Delhi HC Issues Notice In Plea Challenging The IBC Ordinance Whereby The Operation of Section 10 Has Been Suspended

The Division Bench of Chief Justice DN Patel and Justice Prateek Jalan has issued notice to the Ministry of Law & Justice, as well as to the Insolvency and Bankruptcy Board of India (IBBI).

Filed by Mr Rajiv Suri, the petition claims that the impugned Ordinance suspends the operation of sections 7, 9 and 10 of the IBC, depriving the corporate applicant of the ability to initiate corporate insolvency resolution process and take the benefit of the Code for resolution of its debts.

Citing the said suspension of provisions as arbitrary and malafide, the Petitioner has argued that at these extraordinary times such suspension comes across as illogical and unjustified.

It is further argued by the Petitioner that the suspension of Section 10 will further push the companies towards liquidation, discourage entrepreneurship and defeat the objectives of the Code.

While calling the said suspension a violation of Articles 14 and 19(g) of the Constitution, the petition states:

'the effect of the said Ordinance Suspending Section 10 would be to leave Corporate Applicants remediless who will be forced to defend various civil suits for recovery of its debts and defaults. It will further impinge upon the legal right of the corporate applicants to a timely resolution of its debt in a time bound manner through initiation of corporate insolvency resolution process by a corporate applicant as laid down under IBC and therefore the said Ordinance is manifestly arbitrary, unjust and unfair.'

It is further submitted by the Petitioner that the suspension of this Section for a period of 6 months and up to 1 year would result in further deterioration of the affairs of the corporate debtor and result in making the restructuring/ revival of the corporate debtor unviable.