Adjudicating Authority Is Not Bound By The Recommendation Of The Resolution Professional Under Section 99 Of The Insolvency And Bankruptcy Code, 2016 : Karnataka High Court
Live LawA division bench of the Karnataka High Court in its recent judgement/dated April 5, 2022, dismissed a writ petition challenging the constitutional validity of Sections 95, 99 and 100 of the Insolvency and Bankruptcy Code, 2016 as it found no merit to the challenge. Background: An application was filed before the Hon'ble National Company Law Tribunal, Bangalore by the Financial Creditor * through the Resolution Professional under Section 95 of the Code for initiation of personal insolvency resolution process against the Personal Guarantor. The said appointment of the Resolution Professional was challenged by the Personal Guarantor by filing a writ petition before the Karnataka High Court, seeking the following: Declaration that Section 95 of the Code is unconstitutional to the extent that it permits the filing of applications through the resolution professional. Arguments The Petitioner contended that under Section 95 of the Code, an application can be filed to initiate insolvency resolution by a creditor through a Resolution Professional. The Court held that the process contemplated under Sections 95 to 100 is a time bound process, which requires the Resolution Professional to firstly give reasons in support of his recommendation.