credit facilities obtained from DFCC Bank PLC.

The bank had instituted action seeking to recover more than Rs.5.5 million together with interest from the defendant in his capacity as guarantor for loan facilities granted to a company.

During the proceedings, the defendant contended that the company, as the principal debtor and b...