Constitutional Validity Of Section 95-100 Of IBC
- IJLLR Journal
- 1 hour ago
- 2 min read
Shakshi Rana, Chandigarh University
Adv. Aryan Verma, Chandigarh University
The Insolvency and Bankruptcy Code, 2016 (IBC), was enacted to consolidate and amend laws relating to reorganization and insolvency resolution of corporate persons, partnership firms, and individuals in a time-bound manner. Among its various provisions, Sections 95 to 100 deal specifically with the insolvency resolution process for individuals and partnership firms. These sections were challenged for their constitutional validity, leading to significant judicial scrutiny by the Supreme Court of India.
On November 9, 2023, the Supreme Court of India added a landmark judgment, three-Judge Bench of Dr DY Chandrachud, J B Pardiwala, and Manoj Misra has held in the matter of Dilip B. Jiwrajka v. Union of India and Others [Writ Petition (Civil) No. 1281 of 2021] (decided along with multiple other similar tagged-along writ petitions on similar legal issue), has upheld the constitutional validity of provisions of the Insolvency and Bankruptcy Code, 2016 (“IBC”) pertaining to insolvency resolution process of personal guarantors. For the purpose of reference herein, Mr. Dilip B. Jiwrajka shall be referred to as the “Petitioner” and Union of India shall be referred to as the “Respondent” upholding the constitutional validity of Sections 95 to 100 of the Insolvency and Bankruptcy Code, 2016 (IBC), in response to demanding situations raised on the grounds of privacy, natural justice, and procedural fairness. This judgment greatly improves insolvency jurisprudence, especially regarding individual insolvency resolution processes. The court’s nuanced reasoning clarified legislative reason, the resolution professional's role (RP), and the stability between efficiency and rights protection.
Notably, by way of background, in the matter of Lalit Kumar Jain v. Union of India [(2021) 9 SCC 321], the Supreme Court has, inter alia, held that the liability of a guarantor is not discharged merely on the discharge of the Corporate Debtor.
BACKGROUND:
Sections 95 to 100 of the IBC govern the insolvency resolution process for individual and partnership companies. The provisions have been challenged on multiple constitutional • The board powers granted to the Resolution Professional (RP) under section 99, which allows for searching for information from the debtor, were alleged to violate the right to privacy under Article 21 of the Indian constitution.
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