Tamil Nad

Case in Madras High Court challenges constitutional validity of Insolvency Ordinance

The Madras High Court on Wednesday granted six weeks’ time for the Centre to file its counter affidavit to a writ petition challenging the constitutional validity of the Insolvency and Bankruptcy Code (Amendment) Ordinance 2020.

Chief Justice Amreshwar Pratap Sahi and Justice Senthilkumar Ramamoorthy accepted a request made by Additional Solicitor General (ASG) R. Shankaranarayanan who sought time to get instructions on the petition filed by financier Gagan Bothra.

According to the litigant, the Insolvency and Bankruptcy Code, implemented since 2016, had made life easy for many small, medium and large businessmen who had to otherwise undergo the arduous process of filing civil suits to realise their dues.

Section 10 of the Code provided for initiation of corporate insolvency resolution process against the defaulters before the National Company Law Tribunal. However, by way of the latest ordinance, the initiation of such a process had been stalled, he complained.

Replying to his submissions, the ASG told the court that a reading of the provisions of the Ordinance show that it was only a temporary measure taken to avoid hardships that could be caused to defaulters due to the lockdown to fight COVID-19.

Nevertheless, to be doubly sure, he urged the court to grant him some time to get instructions from the ministry concerned.

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