The Supreme Court on November 9 upheld the constitutional validity of various provisions of the Insolvency and Bankruptcy Code (IBC), 2016, including those pertaining to personal guarantors.
Pertinently, one of the petitioners of the case was businessman Anil Ambani, who had challenged some provisions of IBC alleging that they were violative of fundamental rights guaranteed under the constitution. Over a 200 petitions were filed in a batch challenging various provisions of the code. Provisions relating to the powers of resolution professionals were also under challenge.
Anil Ambani had filed a writ petition in the apex court in 2022 challenging Section 95, 96, 97, 99, 100 of Part III IBC. He had contended that IBC deprives personal guarantors of an opportunity to be heard (natural justice) before proceeding against them.
The court held "IBC cannot be held to be operating in a retroactive manner in order to hold it violative of the constitution. Thus we hold that the statute does not suffer from the vices of manifest arbitrariness."
The court held that IBC cannot be held to be suffering from manifestly arbitrary or illegality. The court held that natural justice provisions cannot be applied uniformly to all situations, but change from case to case.
Furthermore, the court has also ruled that there are enough guardrails in IBC to ensure that a resolution professional's suggestions are recommendatory to the NCLT and not final.
(This is a developing story, please comeback for more)
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