LALIT KUMAR JAIN versus UNION OF INDIA & ORS.

LALIT KUMAR JAIN versus UNION OF INDIA & ORS.

The Central Government acted within the power conferred by Parliament under s.1(3) to bring provisions of the Code into force in stages and, having regard to the 2018 amendment which classified personal guarantors separately and the amendments to s.60, the notification of 15.11.2019 making specified provisions applicable "only in so far as they relate to personal guarantors to corporate debtors" was valid; further, approval of a corporate resolution plan does not ipso facto discharge a personal guarantor of liability under the guarantee contract.

Parties
Petitioner: Lalit Kumar Jain; Respondent: Union of India
Jurisdiction
India
Judgment Date
21 May 2021
Procedural Posture
Transferred Case (civil) / Judgment
Outcome
All writ petitions, transferred cases and transfer petitions dismissed; impugned notification held valid
Legal Topics
Validity of Notification Under S.1(3) of the Insolvency and Bankruptcy Code, 2016, Personal Guarantors to Corporate Debtors and Jurisdiction of NCLT, Delegation/conditional Legislation and Limits on Executive Notification Power, Effect of Approval of Corporate Resolution Plan on Guarantor Liability, Interpretation of S.60(2) and Application of Maxim Reddendo Singular Singulis
Insolvency and Bankruptcy Administrative Law Contract Law Validity of Notification Under S.1(3) of the Insolvency and Bankruptcy Code, 2016 Personal Guarantors to Corporate Debtors and Jurisdiction of NCLT Delegation/conditional Legislation and Limits on Executive Notification Power Effect of Approval of Corporate Resolution Plan on Guarantor Liability Interpretation of S.60(2) and Application of Maxim Reddendo Singular Singulis

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Parties

Lalit Kumar Jain

Petitioner

Union of India

Respondent

Procedural Posture

Transferred Case (civil) / Judgment

Legal Issues

  1. 1 Whether the Central Government’s notification dated 15.11.2019 under s.1(3) IBC bringing specified provisions into force only "in so far as they relate to personal guarantors to corporate debtors" was ultra vires or an impermissible exercise of legislative power
  2. 2 Whether provisions of Part III applied selectively to personal guarantors was an unpermissible classification or excessive delegation
  3. 3 Whether approval of a corporate resolution plan discharges a personal guarantor of liability under the contract of guarantee

Ratio Decidendi

The Central Government acted within the power conferred by Parliament under s.1(3) to bring provisions of the Code into force in stages and, having regard to the 2018 amendment which classified personal guarantors separately and the amendments to s.60, the notification of 15.11.2019 making specified provisions applicable "only in so far as they relate to personal guarantors to corporate debtors" was valid; further, approval of a corporate resolution plan does not ipso facto discharge a personal guarantor of liability under the guarantee contract.

Court Disposition

All writ petitions, transferred cases and transfer petitions dismissed; impugned notification held valid

Orders

  • Impugned notification dated 15.11.2019 is valid
  • Writ petitions, transferred cases and transfer petitions are dismissed