KR Srivats

The Delhi High Court has asked the Centre, insolvency regulator IBBI and State Bank of India (SBI) to file replies on former Bhushan Power and Steel Chairman Sanjay Singhal’s petition challenging the provisions on personal insolvency proceedings against the guarantors of corporate debtors.

It may be recalled that SBI had recently invoked the personal guarantees of Sanjay Singhal and sent him a demand notice for recovery of ₹12,275.91 crore as the guarantor of various loans availed by the company.

This development came after the Finance Ministry had asked PSBs to put in place a mechanism for monitoring cases, which may require initiation of insolvency proceedings against personal guarantors of corporate debtors.

Singhal had filed a petition challenging the SBI move to invoke his personal guarantee and proceed for recovery under the insolvency and bankruptcy code. The Delhi High Court, on Tuesday, issued notices to Centre, IBBI and SBI after conducting the proceedings through video conferencing, sources said. The petitioners, including Arti Singhal, have been allowed to file a further application for interim relief prior to the next date of hearing (October 6) if the necessity arises, they added.

The Delhi High Court is also expected to hear this matter on October 6 along with similar cases moved by other industrialists.

Expert’s take

Aseem Chawla, Managing Partner, ASC Legal, said the Delhi High Court has issued notice in the matter and given the leave seeking any interim relief.

This comes in the backdrop of the Supreme Court directing the High Court to hear Anil Ambani matter involving similar question while disposing of SBI’s plea. It would be interesting to see the approach the Court adopts, he said.

“With all these pervasive instances of judicial intervention in the IBC framework, the efficacy and the implementation of the code would always be a matter of suspect in evolvement of a sustainable insolvency/bankruptcy code in India,” he added.