India News | HC Seeks Centre's Reply on Plea Challenging IBC Provisions on Personal Guarantors
Get latest articles and stories on India at LatestLY. The Delhi High Court has asked the Centre and the IBBI to respond to a plea by former chairman of Bhushan Power and Steel Ltd (BPSL) Sanjay Singal, challenging the provisions on personal insolvency proceedings against guarantors of corporate debtors.
New Delhi, Sep 23 (PTI) The Delhi High Court has asked the Centre and the IBBI to respond to a plea by former chairman of Bhushan Power and Steel Ltd (BPSL) Sanjay Singal, challenging the provisions on personal insolvency proceedings against guarantors of corporate debtors.
A bench of Chief Justice D N Patel and Justice Prateek Jalan issued notices and asked the ministries of Law and Justice and Corporate Affairs, Insolvency and Bankruptcy Board of India (IBBI) and State Bank of India to file their replies on the petition.
The court listed the matter for further hearing on October 6.
It refused to stay, at this stage, a notice issued by SBI to Singal seeking to invoke personal guarantee under the provisions.
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The petition has sought to strike down various sections of the Insolvency and Bankruptcy Code (IBC) which apply to personal guarantors of corporate debtors.
It said that even as the corporate insolvency resolution process of BPSL is pending, SBI has initiated recovery proceedings before the Debt Recovery Tribunal against Singal invoking his various guarantees.
He had stood as surety in his personal capacity for certain loans taken by BPSL from SBI, it said.
In November 2019, the Ministry of Corporate Affairs notified the provisions of the Code on personal insolvency against personal guarantors to corporate debtors and in August this year, a notice was issued by SBI to Singal under them, the plea said.
The petition claimed that the unlawful attempt of the central government to enforce certain provisions of the Code only in relation to personal guarantors to corporate debtors is wholly impermissible in law and it amounts to an unconstitutional usurpation of legislative power by the executive.
It said the ministry's notifying the sections in relation to personal guarantors to corporate debtors is without jurisdiction and arbitrary, discriminatory and unconstitutional.
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