X' and 'Y' jointly take a loan, from 'Z' with promise to repay the loan amount with interest within two years. Soon after taking the loan 'X' is declared as an insolvent and remains insolvent till the date of repayment of loan. 'Y' also fails to repay the loan. 'X' on account of his status as insolvent enjoys immunity from legal proceedings. In these circumstances:

A) Z' can in law institute a suit for recovery of, only 50% of the outstanding from 'Y' B) Z' is entitled in law to sue 'Y' alone for recovery of the entire outstanding amount C) Z' is not entitled to sue 'Y' also for recovery of loan amount till the order of insolvency of 'X' ceases to operate D) Z' is entitled in law to sue 'Y' for 50% of the principal amount due and the entire interest outstanding

Answer & Solution

Correct Answer: Option B

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