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PAMIDIGHANTAM SRI NARASIMHA, MANOJ MISRA
Bank Of Baroda – Appellant
Versus
Farooq Ali Khan – Respondent
The Supreme Court curtailed expansive judicial intervention by High Courts under Article 226, reinforcing constitutional limits on writ jurisdiction in statutory domains like personal insolvency. (!) (!) In this case, a High Court preemptively quashed proceedings against a personal guarantor by determining liability waiver—a mixed question of law and fact—disrupting the Insolvency and Bankruptcy Code's scheme mandating resolution professional scrutiny and Adjudicating Authority adjudication. (!) (!) (!)
Upholding separation of powers, the Court ruled that constitutional courts must refrain from substituting specialized tribunals, preserving statutory processes from premature judicial overrides. (!) (!) This reflects judicial activism's foundational tension: expansive review as a safeguard, yet restrained to avoid encroaching on legislative intent and tribunal autonomy. (!) (!)
The appeal was allowed, restoring proceedings and exemplifying measured judicial power amid India's evolving constitutional landscape. (138 words) (!) (!) (!) (!) (!) (!) (!) (!)
| Table of Content |
|---|
| 1. respondent's liability as guarantor (Para 3 , 4) |
| 2. respondent's claim of waiver (Para 6 , 7) |
| 3. high court's jurisdiction questioned (Para 8 , 9 , 12 , 13 , 15 , 16) |
| 4. statutory process must be followed (Para 10 , 11) |
| 5. appeal allowed (Para 14) |
JUDGMENT :
PAMIDIGHANTAM SRI NARASIMHA, J.
1. Leave granted.
2. The question for our consideration is whether the High Court could have justifiably invoked judicial review under Article 226 of the Constitution to interdict personal insolvency proceedings initiated against respondent no.1 under Section 95 of the Insolvency and Bankruptcy Code, 20161[Hereinafter ‘IBC’.] by holding that his liability as a debtor has been waived. The High Court jurisdiction was invoked against the order of the Adjudicating Authority dated 16.02.2024 appointing a resolution professional and directing him to examine the application under Section 95 and file a report under Section 99 of the IBC. Having considered the facts, legal submissions, and for the reasons to follow, we set aside the judgment and order passed by the High Court and restore the proceedings before the Adjudicatory Authority from the time of its order dated 16.02.2024 directing the
The High Court improperly exercised its jurisdiction under Article 226, disrupting the statutory process of personal insolvency proceedings mandated by the Insolvency and Bankruptcy Code.
Corporate Insolvency Resolution Proceedings – Unjustified interference with proceedings initiated under Insolvency and Bankruptcy Code 2016, breaches discipline of law.
The court upheld the constitutional validity of Sections 95 to 100 of the IBC, affirming the role of the resolution professional as facilitators, and emphasized the necessity of adhering to natural j....
The NCLT has jurisdiction to adjudicate insolvency petitions against personal guarantors even in the absence of pending CIRP against the corporate debtor, as per the provisions of the Insolvency and ....
The Court emphasized the necessity for the Adjudicating Authority to properly consider objections and follow statutory procedures in insolvency resolution proceedings against personal guarantors.
Judicial determination in insolvency proceedings must follow due process, including adherence to principles of natural justice at the admission stage.
The initiation of insolvency proceedings against a personal guarantor is valid when statutory requirements are fulfilled and guarantor's liability is co-extensive with that of the principal borrower.
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