[Breaking] Supreme Court Orders Transfer To Itself All Pleas Challenging Provisions of Insolvency & Bankruptcy Code On Personal Guarantors [Read Order]

The Supreme Court has ordered the transfer of petitions pending across High Courts, challenging the provisions of Insolvency & Bankruptcy Code pertaining to the issues of personal guarantors.

A bench comprising Justices L Nageswara Rao, Hemant Gupta & Ajay Rastogi heard the matter.

The plea had been filed by IBBI seeking transfer on the ground of multiplicity of proceedings and to avoid conflicting judgments on account of pendency of similar issues across High Court.

Senior Advocate Madhavi Divan told the court that it would be appropriate that the issues are decided by top court so that a common judgment can be passed on the issue.

Solicitor General Tushar Mehta appearing on behalf of the State Bank of India informed the Court that the questions of law under consideration were of national importance not about the parties inter se and therefore, the Supreme Court would be an appropriate forum to decide on the same.

On October 19, the Supreme Court had agreed to hear the pleas seeking transfer of a batch of petitions challenging the IBC provisions relating to insolvency of personal guarantor from across High Courts.

One of the pleas are of Reliance Group Chairman Anil Ambani seeking transfer of his plea from Delhi High Court.

The Supreme Court had on September 17, declined to vacate a stay, earlier granted by Delhi High Court towards the ongoing IBC proceedings against Reliance Group Chairman Anil Ambani.

A bench of Justices L Nageswara Rao, Hemant Gupta & S. Ravindra Bhat asked the petitioner bank (State Bank of India) to complete proceedings before the High Court and seek modification as prayed for.

Before the Delhi High Court, the plea was moved by Anil Ambani challenging the appointment of a Resolution Professional for a personal guarantee given by him for loans taken by Reliance Communications Ltd (RCom) and Reliance Infratel Ltd (RITL) from the State Bank of India.

In addition to this, Ambani has also challenged the validity of the provision regarding the personal guarantee and bankruptcy by arguing that there is no enabling provision in the Insolvency and Bankruptcy Code (IBC) for such an order.

In its petition , IBBI has submitted,

"various writ petitions have been filed in more than one High Court which raise substantial questions of law of general importance".

The pending pleas as like Ambanis challenge the constitutional validity of Part III of the IBC, which deals with insolvency resolution for individuals and partnership firms.

In some of the pending writs, the petitioners had secured interim orders from the High Courts, leading to the stalling of proceedings.

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