Mahir Khanna, Amity Law School, Noida
ABSTRACT
The problem to be addressed through this study is to Comprehensive Examination of the Constitutionality of the Insolvency and Bankruptcy Laws.
In the past, due to various challenges to the Sick Industries Companies (Special Provisions) Act of 19852, the Recovery of Debts Due to Banks & Financial Institutions Act, 19933, and the Securitization & Reconstruction of Financial Assets & enforcement of Security Interest Act of 20024, have not produced the desired results. In light of this, Parliament passed the Insolvency & Bankruptcy Code, 20165 by combining all previously existing laws into a single piece of legislation. Following the passage of this Code, the issue of whether a few of its provisions conflicted with constitutional provisions came up.
It is hardly surprising that those who are most impacted by the debt recovery and insolvency laws—primarily debtors—would challenge those laws on the basis of their constitutionality/legality.6
Whereas the aim of the Code was to promptly restructure and resolve the insolvency of partnerships, individuals, and corporations, however repeated challenges to the provisions under this law by debtors brought to the fore gaps in various provisions of the Code. The Insolvency and Bankruptcy Code, 2016 also encountered a constitutional issue, continuing the aforementioned trend. In significant decisions, the Supreme Court of India upheld the constitutional validity of the Code and rejected the challenge. Therefore, this research will attempt to find out the difficulties faced in Part I and Part II of the Code.
This paper’s goal is to provide an overview of the various grounds on which the petitioners contested the Code’s constitutionality as well as the Supreme Court’s ruling on those grounds.
This paper will examine how the legality of various Code provisions (Part I and Part II) has been contested before the Supreme Court and various High Courts. The paper also explain how the courts have defended the constitutionality of certain issues.7
