Aastha Thakur
Published on: 31th July 2022 at 17:10 IST
Businessman Anil Ambani has filed application in the Supreme Court challenging the validity of provisions of Part III of the Insolvency and Bankruptcy Code, 2016, as far as it is applicable to Personal Guarantors of a Corporate Debtor.
The application mainly challenges the provisions of Section 95, 96, 97, 99, 100 of Part III Insolvency and Bankruptcy Code, 2016.
The Bench led by Justice DY Chandrachud will be hearing the application and all the related matters pending before the Court on August 3.
It is argued by the petitioner that the impugned provisions are manifestly arbitrary, unconstitutional, directly violating the fundamental rights under Articles 14, 19 and 21 of the Constitution of India.
The issue generates from the personal guarantee given by Ambani in exchange for loans taken by Reliance Communications Ltd (RCom) and Reliance Infratel Ltd (RITL) from the State Bank of India (SBI).
In 2016, amount of personal guarantees for two loans amounts to nearly INR 5,65,00,00,000 and 6,35,00,00,000 which was later in 2017 classified as Non-Performing Assets (NPA). The petitioner submitted its grievance regarding demand notice issued by State Bank of India dated 24.02.2020 and subsequent filing of insolvency application under Section 95 of the IBC.
It is submitted in its application that debtors/personal guarantor like him have right to know the basis and reasons on which the insolvency application filed under the Section 95 of the IBC is admitted or rejected. The plea filed termed it ex-facie arbitrary and ultra vires, violating his fundamental rights.
Ambani, through his petition, has argued that there is no statutory mandate to provide a copy of the report to the debtor/ personal guarantor, which actually formulates the very basis of the admission of the insolvency proceedings against him.
Further, it is submitted that after stage of initiation of insolvency resolution, personal guarantor should be given an opportunity to dispute why the application should be rejected. However, no such requisite is provided in the Code.