Personal bankruptcy: SC transfers all pending pleas in HCs to itself

The Supreme Court on Friday transferred to itself all the petitions challenging the insolvency and bankruptcy code (IBC) provisions relating to initiation of insolvency proceedings against personal guarantors, including Reliance group chairman Anil Ambani and former Bhushan Power and Steel chairman Sanjay Singal.

A Bench led by Justice LN Rao, while transferring the cases pending before the high courts of Delhi, Madhya Pradesh and Telangana, also restrained all HCs from entertaining fresh cases on the issue.

Last month, the apex court had dismissed the SBI’s appeal seeking vacation of the stay granted by the Delhi HC on personal bankruptcy proceedings initiated against Ambani.

The HC, while staying the order of the NCLT, Mumbai, had allowed the proceedings against corporate debtors to continue. It had also restrained Ambani from selling or transferring any of his personal assets.

“The IBC 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 petitions are transferred from the HCs to this court,” the apex court said.

However, it clarified that the interim reliefs granted by the HCs including one granted to Ambani by the Delhi HC will remain operational till further orders from the apex court.

The apex court said it will start hearing the cases from December 2 and asked the respective lawyers not to seek any adjournments on that day.

The Insolvency and Bankruptcy Board of India (IBBI) had sought the transfer of all the cases to the Supreme Court so as to avoid multiplicity of proceedings and any conflicting judgments by the HCs.

Additional Solicitor General Madhavi Divan and counel Vikas Mehta, appearing for IBBI, submitted that it is imminent that all the petitions were transferred to the SC for an early resolution of the dispute and to avoid any confusion.

Solicitor General Tushar Mehta, appearing for SBI, argued that the SC had already dealt with several issues against against IBC and its amendments and it will be in the best interest of everyone if the apex court settles the law in these cases as well.

Petitions were filed in the HCs challenging the Centre’s Notification of November 15 last year and the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process of Personal Guarantors to Corporate Debtors) Rules, 2019. These petitions had sought a declaration that Section 95, 96, 99, 100, 101 of the IBC are unconstitutional in so far as they apply to personal guarantors of corporate debtors.

Besides, Ambani and Singal had also challenged the personal insolvency proceedings initiated against them.