Skip to main content

Court Upholds Validity Of Key Provisions Of Insolvency And Bankruptcy Code

Supreme Court Upholds Validity Of Key Provisions Of Insolvency And Bankruptcy Code

Impugned IBC provisions do not "suffer from any manifest arbitrariness to violate Article 14, Court said.

New Delhi:

The Supreme Court on Thursday upheld certain key provisions of the Insolvency and Bankruptcy Code (IBC) which were challenged on grounds of being violative of fundamental rights like the right to equality of those against whom insolvency proceedings are initiated.

The top court upheld the constitutionality of some amendments made to the IBC in 2019 pertaining to the Personal Guarantors' Insolvency Resolution.

A bench comprising Chief Justice D Y Chandrachud and justices J B Pardiwala and Manoj Misra held as valid the IBC provisions which do not grant an opportunity of hearing to personal guarantors before insolvency petitions of creditors are admitted for hearing in the event of default in repayment of dues or loans.

"The IBC cannot be held to be operating in a retroactive manner in order to hold it violative of the Constitution. Thus, we hold that the statute does not suffer from the vices of manifest arbitrariness," the CJI said.

The impugned IBC provisions do not "suffer from any manifest arbitrariness to violate Article 14 (right to equality) of the Constitution," the bench said, adding the court cannot rewrite the legislative wordings.

With the judgement, the top court decided as many as 391 petitions challenging various provisions of the IBC. Many pleas challenged the constitutional validity of sections 95(1), 96(1), 97(5), 99(1), 99(2), 99(4), 99(5), 99(6) and 100 of the Code.

These provisions deal with the various stages of insolvency proceedings against a defaulting firm or individuals and the right of hearing of personal guarantors before the commencement of insolvency proceedings against a defaulting firm.

The detailed judgement is yet to be uploaded.

Earlier, the top court had, on different dates, issued notices on petitions challenging IBC provisions on various grounds.

All 391 petitions, including the lead one filed by Surendra B Jiwrajka, were later clubbed together for an authoritative pronouncement on legal issues.

One of the petitions filed by R Shah through advocate Anne Mathew challenged several provisions of the IBC and said,"The impugned provisions are inherently violative of the principle of natural justice and strike at the root of the right of livelihood, right to trade and profession, and also the right to equality of the petitioner under Article 21 (right to life), 19(1)(g) (Right to practice any profession), and 14 (right to equality, respectively, of the Constitution." It said none of the impugned provisions contemplated any opportunity of granting hearing to an alleged personal guarantor before appointment of the resolution professional and imposition of moratorium on the assets of the personal guarantor.

"Interestingly, Section 96(1) of the IBC imposes the rigour of moratorium upon the alleged guarantor, automatically, upon mere filing of the application under Section 95 of the Code, without any requirement of prior notice which itself is violative of the basic canons of the principles of natural justice.

"Such restrictions on the liberties of a person, including restrictions to discharge any debt, without affording any opportunity of hearing are not only ultra vires of the Constitution but also unknown in law," it said.

The scheme of Section 97(5) of the Code does not contemplate any alternative to appointment of a Resolution Professional, it said.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Adblock test (Why?)



from NDTV News- Special https://ift.tt/ZJn5160 https://ift.tt/mqx2hXN
via IFTTT

Comments

Popular posts from this blog

US Defense Chief Austin To Make 'Full Recovery' From Cancer: Doctors

Austin, a 70-year-old career soldier, initially underwent minor surgery to treat cancer on December 22. Washington: US Defense Secretary Lloyd Austin is likely to make a "full recovery" from prostate cancer and his prognosis is "excellent," two doctors said after he was seen at Walter Reed hospital for a follow-up appointment. Austin controversially kept US President Joe Biden in the dark about the cancer diagnosis for weeks, and did not inform either the commander-in-chief or Congress until days after he was hospitalized on January 1 for complications from his treatment. "Secretary Austin was seen today at Walter Reed National Military Medical Center for a scheduled post-prostatectomy surveillance appointment," the doctors said in a statement released by the Pentagon. "He continues to recover well and is expected to make a full recovery. Secretary Austin's prostate cancer was treated early and effectively, and his prognosis is excellent,...

North Korea Says It Tested New Strategic Cruise Missile

North Korea test-fired a new generation of strategic cruise missile on Wednesday. (Representational) Seoul: North Korea fired several cruise missiles towards the Yellow Sea on Wednesday, Seoul's military said, the latest in a series of tension-raising moves by the nuclear-armed state. Hours later, North Korea appeared to confirm the firing, saying it had carried out its first test of a new generation of strategic cruise missiles it is developing, the Pulhwasal-3-31. Pyongyang has accelerated weapons testing in the new year, including tests of what it called an "underwater nuclear weapon system" and a solid-fuelled hypersonic ballistic missile. "Our military detected several cruise missiles launched by North Korea towards the Yellow Sea at around 7:00 am today," the South Korean Joint Chiefs of Staff said in a statement. Unlike their ballistic counterparts, the testing of cruise missiles is not banned under current UN sanctions against Pyongyang. Cruise...

US "Deplores" Israeli Attack On UN Training Center In Gaza

More than 25,000 people have been killed in Gaza since war began against Hamas. Washington: The United States was concerned by an Israeli attack on a U.N. training center sheltering displaced people in Gaza's Khan Younis on Wednesday, Deputy State Department spokesperson Vedant Patel said, repeating Washington's calls for protection of civilians, humanitarian workers and aid facilities. "We deplore today's attack on the U.N.'s Khan Younis training center," Patel told a news briefing, calling it "incredibly concerning." The Director of UNRWA Affairs in Gaza said that nine Palestinians were killed and 75 were injured when two tank rounds hit the building that was sheltering around 800 people in the southern Gaza Strip. "Civilians must be protected, and the protected nature of UN facilities must be respected, and humanitarian workers must be protected so that they can continue providing civilians with the life-saving humanitarian assistance...