Rajasthan High Court Dismisses Plea Challenging Constitutional Validity Of Section 7 Of Insolvency & Bankruptcy Code, 2016
Case: Vishnu Oil Mill Private Ltd. v. Union Of India & Ors.
Coram: Justice Sandeep Mehta and Justice Kuldeep Mathur
Case No.: D.B. Civil Writ Petition No. 2507/2022
Court Observation: “Having considered the entirety of the facts and circumstances as available on record and after appreciating the arguments advanced at bar, we are of the firm view that the statute i.e., Section 7 of the IBC as amended vide Gazette Notification dated 05.06.2020, admits no other interpretation except that a group of financial creditors can converge and join hands to touch the financial limit of Rs.1 crore stipulated under Section 7 so as to initiate a CIRP under the IBC.”
“At the outset, we may state here that validity of Section 7 of the IBC was examined by Hon’ble the Supreme Court in the case of Swiss Ribbons Pvt. Ltd. (supra) and the same was found to be compliant to the Constitution of India and the challenge to the validity of the statute was repelled by Hon’ble the Supreme Court in unequivocal terms. Despite that, the petitioner has ventured into questioning the validity of Section 7 of the IBC claiming that the challenge so laid is on a totally different proposition i.e., permissibility of a group of financial creditors jointly triggering CIRP without adhering to the requirement of default threshold of Rs.1 crore in individual capacity.”
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Keywords
Insolvency & Bankruptcy Code 2016, Constitutional Validity
