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The argument that Section 8 of the Insolvency Act prohibits such filings is not supported by the texts or judicial precedents, as no explicit clause bars insolvency petitions against SBI.
Analysis and Conclusion
References:- ["GOPAL PRASAD CHOURASIA VS PRABANNA KUMAR SHRIVASTAVA - Madhya Pradesh"]: Discusses that the Insolvency Act is a special law and, unless specifically barred, can be applied to entities including banks.- ["SHANKAR LAL VS SHADI RAM RAM SWAROOP - Delhi"]: Highlights that the provisions of insolvency laws are generally applicable unless explicitly excluded; no mention of prohibition against filing against SBI.- Overall, the legal framework does not support an outright prohibition under Section 8 of the Insolvency Act against filing insolvency petitions against SBI.
In the complex world of Indian insolvency law, businesses and creditors often wonder about the limits of insolvency proceedings. A common query arises: whether an insolvency petition can be filed against SBI (State Bank of India), and whether Section 8 of the Insolvency Act prohibits filing of an IP (Insolvency Petition) against SBI. This question touches on critical aspects of jurisdiction, statutory protections for banks, and the framework of the Insolvency and Bankruptcy Code, 2016 (IBC).
This blog post provides a general overview based on legal principles and relevant case laws. Note: This is not legal advice. Consult a qualified lawyer for specific cases, as outcomes depend on facts and current law.
India's insolvency regime has evolved significantly with the IBC, which primarily governs corporate insolvency resolution processes (CIRP). Prior to IBC, older laws like the Provincial Insolvency Act, 1920, and Presidency Towns Insolvency Act applied to individuals and firms. However, for corporate entities like banks, special rules prevail.
Under IBC, petitions for insolvency (under Sections 7, 9, or 10) can be filed against corporate debtors. But banks, including public sector giants like SBI, are classified as financial service providers (FSPs). Section 227 of IBC states that its provisions do not apply to notified FSPs, including banking companies. This creates a bar on standard CIRP against such entities. VYSALI PHARMACEUTICALS LIMITED vs T. BEENA - 2025 Supreme(Online)(Ker) 37028
Civil Court lacks jurisdiction in matters pending before NCLT as per Insolvency and Bankruptcy Code. VYSALI PHARMACEUTICALS LIMITED vs T. BEENA - 2025 Supreme(Online)(Ker) 37028
Instead, banks face resolution through mechanisms under the Banking Regulation Act, 1949, and RBI oversight, such as Prompt Corrective Action (PCA) or amalgamation schemes.
Generally, no, a standard insolvency petition under IBC cannot be filed against SBI. As India's largest public sector bank, SBI enjoys statutory protections:
Petitioners challenging NCLT-related orders must approach NCLT first: Section 60 (5), if any claims made by any persons either party to the petition or other than party to the petition, they have to approach the NCLT for their grievance in respect of either the insolvency or any other grievance. VYSALI PHARMACEUTICALS LIMITED vs T. BEENA - 2025 Supreme(Online)(Ker) 37028
The reference to Section 8 of the Insolvency Act requires clarification, as it may pertain to different statutes:
No provision in Section 8 (under either Act) explicitly bars petitions against SBI. The prohibition stems from IBC's exclusionary framework, not Section 8 directly.
Indian courts have addressed insolvency jurisdiction extensively, providing guidance:
The High Court in a key ruling held civil suits unmaintainable amid IBC proceedings, quashing injunctions and directing claims to NCLT. This underscores that insolvency matters against regulated entities route through specialized forums. VYSALI PHARMACEUTICALS LIMITED vs T. BEENA - 2025 Supreme(Online)(Ker) 37028
To initiate CIRP, applicants must prove debt disbursal. Mere security provision (e.g., mortgage) does not qualify one as a financial creditor: An applicant must establish disbursal of funds to qualify as a financial creditor under the Insolvency and Bankruptcy Code. P.L. Srinivas Reddy vs Techtrans Constructions India Pvt Ltd - 2025 Supreme(Online)(NCLT) 7857
The NCLT dismissed a petition lacking proof: The Applicant’s claim of being a financial creditor was found unsubstantiated as he did not disburse funds to the Respondent. P.L. Srinivas Reddy vs Techtrans Constructions India Pvt Ltd - 2025 Supreme(Online)(NCLT) 7857
Under Provincial Insolvency Act, petitions must follow rules: The application for insolvency must comply with the rules framed under Section 79 of the Provincial Insolvency Act. Courts allow amendments for compliance. Satish Chandra Addya VS Firm Raj Narain Pakhira and Rasik Lal Pakhira BR Rasi Lal Pakhira @APPELLANT - 1923 Supreme(Cal) 256
Banks like SBI feature in disputes, but as petitioners, not debtors. One case deprecated a bank's withdrawal of CIRP without due process. M. S. HILLERY FASHION COTFAB LIMITED VS ASSISTANT GENERAL MANAGER BANK OF BARODA - 2022 Supreme(Guj) 515
In consumer disputes involving bank deposits, insolvency petitions by proprietors halted refunds, highlighting limits on parallel proceedings. Indian Ananda (Fund) Bank VS T. A. Radhakrishnan Ushus
Section 8 of the Arbitration Act intersects with insolvency, requiring written applications for referral. Courts cannot dismiss suits on verbal pleas. Alok Kumar Lodha VS Asian Hotels (North) Limited - 2020 Supreme(Del) 1546Dharamvir Khosla VS Asian Hotels (north) Ltd. - 2020 Supreme(Del) 738
These cases illustrate insolvency's procedural rigor, rarely favoring petitions against banks.
Creditors facing defaults by SBI (rare, given its stability) have options:- Debt Recovery Tribunals (DRT): Under Recovery of Debts and Bankruptcy Act, 1993 (RDB Act).- RBI Grievance Mechanisms: For systemic issues.- Civil Suits: Subject to IBC bar if insolvency-linked. State Bank Of India vs Npt Offset Press Private Limited - 2026 Supreme(Online)(Mad) 1037
Joint complaints or multi-party actions may fail if causes differ. Indian Ananda (Fund) Bank VS T. A. Radhakrishnan Ushus
In summary, while insolvency law empowers creditors, statutory banks like SBI operate outside standard IP frameworks. Evolving jurisprudence emphasizes specialized forums. Stay informed on RBI notifications and IBC amendments for updates.
Disclaimer: Laws change; this analysis is general (circa available cases). Professional advice is essential.
(Word count: approx. 1050)
#InsolvencyLaw, #IBCIndia, #SBIlegal
... ( 8 ) LEARNED counsel for the petitioner has however, cited anumber of authorities relating to the effect of section 28 (2) of the Provincial Insolvancy Act 1920 nernely Peary lal v. Kishan Sarup (A. 1. R. 1963 mad. 284 (?), A. I. ... The provisions of section 28of the lnsoivancy Act are differertly worded and the object behind them is different. Firstly the provisions of Insolvancy Act are in like the Slum Areas Act a permanent....
Section 60 (5), if any claims made by any persons either party to the petition or other than party to the petition, they have to approach the NCLT for their grievance in respect of either the insolvancy or any other grievance. ... Without doing so, directly filed the original petition which is not maintainable, therefore, prayed for dismissal of the original petition. ... 8. ... JUDGMENT Section 63 of the Insolvency and Bankruptcy ....
Hence, challenging the same, the present petition is filed. 4. ... The learned counsel for the respondent/accused submitted that the appeal itself has already been argued by both side and the petitioner/complainant has also filed his written submissions and now the matter is posted on 22.09.2025 for filing of written submissions of the respondent/accused. ... The main contention of the learned counsel for the petitioner/complainant is that the respondent is earning money and that the first appellate Court ought to have ....
Negotiable Instruments Act against the respondents in S.T.C.No.182 of 2016. The trial Cout,t by judgment dated 10.10.2019 dismissed the complaint and discharged the accused/respondents, against which, the present appeal is filed. ... JUDGMENT The petitioner as complainant filed a private complaint under Section 138 of the a href="./..
The petitioner filed an application under Section 20 of the Act, which was registered as S. No. 2957/88 and was allowed on 20th July, 1990. ... ... ( 1 ) THIS is a petition filed under Sections 33 and 37 (5) of the Arbitration Act, 1940 (for short "the Act") praying that the arbitration clause contained in agreement to sell dated 6th March, 1987 be declared to be of no effect and valid ... For example, insolvancy proceedings, probate proceedings, su....
We are of opinion that the Court below should inquire into the present value of the properties and decide whether, having regard to the proviso (a) to Section 24 of the Act, the debtors have proved inability to pay their debts. 8. ... concur in the filing of the same." ... It is unnecessary to refer to the cases decided under the former Insolvency Act (III of 1907). Section 79 of the present Provincial Insolvency Act (V of 1920) provides that the Hig....
..Respondent/Plaintiff Prayer : Application is filed under Order XIV Rule 8 of the Original Side Rules Read With Order VII Rule 1 of the CPC Read With Section 11 of the Commercial Courts Act, 2015, to reject the suit in C.S. ... Hence, it becomes necessary to examine whether the present suit is barred by any other law. 8. The proceedings before the DRT were instituted under the RDB Act. ... (ii) The plaintiff seeks enforcement of the SBI OTS 2017 s....
It only considered as to whether despite amendment of section 141 C.P. ... The legal representatives of the deceased petitioner filed a petition under section 151 C.P.C. asking the court to substitute the petitioners, namely the legal representatives of the original plaintiff, now deceased, in the suit. The trial court relied upon a single bench decision in Salil Kumar v. ... Code by an amending Act of 1976 section 141 would be applicable to an application under Order....
5.6 Subsequent to the filing of CP (IB) No.74 of 2024, the Applicant filed the present Application under Section 5 8 of the Transfer of Property Act, 1882 , a mortgage is a transfer of an interest in specific immovable property for the purpose of securing the payment of money. ... In this regard, reliance is placed on the definition of borrower in Section 2(1)(f) of the SARFAESI Act. ... 3.2 It is further contended that the present Application is misconceived, not ....
Insolvency Act is a (special law), and in the absence of any specific provision to the contrary, the Civil Procedure Code cannot limit or otherwise affect the provisions of the Insolvancy Act. ... They respectively canvassed arguments relating to the above referred contentions in the petition and the Returns. It is necessary to refer to the relevant provisions of the Provincial Insolvency Act, 1920 (for short called the Act ). (i) Section 4 is as follows : -"4. ... On....
It may be noted that the application was filed by the respondent Bank under section 12A of the I.B. Code, read with Regulation 30A of the CIRP Regulations, 2016, for withdrawal of the aforesaid Application No. 526 of 2018 through IRP. The respondent Bank had initiated proceedings under the Insolvancy and Bankruptcy Act and filed Application under Section 7 before the NCLT, Ahmedabad, being Application No. CP (IB)526/18. The conduct of the Bank is deprecated by the NCLT vide its order dated 09.01.2020.
On an objection under Section 8 of the Act, whether the Court can decide that the dispute is arbitrable or not or the parties are required to be relegated to the Arbitrator for decision on the arbitrability of the dispute? Whether an objection under Section 8 of the Act can be taken without filing an application?
Whether an objection under Section 8 of the Act can be taken without filing an application? Based on the contentions of the parties, the following issues arise for consideration before this Court:- I. On an objection under Section 8 of the Act, whether the Court can decide that the dispute is arbitrable or not or the parties are required to be relegated to the Arbitrator for decision on the arbitability of the dispute?
By Ext.P10 judgment delivered on 1.7.2005 the said original petition was dismissed. However, this Court directed the State Bank of India to consider whether the Regulations can be amended in exercise of the power conferred on the State Bank of India under Section 63 of the State Bank of India (Subsidiary Banks) Act, 1958. The petitioner thereafter filed Ext.P11 representation dated 20.10.2004 before the respondents claiming payment of superannuation pension contending that as on 31.3.2001 she had an actual service of 19 years, 11 months and 11 days, which has to be rounded ....
Further joint complaint is not entertainable by the forum below and therefore the course open to us is to dismiss the complaint. In view of the fact of filing of an insolvancy petition by the second opposite party to adjudge him as an insolvant we cannot pass any order directing him to pay to the complainants the deposits made by them. The first opposite party is only a proprietary concern of second opposite party and as the second opposite party received the deposits from the complainants he alone can be made liable for the return of the deposits. In the result the appeals....
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