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posted by: Niranjana VB
Last updated: Jul 03, 2023 at 21:48 IST
On Monday, the SC agreed to hear several petitions challenging provisions of the insolvency and bankruptcy law that it claims violate the basic rights of those subject to insolvency proceedings.
A bench consisting of Chief Justice DY Chandrachud and Justices PS Narasimha and Manoj Misra issued notices to the Center and others on up to three petitions and ordered that the petitions be linked to a pending petition on this case
The Supreme Court agreed on Monday to hear a set of petitions challenging various provisions of the Insolvency and Bankruptcy Code (IBC) over claims that they violate basic rights such as the right to equality of those against whom insolvency proceedings have been initiated.
A bench consisting of Chief Justice DY Chandrachud and Justices PS Narasimha and Manoj Misra issued notices to the Center and others on up to three petitions and ordered that the petitions be linked to a pending petition on this case.
One of the petitions, which was heard on Monday, was filed by R Shah, through attorney Anne Mathew, challenging the constitutional validity of Sections 95(1), 96(1), 97(5), 99(1), 99(2), 99(4), 99(5), 99(6) and 100 from the blog.
These provisions deal with the various stages of insolvency proceedings against a defaulting company or individuals.
“The impugned provisions inherently violate the principle of natural justice and strike at the root of the right to subsistence, the right to trade and occupations, as well as the right to equality of the petitioner under Article 21 (Right to Life), 19(1)(g) (Right to practice any profession), and 14 (Right to Equality, respectively, of the Constitution,” the appeal reads.
It said that none of the contested rulings contemplated any opportunity to grant a hearing to an alleged personal guarantor before hiring a resolution professional and imposing a freeze on the assets of the personal guarantor.
Interestingly, Section 96(1) of the IBC strictly imposes a stay on the alleged guarantor, automatically, as soon as the application is made under Section 95 of the Act, without any requirement of prior notice which in itself is a violation of the basic defenses of the principles of natural justice.
She added, “Such restrictions on a person’s liberties, including restrictions on the payment of any debt, without providing any opportunity to be heard, are not only contrary to the powers of the Constitution but are not recognized in the law.”
She said the section 97(5) scheme of the Act does not contemplate any alternative to hiring a dissolution specialist.
(This story was not edited by the News18 staff and was published from a syndicated news agency feed – PTI)
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