Key Points
The Supreme Court allowed banks to initiate insolvency proceedings against personal guarantors of loans taken by defaulter companies without giving them an opportunity to present their stand in what experts said was a key ruling that could speed up the bankruptcy process...
A bench led by chief justice of India DY Chandrachud dismissed a set of petitions filed by former promoters of bankrupt companies, including Anil Ambani, Venugopal Dhoot and Sanjay Singal, challenging personal insolvency proceedings initiated against them..
It also upheld various provisions of the Insolvency and Bankruptcy Code, 2016 (IBC) that had been challenged on grounds such as the alleged absence of due process and violation of natural justice principles...
Challenging the validity of provisions of Part III of IBC that are applicable to personal guarantors of a corporate debtor, the petitions stated that they were manifestly arbitrary, unconstitutional, and violated fundamental rights..
At no point is the NCLT statutorily mandated to give the alleged debtor an opportunity to be heard or raise objections on issues of quantum of debt, limitation, illegal claim, abuse of court processes, suppression of material facts, etc, they stated, adding that the impugned provisions are susceptible to routine abuse by individuals who may wrongfully claim to be creditors..
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