IBC - Constitutionality of Personal Guarantors Judgement

In its recent decision in the matter of Dilip B. Jiwrajka v. Union of India & Ors [2023 SCC OnLine SC 1530], a three judge bench of the Hon’ble Supreme Court dismissed a batch of 384 writ petitions filed under Article 32 of the Constitution assailing the constitutionality of Sections 95, 96, 97, 99 and 100 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) pertaining to initiation of insolvency proceedings against individuals and partnership firms codified in Part III of the IBC. The petitioners contended that: (a) Part III envisages appointment of resolution professional without making any judicial determination of existence of debt and default; (b) the debtor is provided an opportunity of being heard only at a belated stage which is in contravention of the principles of natural justice; (c) the resolution professional has been conferred with wide ranging powers which are arbitrary in nature and contravenes a debtor’s right to privacy; (d) an interim moratorium comes into force without any judicial determination of debt and default.