Supreme Court Disapproves Of High Court Interdicting Insolvency Process Against Personal Guarantor At Threshold Stage In Writ Jurisdiction
1 month ago

Supreme Court Disapproves Of High Court Interdicting Insolvency Process Against Personal Guarantor At Threshold Stage In Writ Jurisdiction

Live Law  

The Supreme Court while deciding an appeal pertaining to insolvency proceedings initiated against a personal guarantor, observed that the High Court should not have prohibited such proceedings by holding that the guarantor's liability has been waived. "In light of this statutory scheme, which has been followed by the Adjudicating Authority, we are of the view that the High Court incorrectly exercised its writ jurisdiction as: first, it precluded the statutory mechanism and procedure under the IBC from taking its course, and second, to do so, the High Court arrived at a finding regarding the existence of the debt, which is a mixed question of law and fact that is within the domain of the Adjudicating Authority under Section 100 of the IBC. The primary issues involved in the present case, including the factual determination of whether the debt exists, is part of the statutory and regulatory regime of the Insolvency and Bankruptcy Code.,” the Court said and concluded that the High Court ought not to have interdicted the proceedings under Article 226 of the Constitution. The bench also referred to the recent judgment in Mohammed Enterprises Ltd v. Farooq Ali Khan which also disapproved of High Courts interfering with CIRP proceedings in exercise of writ jurisdiction.

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History of this topic

Serving Demand Notice To Personal Guarantor Under Rule 7 Of Personal Guarantors Rules Cannot Be Considered Invocation Of Guarantee: NCLAT
2 weeks, 5 days ago

Serving Demand Notice To Personal Guarantor Under Rule 7 Of Personal Guarantors Rules Cannot Be Considered Invocation Of Guarantee: NCLAT

Live Law  

The National Company Law Appellate Tribunal New Delhi bench of Justice Ashok Bhushan, Mr. Barun Mitra and Mr. Arun Baroka has held that a Notice served to the personal guarantor under Rule 7 of Insolvency and Bankruptcy Rules, 2019 cannot be considered 'Invocation of Guarantee', therefore unless a guarantee has been invoked as per the terms of the 'Deed of …

'IBC A Complete Code' : Supreme Court Disapproves Of High Court Exercising Writ Jurisdiction To Interdict CIRP
2 months, 2 weeks ago

'IBC A Complete Code' : Supreme Court Disapproves Of High Court Exercising Writ Jurisdiction To Interdict CIRP

Live Law  

Disapproving a High Court's order interdicting a Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, the Supreme Court recently observed that the IBC is a complete code in itself, having sufficient checks and balances, and thus, the exercise of supervisory and judicial review powers by High Courts demands rigorous scrutiny and. Disapproving a High Court's order interdicting a …

Date Of Default In Case Of Personal Guarantor Depends On Terms Of Contract Of Guarantee: NCLAT
3 months ago

Date Of Default In Case Of Personal Guarantor Depends On Terms Of Contract Of Guarantee: NCLAT

Live Law  

The NCLAT New Delhi bench of Justice Ashok Bhushan, Mr. Arun Baroka and Barun Mitra has held that the liability of a borrower and guarantor is co-extensive but the liability of a Guarantor stems from the contract of guarantee and therefore the date of default in the case of the guarantor depends on the terms of contract of guarantee. Since …

Indian Courts Are Not Bound By Foreign Insolvency Judgments From Non-Reciprocating Countries: Calcutta High Court
8 months, 3 weeks ago

Indian Courts Are Not Bound By Foreign Insolvency Judgments From Non-Reciprocating Countries: Calcutta High Court

Live Law  

The Calcutta High Court single judge bench of Justice Shampa Sarkar held that without a comprehensive cross-border insolvency framework, Indian courts do not recognize or enforce moratorium orders from non-reciprocating countries, such as the U.S., and thus are not obligated to stay ongoing suits due to such foreign proceedings. The trial judge rejected the Petitioner's application by holding that the …

NCLT Kochi: Creditors Can't Initiate Insolvency Proceedings Against Personal Guarantor Without Establishing Independent Default By CD
8 months, 3 weeks ago

NCLT Kochi: Creditors Can't Initiate Insolvency Proceedings Against Personal Guarantor Without Establishing Independent Default By CD

Live Law  

The National Company Law Tribunal Kochi, comprising Justice T Krishna Valli and Mr. Shyam Babu Gautam dismissed the application to initiate insolvency proceedings against the Personal guarantors under Section 95 of Insolvency and Bankruptcy Code, 2016. It held that creditors cannot initiate insolvency proceedings against personal guarantors solely based on the initiation of the Corporate Insolvency Resolution Process without showcasing …

When Can High Courts Entertain Writ Petition Under Article 226 Despite Existence Of Statutory Remedies? Supreme Court Explains
11 months, 1 week ago

When Can High Courts Entertain Writ Petition Under Article 226 Despite Existence Of Statutory Remedies? Supreme Court Explains

Live Law  

Observing that the High Court should exercise due care and caution while entertaining the petitions under Article 226 of the constitution even when there exists an alternative statutory remedy, the Supreme Court on Wednesday deprecated the High Court's interference in the auction sale proceedings completed by the Bank at the instance of the borrower despite having statutory remedy. Observing that …

Supreme Court Upholds Constitutionality Of IBC Provisions Relating To Personal Guarantors; Says Adjudicatory Role Can't Be Read Into Sec 97
1 year, 4 months ago

Supreme Court Upholds Constitutionality Of IBC Provisions Relating To Personal Guarantors; Says Adjudicatory Role Can't Be Read Into Sec 97

Live Law  

In a significant judgment, the Supreme Court on Thursday upheld the constitutionality of the provisions of the Insolvency and Bankruptcy Code relating to Personal Guarantors' Insolvency Resolution, which were introduced through the amendments made in 2019.The Court held that these provisions cannot be held as unconstitutional for not affording. In a significant judgment, the Supreme Court on Thursday upheld the …

SC Issues Notice to Centre on Pleas Challenging Provisions of Insolvency and Bankruptcy Code
1 year, 8 months ago

SC Issues Notice to Centre on Pleas Challenging Provisions of Insolvency and Bankruptcy Code

News 18  

The Supreme Court on Monday agreed to hear a batch of petitions challenging various provisions of the Insolvency and Bankruptcy Code over claims that they are violative of fundamental rights like the right to equality of those against whom insolvency proceedings have been initiated. A bench comprising Chief Justice D Y Chandrachud and justices P S Narasimha and Manoj Misra …

CIRP Can Be Initiated Against Corporate Guarantor Without Proceeding Against Principal Borrower: Supreme Court
2 years, 6 months ago

CIRP Can Be Initiated Against Corporate Guarantor Without Proceeding Against Principal Borrower: Supreme Court

Live Law  

The Supreme Court held that Corporate Insolvency Resolution Process can be initiated against the Corporate Guarantor without proceeding against the principal borrower.The liability of the guarantor is co-extensive with that of the Principal Borrower, the bench comprising Justices Indira Banerjee and JK Maheshwari observed.In this case, the Adjudicating Authority admitted. The Supreme Court held that Corporate Insolvency Resolution Process can …

Supreme Court Issues Notice On Plea Challenging Constitutionality Of IBC Provisions Relating To Personal Guarantors
2 years, 10 months ago

Supreme Court Issues Notice On Plea Challenging Constitutionality Of IBC Provisions Relating To Personal Guarantors

Live Law  

The Supreme Court has issued notice on a petition filed by a personal guarantor which raises a constitutional challenge to the personal insolvency provisions under the Insolvency & Bankruptcy Code, 2016. Since a similar issue is pending, the Court has directed to tag the present case along with the pending Special Leave Petition No. 16464 of 2021 The personal guarantor …

Insolvency Law In Review – January 2022
2 years, 11 months ago

Insolvency Law In Review – January 2022

Live Law  

The enactment of the Insolvency and Bankruptcy Code 2016 has had significant ramifications on the corporate insolvency landscape. In State Bank of India v. Mahendra Kumar Jajodia, the NCLAT, New Delhi held that the National Company Law Tribunal, Kolkata erred in holding that since no corporate insolvency resolution process or liquidation proceeding of the corporate debtor were pending, the application …

Guarantor Whose Guarantee Stands Invoked By Any Creditor Barred Under Section 29A(h) IBC: Supreme Court
3 years, 2 months ago

Guarantor Whose Guarantee Stands Invoked By Any Creditor Barred Under Section 29A(h) IBC: Supreme Court

Live Law  

The Supreme Court has delivered an important judgment interpreting the scope of Section 29A of the Insolvency and Bankruptcy Code. Section 29A IBC specifies the categories of persons who are not eligible to be resolution applicants.Sub-section of Section 29A refers to persons whose guarantees stand invoked by the creditors of the corporate debtor. Adopting a "purposive interpretation" of the provision, …

Writ Jurisdiction Cannot Be Invoked To Challenge Appointment Of Arbitrator: Kerala High Court
3 years, 2 months ago

Writ Jurisdiction Cannot Be Invoked To Challenge Appointment Of Arbitrator: Kerala High Court

Live Law  

The Kerala High Court recently held that writ jurisdiction cannot be invoked to challenge the appointment of an arbitrator since such grievances could be redressed as per the provisions of the Arbitration and Conciliation Act, 1996.Ruling that there should not be any judicial interference in the course of the arbitral proceedings for redressal of such grievances, Justice P.B. The Kerala …

Lenders To Initiate Insolvency Proceedings Against Personal Guarantors
3 years, 9 months ago

Lenders To Initiate Insolvency Proceedings Against Personal Guarantors

Live Law  

With the recovery proceedings under the Insolvency and Bankruptcy Code, 2016 not moving at the pace that it should, the Government, on November 15, 2019 came out with a new provision that empowered banks to move an application for initiation of insolvency against personal guarantors, who are usually promoters of big business houses. Petitions before various High Courts were filed …

An Analysis Of The Supreme Court Verdict On Insolvency And Bankruptcy Of Personal Guarantors Of A Corporate Debtor
3 years, 9 months ago

An Analysis Of The Supreme Court Verdict On Insolvency And Bankruptcy Of Personal Guarantors Of A Corporate Debtor

Live Law  

The Ministry of Corporate Affairs, in the bask of implementing the Insolvency and Bankruptcy Laws in India notified and brought into force the provisions of insolvency of personal guarantors of the corporate debtorvide notification dated 15th November, 2019. After enactment of the Code, insolvency proceedings against personal guarantors to corporate debtors would lie before the NCLT, in terms of Section …

Guarantors liable if firms fail to repay: Supreme Court
3 years, 9 months ago

Guarantors liable if firms fail to repay: Supreme Court

Hindustan Times  

Promoters, managing directors and chairmen, who stand as personal guarantors to corporate loans, can also be proceeded against before the company law tribunal if their firms are unable to repay debts, ruled the Supreme Court on Friday as it declared “legal and valid” a November 15, 2019, notification issued by the Union government under the Insolvency and Bankruptcy Code. Citing …

Supreme Court says personal guarantors liable for corporate debt
3 years, 10 months ago

Supreme Court says personal guarantors liable for corporate debt

The Hindu  

The Supreme Court on Friday upheld a government move to allow lenders initiate insolvency proceedings against personal guarantors, who are usually promoters of big business houses, along with the stressed corporate entities for whom they gave guarantee. In a judgment, which will ring loud and clear across the business community, a Bench of Justices L. Nageswara Rao and S. Ravindra …

[Breaking] Supreme Court Orders Transfer To Itself All Pleas Challenging Provisions of Insolvency & Bankruptcy Code On Personal Guarantors [Read Order]
4 years, 4 months ago

[Breaking] Supreme Court Orders Transfer To Itself All Pleas Challenging Provisions of Insolvency & Bankruptcy Code On Personal Guarantors [Read Order]

Live Law  

The Supreme Court has ordered the transfer of petitions pending across High Courts, challenging the provisions of Insolvency & Bankruptcy Code pertaining to the issues of personal guarantors.A bench comprising Justices L Nageswara Rao, Hemant Gupta & Ajay Rastogi heard the matter.The plea had been filed by IBBI seeking transfer on the ground of multiplicity of proceedings and to. The …

Personal insolvency: SC to decide on transferring pending cases to itself
4 years, 4 months ago

Personal insolvency: SC to decide on transferring pending cases to itself

Live Mint  

The Supreme Court Wednesday said it would pass orders on a batch of pleas filed by Insolvency and Bankruptcy Board of India seeking transfer of all petitions pending before different high courts challenging the provisions of IBC with regard to personal insolvency. Additional Solicitor General Madhavi Divan, appearing for IBBI, said that questions of law raised in these writ petitions …

[Article 226] Writ Petition Not Maintainable Against Judicial Order Passed By High Court: SC [Read Order]
4 years, 6 months ago

[Article 226] Writ Petition Not Maintainable Against Judicial Order Passed By High Court: SC [Read Order]

Live Law  

The Supreme Court has held that a writ petition under Article 226 of the Constitution would not be maintainable in order to challenge an order which has been passed by the High Court in the exercise of its judicial powers. The petitioner assailed this order passed by the High Court by filing a writ petition under Article 226 with a …

40 Important Judgments On Insolvency And Bankruptcy Code, 2016 [Part-1]
5 years, 10 months ago

40 Important Judgments On Insolvency And Bankruptcy Code, 2016 [Part-1]

Live Law  

To borrow the golden words of Justice Rohinton F. Nariman in Swiss Ribbons Pvt. THE DIFFERENCE BETWEEN SECTION 7 AND SECTION 9 OF THE CODE: Supreme Court held that for triggering Section 7 of the IBC, a default could be in respect of default of financial debt owed to any financial creditor of the corporate debtor – it need not …

Insolvency And Bankruptcy Code: Section 14 Moratorium Would Not Apply To A Personal Guarantor Of A Corporate Debtor: SC [Read Judgment]
6 years, 7 months ago

Insolvency And Bankruptcy Code: Section 14 Moratorium Would Not Apply To A Personal Guarantor Of A Corporate Debtor: SC [Read Judgment]

Live Law  

'Section 14 refers only to debts due by corporate debtors, who are limited liability companies, and it is clear that in the vast majority of cases, personal guarantees are given by Directors who are in management of the companies. The Supreme Court has held that Section 14 of the Insolvency and Bankruptcy Code, 2016, which provides for a moratorium for …

Insolvency Proceedings Against Personal Guarantors Under The Insolvency And Bankruptcy Code - Missed Opportunity By The Allahabad HC?
7 years, 6 months ago

Insolvency Proceedings Against Personal Guarantors Under The Insolvency And Bankruptcy Code - Missed Opportunity By The Allahabad HC?

Live Law  

Insolvency and Bankruptcy Code, 2016 is a crucial legislation passed by the Parliament which has the potential to be a game changer in the insolvency and bankruptcy regime in India. In this regard, Sanjeev Shriya v. State Bank of India & others before the Allahabad High Court was a fit case to settle the issue regarding initiation of insolvency process …

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