A prominent face in Indian Business, Anil Ambani has moved the Supreme Court challenging the validity of certain provisions of Part III (Insolvency Resolution and Bankruptcy for Individuals and Partnership Firms) of the Insolvency and Bankruptcy Code, 2016 pertaining to Personal Guarantors of a Corporate Debtor.The petition has challenged sections 95 (Application by creditor to...
A prominent face in Indian Business, Anil Ambani has moved the Supreme Court challenging the validity of certain provisions of Part III (Insolvency Resolution and Bankruptcy for Individuals and Partnership Firms) of the Insolvency and Bankruptcy Code, 2016 pertaining to Personal Guarantors of a Corporate Debtor.
The petition has challenged sections 95 (Application by creditor to initiate insolvency resolution process), 96 (Interim-moratorium), 97 (Appointment of resolution professional), 99 (Submission of report by resolution professional), 100 (Admission or rejection of application) of the IBC.
A bench headed by Justice DY Chandrachud will consider the matter on August 3. Similar other petitions
have already been filed, on which the Court has issued notice.
The dispute in Ambani's case pertains to the insolvency application filed by the State Bank of India over a personal guarantee given by him for loans taken by Reliance Communications Ltd (RCom) and Reliance Infratel Ltd (RITL) from the SBI.
As per Anil Ambani's petition, the challenged provisions are manifestly arbitrary, unconstitutional, directly violating his fundamental rights under Articles 14, 19 and 21 of the Constitution of India.
"The Petitioner submits that pertinently, a bare reading of Section 99(10) of the IBC clearly shows that a copy of the Resolution Professional's report is only to be provided to the person filing the application. Therefore, if an application is filed under Section 95 ofthe IBC by the creditor, a copy of such report will only be provided to the creditor by the Resolution Professional and not to the debtor/ personal guarantor, i.e., Petitioner herein. The Petitioner submits that there is no statutory mandate to provide a copy of the report to the debtor/ personal guarantor, i.e., Petitioner herein, which actually formulates the very basis of the admission of the insolvency proceedings against the debtor/ personal guarantor, i.e., Petitioner; herein", the petition states.
The other grounds are :
- Interim moratorium under Section 96 is ordered against the personal guarantor as soon as Section 95 application is filed, without any application of mind.
- There is mechanism to verify if the creditor has already approached the DRT or invoked SARFAESI proceedings and without such verification, proceedings are taken against personal guarantor.
- No opportunity of hearing is afforded to the guarantor before the admission of application.
- The procedure can lead to forum shopping.
Case : Anil Dhirajlal Ambani vs Union of India |WP(c) 519/22