HC seeks Centre's reply on BPSL ex-chairman plea against IBC proceedings

The Delhi High Court has asked the Centre and the IBBI to respond to a plea by former chairman of Bhushan Power and Steel Ltd (BPSL) Sanjay Singal, challenging the provisions on personal insolvency proceedings against guarantors of corporate debtors.

 

A bench of Chief Justice D N Patel and Justice Prateek Jalan issued notices and asked the ministries of Law and Justice and Corporate Affairs, Insolvency and Bankruptcy Board of India (IBBI) and State Bank of India to file their replies on the petition.

 

The court listed the matter for further hearing on October 6. It refused to stay, at this stage, a notice issued by SBI to Singal seeking to invoke personal guarantee under the provisions.

 

The petition has sought to strike down various sections of the Insolvency and Bankruptcy Code (IBC) which apply to personal guarantors of corporate debtors. It said that even as the corporate insolvency resolution process of BPSL is pending, SBI has initiated recovery proceedings before the Debt Recovery Tribunal against Singal invoking his various guarantees.