SWISS RIBBONS PVT. LTD. & ANR. versus UNION OF INDIA & ORS.

SWISS RIBBONS PVT. LTD. & ANR. versus UNION OF INDIA & ORS.

The Supreme Court held that the Insolvency and Bankruptcy Code, 2016 does not suffer from any arbitrariness or discrimination violative of Article 14. The classification between financial and operational creditors is based on intelligible differentia that bears a direct nexus to the legislative object of ensuring maximum recovery and viability of the corporate debtor. The mechanisms for triggering insolvency, eligibility, withdrawal, and priority on liquidation are rational and constitutionally valid. The tribunals’ composition and functioning comply with earlier judicial directions. The Code passes constitutional muster in its entirety.

Parties
Petitioner: Swiss Ribbons Pvt. Ltd.; Respondent: Union of India
Jurisdiction
India
Judgment Date
25 January 2019
Procedural Posture
Writ Petition (civil) No. 99 of 2018 / Final Judgment
Outcome
Petitions disposed of; challenge to the constitutional validity of the Code rejected.
Legal Topics
Constitutional Validity of the Insolvency and Bankruptcy Code, 2016, Discrimination Between Financial and Operational Creditors, Powers of Resolution Professional, Priority in Liquidation and Distribution of Assets, Role of Tribunals Under the Code
Constitutional Law Insolvency Law Constitutional Validity of the Insolvency and Bankruptcy Code, 2016 Discrimination Between Financial and Operational Creditors Powers of Resolution Professional Priority in Liquidation and Distribution of Assets Role of Tribunals Under the Code

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Legal principles 5 Authorities cited 11 Party arguments 2 Amounts and remedies 13
Sign in to unlock

Parties

Swiss Ribbons Pvt. Ltd.

Petitioner

Union of India

Respondent

Procedural Posture

Writ Petition (civil) No. 99 of 2018 / Final Judgment

Legal Issues

  1. 1 Whether the classification between financial creditors and operational creditors under the Insolvency and Bankruptcy Code, 2016 is discriminatory, arbitrary, and violative of Article 14 of the Constitution
  2. 2 Whether Section 12A of the Code, regarding withdrawal of applications, is violative of Article 14
  3. 3 Whether Section 29A has retrospective application impairing vested rights

Ratio Decidendi

The Supreme Court held that the Insolvency and Bankruptcy Code, 2016 does not suffer from any arbitrariness or discrimination violative of Article 14. The classification between financial and operational creditors is based on intelligible differentia that bears a direct nexus to the legislative object of ensuring maximum recovery and viability of the corporate debtor. The mechanisms for triggering insolvency, eligibility, withdrawal, and priority on liquidation are rational and constitutionally valid. The tribunals’ composition and functioning comply with earlier judicial directions. The Code passes constitutional muster in its entirety.

Court Disposition

Petitions disposed of; challenge to the constitutional validity of the Code rejected.

Orders

  • Petitions disposed of in terms of the judgment.
  • No order as to costs.