Constitution of India – Art.226 – Insolvency and Bankruptcy Code, 2016 – s.95 – Whether the High Court correctly exercised its writ jurisdiction to interdict the personal insolvency proceedings under the IBC against respondent no. 1: Held: The Adjudicating Authority, by its order dated 16.02.2024, has followed the procedure envisaged u/s.95 to 100 of the IBC – It specifically observed that respondent no. 1’s objections regarding limitation and waiver of the guarantee will be considered once the resolution professional submits his report – This is the correct approach as the appointment of a resolution professional, at the very threshold, is statutorily mandated u/s.97 of the IBC – S.99 requires the resolution professional to, at the first instance, gather information and evidence regarding repayment of the debt, and ascertain whether the application satisfies the requirements of s.94 or s.95 of the IBC – The existence of the debt will first be examined by the resolution professional in his report, and will then be judicially examined by the Adjudicating Authority when it decides whether to admit or reject the application u/s.100 – This Court is 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 u/s.100 of the IBC – It is well-settled that when statutory tribunals are constituted to adjudicate and determine certain questions of law and fact, the High Courts do not substitute themselves as the decision-making authority while exercising judicial review – In the present case, the proceedings had not even reached the stage where the Adjudicatory Authority was required to make such determination – Rather, the High Court exercised jurisdiction even prior to the submission of the resolution professional’s report, thereby precluding the Adjudicating Authority from performing its adjudicatory function under 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 – In fact, the entire rationale behind appointing a resolution professional u/s.97 is to facilitate this determination by the Adjudicating Authority – The High Court ought not to have interdicted the proceedings under the statute and assumed what it did while exercising jurisdiction u/Art.226 of the Constitution. [Paras 9, 10, 11, 12]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Ankit Gyan. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
This page is for informational and research purposes only and does not constitute legal advice. Consult a qualified advocate for advice specific to your situation.