The Supreme Court lately accepted to consider the plea filed by Insolvency and Bankruptcy Board of India (IBBI) seeking transfer of a batch of petitions challenging the IBC provisions relating to insolvency of private guarantors (Insolvency and Bankruptcy Board of India v. Lalit Kumar Jain & Ors).
Challenges to those provisions, pending before various High Courts, are all sought to be transferred to the Supreme Court. These involve the petition to transfer Anil Ambani's case concerning his personal guarantee from the Delhi High Court to the Apex Court. In its petition seeking transfer of these pending cases, IBBI has submitted that the various writ petitions have been filed in more than one High Court which raise substantial questions of law of general importance.
All of those unresolved writ petitions challenge the constitutional validity of Part III of the IBC, which deals with insolvency resolution for people and partnership firms. Sections 95, 96, 99, 100 and 101 even have been assailed in these petitions to the extent of being applicable to non-public guarantors while the principles framed by the Central government in 2019 also stand challenged.
In reference to a number of these pending writs, the petitioners have secured interim orders from the High Courts which might cause stalling of the proceedings, it's submitted. The Delhi High Court lately stayed the insolvency proceedings against Anil Ambani in his capacity as a guarantor. This stay was turned down to be vacated by the Supreme Court and thus remains to be in force currently.
Moreover, the Delhi High Court, where a large chunk of these petitions remain pending, earlier this month directed that the interim moratorium under Section 96 of IBC shall continue to be in effect altogether in cases where applications under Sections 94 and 95 are filed.
In light of a proliferation of litigation touching upon an equivalent question of law spread across various High Courts, the IBBI has prayed for the Supreme Court to transfer all the petitions to itself and listen to the challenge to the vires of the provisions itself.
This prayer is also made in light of the possibility of conflicting judgments being passed by different constitutional courts.