SUPREME COURT OF INDIA
Dhananjaya Y Chandrachud, CJI., J B Pardiwala, Manoj Misra, JJ.
Dilip B Jiwrajka - Petitioner
Versus
Union of India & Ors. - Respondents
Writ Petition (Civil) No 1281 of 2021, W.P.(C) No. 149/2022, W.P.(C) No. 307/2022, W.P.(C) No. 308/2022, W.P.(C) No. 525/2022, W.P.(C) No. 472/2022, W.P.(C) No. 528/2022, W.P.(C) No. 519/2022, W.P.(C) No. 544/2022, W.P.(C) No. 546/2022, W.P.(C) No. 599/2022, W.P.(C) No. 600/2022, W.P.(C) No. 597/2022, W.P.(C) No. 590/2022, W.P.(C) No. 611/2022, W.P.(C) No. 615/2022, W.P.(C) No. 622/2022, W.P.(C) No. 596/2022, W.P.(C) No. 703/2022, W.P.(C) No. 705/2022, W.P.(C) No. 753/2022, W.P.(C) No. 826/2022, W.P.(C) No. 984/2022, W.P.(C) No. 812/2022, W.P.(C) No. 809/2022, W.P.(C) No. 818/2022, W.P.(C) No. 825/2022, W.P.(C) No. 910/2022, W.P.(C) No. 925/2022, W.P.(C) No. 1062/2022, W.P.(C) No. 1004/2022, W.P.(C) No. 929/2022, W.P.(C) No. 937/2022, W.P.(C) No. 1027/2022, W.P.(C) No. 1113/2022, W.P.(C) No. 89/2023, W.P.(C) No. 133/2023, W.P.(C) No. 216/2023, W.P.(C) No. 403/2022, W.P.(C) No. 385/2022, W.P.(C) No. 388/2022, W.P.(C) No. 395/2022, W.P.(C) No. 394/2022, W.P.(C) No. 424/2022, W.P.(C) No. 443/2022, W.P.(C) No. 428/2022, W.P.(C) No. 709/2022, W.P.(C) No. 418/2022, W.P.(C) No. 416/2022, W.P.(C) No. 417/2022, W.P.(C) No. 491/2022, W.P.(C) Diary No. 18674/2022, W.P.(C) No. 485/2022, W.P.(C) No. 486/2022, W.P.(C) No. 467/2022, W.P.(C) No. 471/2022, W.P.(C) No. 478/2022, W.P.(C) No. 530/2022, W.P.(C) No. 541/2022, W.P.(C) No. 559/2022, W.P.(C) No. 551/2022, W.P.(C) No. 567/2022, W.P.(C) No. 578/2022, W.P.(C) No. 755/2022, W.P.(C) No. 570/2022, W.P.(C) No. 616/2022, W.P.(C) No. 560/2022, W.P.(C) No. 583/2022, W.P.(C) No. 582/2022, W.P.(C) No. 654/2022, W.P.(C) No. 652/2022, W.P.(C) No. 638/2022, W.P.(C) No. 635/2022, W.P.(C) No. 601/2022, W.P.(C) No. 634/2022, W.P.(C) No. 649/2022, W.P.(C) No. 647/2022, W.P.(C) No. 668/2022, W.P.(C) No. 657/2022, W.P.(C) No. 684/2022, W.P.(C) No. 655/2022, W.P.(C) No. 674/2022, W.P.(C) No. 692/2022, W.P.(C) No. 510/2022, W.P.(C) No. 714/2022, W.P.(C) No. 729/2022, W.P.(C) No. 663/2022, W.P.(C) No. 726/2022, W.P.(C) No. 666/2022, W.P.(C) No. 670/2022, W.P.(C) No. 776/2022, W.P.(C) No. 760/2022, W.P.(C) No. 696/2022, W.P.(C) No. 707/2022, W.P.(C) No. 736/2022, W.P.(C) No. 887/2022, W.P.(C) No. 885/2022, W.P.(C) No. 766/2022, W.P.(C) No. 683/2022, W.P.(C) No. 791/2022, W.P.(C) No. 794/2022, W.P.(C) No. 700/2022, W.P.(C) No. 716/2022, W.P.(C) No. 717/2022, W.P.(C) No. 733/2022, W.P.(C) No. 720/2022, W.P.(C) No. 724/2022, W.P.(C) No. 773/2022, W.P.(C) No. 816/2022, W.P.(C) No. 752/2022, W.P.(C) No. 789/2022, W.P.(C) No. 759/2022, W.P.(C) No. 754/2022, W.P.(C) No. 781/2022, W.P.(C) No. 785/2022, W.P.(C) No. 803/2022, W.P.(C) No. 784/2022, W.P.(C) No. 807/2022, W.P.(C) No. 800/2022, W.P.(C) No. 834/2022, W.P.(C) No. 821/2022, W.P.(C) No. 832/2022, W.P.(C) No. 858/2022, W.P.(C) No. 835/2022, W.P.(C) No. 837/2022, W.P.(C) No. 863/2022, W.P.(C) No. 894/2022, W.P.(C) No. 1084/2022, W.P.(C) No. 839/2022, W.P.(C) No. 830/2022, W.P.(C) No. 886/2022, W.P.(C) No. 854/2022, W.P.(C) No. 868/2022, W.P.(C) No. 842/2022, W.P.(C) No. 862/2022, W.P.(C) No. 884/2022, W.P.(C) No. 870/2022, W.P.(C) No. 873/2022, W.P.(C) No. 909/2022, W.P.(C) No. 849/2022, W.P.(C) No. 831/2022, W.P.(C) No. 843/2022, W.P.(C) No. 901/2022, W.P.(C) No. 907/2022, W.P.(C) No. 917/2022, W.P.(C) No. 916/2022, W.P.(C) No. 845/2022, W.P.(C) No. 889/2022, W.P.(C) No. 922/2022, W.P.(C) No. 924/2022, W.P.(C) No. 921/2022, W.P.(C) No. 935/2022, W.P.(C) No. 893/2022, W.P.(C) No. 895/2022, W.P.(C) No. 914/2022, W.P.(C) No. 900/2022, W.P.(C) No. 920/2022, W.P.(C) No. 923/2022, W.P.(C) No. 938/2022, W.P.(C) No. 934/2022, W.P.(C) No. 949/2022, W.P.(C) No. 1121/2022, W.P.(C) No. 822/2022, W.P.(C) No. 1061/2022, W.P.(C) No. 1042/2022, W.P.(C) No. 1041/2022, W.P.(C) No. 1040/2022, W.P.(C) Diary No. 29889/2022, W.P.(C) No. 941/2022, W.P.(C) No. 1072/2022, W.P.(C) No. 945/2022, W.P.(C) No. 1043/2022, W.P.(C) No. 947/2022, W.P.(C) No. 1044/2022, W.P.(C) No. 976/2022, W.P.(C) No. 952/2022, W.P.(C) No. 972/2022, W.P.(C) No. 905/2022, W.P.(C) No. 939/2022, W.P.(C) No. 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W.P.(C) Diary No(s). 40974/2022, W.P.(C) Diary No(s). 42246/2022, W.P.(C) No. 118/2023, W.P.(C) No. 77/2023, W.P.(C) No. 173/2023, W.P.(C) No. 233/2023, W.P.(C) No. 166/2023, W.P.(C) Diary No(s). 4241/2023, W.P.(C) Diary No(s). 4379/2023, W.P.(C) No. 161/2023, W.P.(C) No. 181/2023, W.P.(C) No. 183/2023, W.P.(C) No. 286/2023, W.P.(C) No. 298/2023, W.P.(C) No. 182/2023, W.P.(C) No. 194/2023, W.P.(C) No. 285/2023, W.P.(C) No. 189/2023, W.P.(C) No. 180/2023, W.P.(C) No. 609/2023, W.P.(C) No. 245/2023, W.P.(C) No. 203/2023, W.P.(C) No. 215/2023, W.P.(C) No. 200/2023, W.P.(C) No. 265/2023, W.P.(C) No. 249/2023, W.P.(C) No. 295/2023, W.P.(C) No. 217/2023, W.P.(C) No. 237/2023, W.P.(C) No. 236/2023, W.P.(C) No. 234/2023, W.P.(C) No. 361/2023, W.P.(C) No. 326/2023, W.P.(C) No. 329/2023, W.P.(C) No. 347/2023, W.P.(C) No. 332/2023, W.P.(C) No. 324/2023, W.P.(C) No. 338/2023, W.P.(C) No. 403/2023, W.P.(C) No. 383/2023, W.P.(C) No. 417/2023, W.P.(C) No. 588/2023, W.P.(C) No. 363/2023, W.P.(C) No. 424/2023, W.P.(C) No. 402/2023, W.P.(C) No. 422/2023, W.P.(C) No. 476/2023, W.P.(C) No. 433/2023, W.P.(C) No. 413/2023, W.P.(C) No. 426/2023, W.P.(C) No. 458/2023, W.P.(C) No. 459/2023, W.P.(C) No. 465/2023, W.P.(C) No. 454/2023, W.P.(C) No. 448/2023, W.P.(C) No. 521/2023, W.P.(C) No. 584/2023, W.P.(C) No. 546/2023, W.P.(C) No. 694/2023, W.P.(C) No. 693/2023, W.P.(C) No. 566/2023, W.P.(C) No. 528/2023, W.P.(C) No. 541/2023, W.P.(C) No. 557/2023, W.P.(C) No. 542/2023, W.P.(C) No. 553/2023, W.P.(C) No. 602/2023, W.P.(C) No. 596/2023, W.P.(C) No. 657/2023, W.P.(C) No. 620/2023, W.P.(C) No. 634/2023, W.P.(C) No. 652/2023, W.P.(C) No. 643/2023, W.P.(C) No. 647/2023, W.P.(C) No. 649/2023, W.P.(C) No. 1192/2023, W.P.(C) No. 212/2023, W.P.(C) No. 480/2023, W.P.(C) No. 683/2023, W.P.(C) No. 797/2023, W.P.(C) No. 798/2023, W.P.(C) No. 885/2023, W.P.(C) No. 811/2023, W.P.(C) Diary No(s). 20508/2023, W.P.(C) No. 601/2023, W.P.(C) No. 663/2023, W.P.(C) No. 617/2023, W.P.(C) No. 641/2023, W.P.(C) No. 690/2023, W.P.(C) No. 639/2023, W.P.(C) No. 729/2023, W.P.(C) No. 728/2023, W.P.(C) No. 743/2023, W.P.(C) No. 711/2023, W.P.(C) No. 667/2023, W.P.(C) No. 668/2023, W.P.(C) No. 684/2023, W.P.(C) No. 778/2023, W.P.(C) No. 786/2023, W.P.(C) No. 709/2023, W.P.(C) No. 734/2023, W.P.(C) No. 770/2023, W.P.(C) No. 735/2023, W.P.(C) No. 774/2023, W.P.(C) No. 740/2023, W.P.(C) No. 731/2023, W.P.(C) No. 751/2023, W.P.(C) No. 818/2023, W.P.(C) No. 861/2023, W.P.(C) No. 883/2023, W.P.(C) No. 903/2023, W.P.(C) No. 779/2023, W.P.(C) No. 845/2023, W.P.(C) No. 791/2023, W.P.(C) No. 839/2023, W.P.(C) No. 787/2023, W.P.(C) No. 871/2023, W.P.(C) No. 810/2023, W.P.(C) No. 805/2023, W.P.(C) No. 803/2023, W.P.(C) No. 795/2023, W.P.(C) No. 842/2023, W.P.(C) No. 924/2023, W.P.(C) No. 919/2023, W.P.(C) No. 926/2023, W.P.(C) No. 920/2023, W.P.(C) No. 997/2023, W.P.(C) No. 886/2023, W.P.(C) No. 915/2023, W.P.(C) No. 936/2023, W.P.(C) No. 954/2023, W.P.(C) No. 1021/2023, W.P.(C) No. 1052/2023, W.P.(C) No. 1004/2023, W.P.(C) No. 973/2023, W.P.(C) No. 1023/2023, W.P.(C) No. 1016/2023, W.P.(C) No. 1026/2023, W.P.(C) No. 1041/2023, W.P.(C) No. 1090/2023, W.P.(C) No. 1116/2023, W.P.(C) No. 1094/2023, W.P.(C) No. 1145/2023, W.P.(C) No. 1101/2023, W.P.(C) No. 1065/2023, W.P.(C) No. 1071/2023, W.P.(C) No. 1095/2023, W.P.(C) No. 1111/2023, W.P.(C) No. 1068/2023, W.P.(C) No. 1110/2023, W.P.(C) No. 1040/2023, W.P.(C) No. 1132/2023, W.P.(C) No. 1107/2023, W.P.(C) No. 1171/2023, W.P.(C) No. 1221/2023, W.P.(C) No. 1233/2023, W.P.(C) No. 1217/2023, W.P.(C) No. 1194/2023, W.P.(C) No. 1242/2023
Decided On : 09-11-2023
JUDGMENT :
Dr Dhananjaya Y Chandrachud, CJI.
Table of Contents
| I. Background |
| II. Scheme of the IBC |
| III. Submissions |
| A. Submissions on behalf of the Petitioners |
| B. Submissions on behalf of the Respondents |
| IV. Analysis |
| A. Comparative Analysis of Part II and Part III of the IBC |
| 1. Stages under Part II and III |
| 2. The Role of the Resolution Professional in Corporate as opposed to Individual Insolvency |
| 3. The impact of a moratorium under Section 14 of Part II vis-a-vis interim-moratorium under Section 96 of Chapter III of Part III |
| 4. The Role of the Adjudicating Authority |
| B. Applicability of the Principles of Natural Justice |
| 1. Role of the Resolution Professional as a facilitator is to collate facts |
| 2. Role of the Adjudicatory Authority |
| 3. A right of representation has been provided under Section 99(2) |
| C. Challenge to the constitutional validity |
| V. Conclusion |
1. Applications for condonation of delay in refiling the writ petitions are allowed.
I. Background
2. In a batch of three hundred and eighty four petitions under Article 32 of the Constitution, the petitioners challenge the constitutional validity of Sections 95 to 100 of the Insolvency and Bankruptcy Code 20161[“IBC”]. The individual facts of each case are not reproduced here as we are deciding the constitutionality of the above provisions of the IBC.
3. The principle aims of the IBC are to promote investment, and resolution of insolvencies of corporate persons, firms, and individuals in a time bound manner. The IBC consolidated and amended a web of laws which had led to an ineffective and inefficient mechanism for resolution of insolvencies marked with significant delays.
4. Part III of the IBC deals with insolvency resolution and bankruptcy for individuals and partnership firms. Chapter III of Part III which is titled “Insolvency Resolution Process” (“IRP”) comprises of Sections 94 to 120. Prior to the introduction of the IBC, insolvency in relation to individuals was governed by the provisions of the Presidency Towns Insolvency Act 1909 and the Provincial Insolvency Act 1920, both of which stand repealed.
5. The provisions of the IBC apply to personal guarantors to corporate debtors.2[Section 2(e), IBC as amended by the Amending Act 8 of 2018]. In exercise of the power conferred by Section 1(3), a notification was issued on 15 November 2019 by the Union Government in the Ministry of Corporate Affairs. The notification brought into force Section 2(e), Section 78 (except with regard to fresh start process), Section 79, Section 94 to 187, Sections 239(2)(g), (h) and (i), Sections 239(2)(m) to (zc); Section 239(2)(zn) to (zs) and Section 249. The notification was challenged before this Court. In Lalit Kumar Jain v Union of India, (2021) 9 SCC 321, a two-Judge Bench inter alia, held that the liability of a guarantor is not discharged merely on the discharge of the corporate debtor.
6. By Amending Act 26 of 2018, Parliament introduced amendments inter alia, in Section 60 which provides for the jurisdiction of the adjudicating authority, namely, the National Company Law Tribunal.4[“Tribunal”] Among other things, the amendments to Section 60 comprehend the jurisdiction of the Tribunal in matters involving the bankruptcy of a corporate guarantor or personal guarantor, as the case may be, of a corporate debtor.
7. In order to consider the nature of challenge in these proceedings, it would be appropriate to make a brief reference to the provisions of the IBC.
II. Scheme of the IBC
8. Part I of the IBC deals with preliminary matters, such as its application and definitions. Part II deals with insolvency resolution and liquidation for corporate persons. Part III deals with insolvency resolution and bankruptcy for individuals and partnership firms. Part IV provides for the regulation of in
Lalit Kumar Jain v Union of India
Ujjam Bai v State of Uttar Pradesh
Swiss Ribbons Private Limited v Union of India
Essar Steel India Limited v Satish Kumar Gupta
K.S. Puttaswamy (9 Judge Bench) v Union of India
State Bank of India v Rajesh Agarwal
The Registrar of NCLT performs a ministerial function when receiving petitions under Section 95 of the Insolvency Code, without adjudicating on their merits.
Section 97(3)-(5) requirement to direct Board for resolution professional nomination is directory; Adjudicating Authority may appoint directly from IBBI-shared panel under Rule 8(2) for personal guar....
Judicial determination in insolvency proceedings must follow due process, including adherence to principles of natural justice at the admission stage.
The court ruled on the procedural compliance for initiating insolvency proceedings against Personal Guarantors, emphasizing the need for detailed reasoning by the Adjudicating Authority.
Procedural compliance under Sections 95, 99, and 100 of the IBC is essential before admitting insolvency proceedings against personal guarantors.
The Court emphasized the necessity for the Adjudicating Authority to properly consider objections and follow statutory procedures in insolvency resolution proceedings against personal guarantors.
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