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SC to hear all pleas against IBC's personal insolvency provisions
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SME Times News Bureau | 30 Oct, 2020
The Supreme Court on Thursday ordered the transfer, to itself, of all
petitions pending before various High Courts against the provisions of
Insolvency and Bankruptcy Code (IBC) with regard to personal insolvency.
A
bench comprising Justices L. Nageswara Rao, Hemant Gupta and Ajay
Rastogi passed the order on the petition of the Insolvency and
Bankruptcy Board of India under Article 139 (A) read with Article 142 of
the Constitution, seeking transfer of the writ petitions filed before
High Courts to the apex court.
"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," the bench said.
By
a notification dated November 15, 2019, the Ministry of Corporate
Affairs, in exercise of its power conferred under Section 1(3) of the
Insolvency and Bankruptcy Code, 2016 brought into force the provisions
of the Insolvency and Bankruptcy Code, 2016 insofar as they related to
'personal guarantors to corporate debtors' with effect from December 1,
2019.
Writ petitions were filed in the Delhi High Court and other
High Courts challenging this notification and the Insolvency and
Bankruptcy (Application to Adjudicating Authority for Insolvency
Resolution Process of Personal Guarantors to Corporate Debtors) Rules,
2019.
"The writ petitioners also sought a declaration that
Section 95, 96, 99, 100, 101 of the Insolvency and Bankruptcy Code, 2016
are unconstitutional insofar as they apply to personal guarantors of
corporate debtors," observed the top court.
Additional Solicitor
General Madhavi Divan, appearing for the IBBI, submitted that in view
of the importance of the matter, it is imminent that all the writ
petitions should be transferred to the top court for an early resolution
of the dispute.
"The Additional Solicitor General submitted
that different opinions by the High Courts before which the Writ
Petitions are pending would lead to confusion," the top court said.
The
IBBI insisted that the best course would be to transfer the cases to
the top court where the dispute can be finally resolved.
The top
court said: "After hearing the submissions made by the parties, we are
of the considered opinion that the writ petitions that are pending in
the High Courts pertaining to the challenge to the Notification dated
November 15, 2019 and related issues have to be transferred to this
Court."
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