Section 42 Of The IBC And The Doctrine Of Constructive Notice: Examining The Binding Nature Of Public Liquidation Records On Creditors
- IJLLR Journal
- Sep 13
- 2 min read
Manglam Kumar Singh, School of Legal Studies, CMR University
Ashlesha Pradhan, School of Legal Studies, CMR University
ABSTRACT
The liquidators in insolvency proceedings have the power to approve and disapprove the claims of the stakeholders. In a state where the law is supreme, checks and balances are an essential tool to review the decisions of any authority. This paper is going to explore the doctrine of constructive notice and Section 42 of the IBC, 2016. Section 42 of the IBC deals with the right of creditors to appeal to the Adjudicating Authority. Furthermore, the paper is going to analyse whether the notice published under Regulations 13 and 31 of the IBBI(Liquidation Process)Regulations are valid notice to all the stakeholders. Through doctrinal and case law analysis, the research reveals that courts generally uphold public disclosures as sufficient notice, thereby triggering limitation periods. However, the paper argues that while constructive notice ensures procedural efficiency, it may disadvantage creditors who lack actual or reasonable access to such publications, particularly small or rural stakeholders.
The precedents regarding constructive notices support the publication procedure only where due process is followed; however, it should not be ignored by the deciding authority when the creditor has a reasonable explanation of the absence of actual notice or ineffective notice. The paper will further discuss the legislative and procedural reforms that could ensure a fair balance between efficiency and justice. It further supports the concept of publication of notices in local languages and granting the deciding authorities the power to condone the delays after proper explanation by the parties. In summary, the paper highlights the critical need to align legal assumptions with the practical challenges faced by the stakeholders during the process of liquidation.
Keywords: Liquidator, Constructive notice, adjudicating authority, stakeholders’ right.
