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 &amp; 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.”
Non Reportable IN THE CIVIL ORIGINAL JURISDICTION Transfer PetitionNoNo(s). 1043 2020 Transfer Petition(s)(Civil) No(s). 1035 2020 Transfer Petition(s)(Civil) No(s). 1038 2020 Transfer Petition(s)(Civil) No(s). 1044 2020 Transfer Petition(s)(Civil) No(s). 1027 2020 Transfer Petition(s)(Civil) No(s). 1029 2020 Transfer Petition(s)(Civil) No(s). 1036 2020 Transfer Petition(s)(Civil) No(s). 1030 2020 Transfer Petition(s)(Civil) No(s). 1142 2020 Transfer Petition(s)(Civil) No(s). 1147 2020 Transfer Petition(s)(Civil) No(s).1146 2020 Transfer Petition(s)(Civil) No(s).1148 2020 O R D E R The Insolvency and Bankruptcy Board of India has filed the above Transfer Petitions under Article 139read with 1 | P a g e Article 142 of the Constitution of India seeking transfer of the Writ Petitions filed before High Courts to this Court. By a Notification dated 15.11.2019 the Ministry of Corporate Affairs Government of India in exercise of its power conferred under Section 1(3) of the Insolvency and Bankruptcy Code 2016 brought into force the following provisions of the Insolvency and Bankruptcy Code 2016 insofar as they related to personal guarantors to corporate debtors with effect from 01.12.2019: i. Clauseof Section 2 ii. Section 78and Sections 79 iii. Sections 94 to 187iv. Clauseto Clauseof sub sectionof Section 239 v. Clauseto Clauseof sub sectionof Section 239 vi. Clauseto Clauseof sub sectionof Section 240 vii. Section 249. 3. Writ Petitions were filed in the High Court of Delhi and other High Courts challenging the Notification dated 15.11.2019 and the Insolvency and BankruptcyRules 2019. The Writ Petitioners also sought a declaration that Section 95 96 99 100 101 of the Insolvency and Bankruptcy Code 2016 are unconstitutional in so far as they apply to personal guarantors of corporate debtors. The Writ Petitions filed in 2 | P a g e the Delhi High Court are scheduled to be heard finally on 10.11.2020. The Petitioner contended that several Writ Petitions have been filed in the other High Courts. The Petitioner requests for the transfer of the Writ Petitions from all the High Courts to this Court to avoid the confusion caused by possible divergence of opinions expressed by the High Courts. 4. 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. 3 | P a g e The learned counsel appearing for the Respondents Writ Petitioners in the High Courts objected to the transfer of the Writ Petitions on the following grounds: a) That the Writ Petitions in the Delhi High Court are ready for hearing as they are listed on 10.11.2020 for final disposal. Therefore the Delhi High Court should be permitted to complete the hearing. b) If the High Courts decide the matter this Court will have the benefit of their opinion on the subject matter of the dispute. c) That the Insolvency and Bankruptcy Board of India cannot maintain these Transfer Petitions. Transfer Petitions could have been filed by the Union of India. d) That transfer of the Writ Petitions from various High Courts to this Court would not hasten the process and lead to early disposal. On the other hand the Writ Petitions will remain pending in this Court for a long period of time. 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 15.11.2019 and related issues have to be transferred to this Court. Transfer of the Writ Petitions to this Court would avoid conflicting decisions by the High Courts 4 | P a g e 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. 7. We direct the transfer of the Writ Petitions giving rise to the above Transfer Petitions which are pending before the High Courts to this Court. The Registries of the High Courts are directed to transmit the records of the Writ Petitions As we have transferred the Writ Petitions filed challenging the Notification dated 15.11.2019 and related issues to this Court we direct 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. The interim 5 | P a g e orders passed by the High Courts if any shall continue till further orders. The Transfer Petitions are allowed accordingly. ...................................J [L. NAGESWARA RAO ..................................J [HEMANT GUPTA ..................................J [AJAY RASTOGI New Delhi October 29 2020. 6 | P a g e