New Delhi: The Delhi High Court has sought a response from the Centre and others on a petition filed by ex-Chairman of Bhushan Power and Steel Ltd. (BPSL) Sanjay Singal challenging the provisions of personal insolvency proceedings against personal guarantors under the Insolvency & Bankruptcy Code, 2016.
A division bench of the high court presided by Chief Justice D.N. Patel and Justice Prateek Jalan issued notice to the Modi government, Insolvency and Bankruptcy Board of India and the State Bank of India on Singal’s plea which has sought the striking down of Sections 95, 96, 97, 99, 100 and 101 of the IBC, insofar as they apply to personal guarantors of corporate debtors, and the consequent rules.
The bench, however, refused to pass any order of stay in respect to the SBI’s notice to Singal under the impugned provisions.
Notwithstanding the pendency of the corporate insolvency resolution process of Bhushan Power and Steel, the SBI had initiated recovery proceedings before the Debt Recovery Tribunal against Singal in relation to several guarantees.
In the meantime, the Central government notified the provisions on personal insolvency against personal guarantors to corporate debtors and a notice was issued by the SBI to Singal under them.
After hearing the parties, the court listed the matter for further hearing on October 6.