Breaking: Supreme Court transfers to itself petitions challenging IBC provisions on personal guarantors

The Supreme Court today agreed to transfer to itself a batch of petitions challenging Insolvency and Bankruptcy Code (IBC) provisions relating to insolvency of personal guarantors (Insolvency and Bankruptcy Board of India v. Lalit Kumar Jain & Ors)..The Bench of Justices L Nageswara Rao, Hemant Gupta and Ajay Rastogi, after a brief hearing on the issue of transfer, had reserved its order yesterday while expressing its inclination to allow the plea. .Today the Supreme Court while transferring the writ petitions to itself, said,."The Insolvency and Bankruptcy Code is at a nascent stage and it is better that the interpretation of the provisions of the Code is taken up by this Court to avoid any confusion, and to authoritatively settle the law. Considering the importance of the issues raised in the Writ Petitions which need finality of judicial determination at the earliest, it is just and proper that the Writ Petitions are transferred from the High Courts to this Court.".Today, the Court said that no further writ petitions on the issue are to be entertained by any High Court. Further, all interim orders passed by the High Courts will continue to be in operation till further orders..The matter will now be taken up on December 2, by which time all pleadings are required to be completed..The Insolvency and Bankruptcy Board of India (IBBI) had sought the transfer of all the matters pending before the High Courts to the Supreme Court so as to avoid conflicting rulings by different Constitutional Courts. This position of IBBI was voiced by Additional Solicitor General Madhavi Divan during the hearing yesterday..Solicitor General Tushar Mehta, representing State Bank of India, submitted that the issue under question in the various writ petitions is a national issue and does not affect the writ petitioners before the High Courts inter se. Thus, the Apex Court must hear the question of law, Mehta submitted..Of the pending writ petitions, the maximum number of pleas remain pending before the Delhi High Court, before which the matter is expected to be taken up for final hearing on November 10. The Delhi High Court had also passed an interim order in that batch of petitions, which also includes a petition by Anil Ambani..Delhi HC stays IBC proceedings Anil Ambani for being personal guarantor; Issues notice in challenge to provisions on personal insolvency.While some counsel for various respondents argued in favour of the High Courts deciding the issue first, there were some who proposed that the pending matters from the Madhya Pradesh High Court and the Telangana High Court may be transferred to the Delhi High Court, which is already seized of the matter. A submission was also made questioning IBBI's stance in seeking this transfer..In its petition seeking transfer of these pending cases, IBBI has submitted that "various writ petitions have been filed in more than one High Court which raise substantial questions of law of general importance".All of these pending writ petitions challenge the constitutional validity of Part III of the IBC, which deals with insolvency resolution for individuals and partnership firms..Sections 95, 96, 99, 100 and 101 also have been assailed to the extent of being applicable to personal guarantors. The Rules framed by the Central government in 2019 under the IBC also stand challenged..Read Judgment:

Breaking: Supreme Court transfers to itself petitions challenging IBC provisions on personal guarantors

Shruti Mahajan

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