The Insolvency and Bankruptcy Code is at a nascent stage: Supreme Court
The insolvency and bankruptcy board of India via a transfer petition under article 139 (A) read with Article 142 of the Indian constitution moved towards the Supreme Court for the transfer of all the writ petitions to this court. This judgement was passed in the case of Insolvency and Bankruptcy Board of India versus Lalit Kumar Jain & Ors. [Transfer petition (civil) No- 1034 of 2020].
The Ministry of Corporate Affairs, Government of India after utilizing its power under section 1(3) of the Insolvency and Bankruptcy Code, 2016 brought some provisions insofar as they related to “personal guarantors to corporate debtors”. Thus the writ petitions were filed in high court of Delhi and various other courts challenging the Insolvency and Bankruptcy rule, 2019. Also sections- 95, 96, 99, 100, 101 of the code of 2016 were declared as unconstitutional as they apply to guarantors of corporate debtors. Thus to avoid any confusion caused by possible divergence of opinions by various high courts, this petition was filed.
Ms. Madhavi Divan, learned Additional Solicitor General appearing for the Petitioner submitted that “in view of the importance of the matter, it is imminent that all the Writ Petitions are transferred to this Court for an early resolution of the dispute. The learned Additional Solicitor General submitted that different opinions by the High Courts before which the Writ Petitions are pending would lead to confusion. The learned Solicitor General supported the submissions of the learned Additional Solicitor General and urged that the dispute pertaining to the validity of the Notification dated 15.11.2019 needs to be decided expeditiously. According to learned Solicitor General, the best course would be to transfer the cases to this Court where the dispute can be finally resolved.”
This court held that the “Transfer of the Writ Petitions to this Court would avoid conflicting decisions by the High Courts which are in seisin of the Writ Petitions. 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.”
The court also stated that “no further Writ Petitions involving the challenge to the Notification dated 15.11.2019 by which Part III of the Insolvency and Bankruptcy Code, 2016 and other provisions in so far as they relate to personal guarantors to corporate debtors have been brought into force shall be entertained by any High Court.”