# In the matter of Shri. Babu A Dhammanagi & Anr. Vs. Union of India & Ors, WP No. 21626/2021

> HC judgment dated 2022-04-05. Citation: TCN-2022-HC-00055. The writ petition challenges the validity of Sections 95(1), 99, and 100 of the Insolvency and…

- **Court:** HC
- **Order date:** 5 Apr 2022
- **Citation:** TCN-2022-HC-00055
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/high-courts-new-delhi/shri-babu-a-dhammanagi-anr-vs-union-of-india-ors-wp-no-216262021-9ca9291e

## Summary

### Background

The writ petition challenges the validity of Sections 95(1), 99, and 100 of the Insolvency and Bankruptcy Code (IBC), 2016, arguing they violate Article 14 of the Constitution of India. The case originates from an inter-corporate deposit agreement between a corporate debtor and Piramal Enterprise (respondent No. 2) executed on May 27, 2016. This agreement was later assigned to respondent No. 2 on September 22, 2016. Respondent No. 2 filed two applications under Section 95(1) of the IBC, read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019, seeking to initiate a corporate insolvency resolution process. The National Company Law Tribunal

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## Facts

An inter-corporate deposit agreement was executed between the Corporate debtor and the Perimal Enterprise (respondent No.2) on May 27, 2016. The agreement was assigned to respondent No.2 on September 22, 2016. Respondent No.2 filed two applications under Section 95(1) of the Code read with Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019, seeking to initiate corporate insolvency resolution process. The National Company Law Tribunal, Bangalore passed an interim moratorium order on November 11, 2021, against the petitioners and appointed respondent No.3 as a resolution professional under Section 97 of the Code. Notices were issued to the

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## Issues and analysis

### Issue 1: Whether Section 95(1) of the Insolvency and Bankruptcy Code, 2016 is unconstitutional to the extent …

**Ratio:** The Supreme Court in Gujarat Urja Vikas Nigam Ltd. vs. Amit Gupta (2021) 7 SCC 209 has

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**Reasoning:** The court reasoned that the role of the resolution professional is limited to making

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**Interpretation:** The interpretation of Section 95(1) is that it allows for the initiation of

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**Application:** The ratio and reasoning apply to the facts by confirming that the process

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## Parties

- **Judges:** ALOK AR…; S. Vishwajith…
- **Appellants:** SRI. BABU A.…
- **Respondents:** Union of…
- **Advocates:** Shashank…; M.N. K…; +4 more

## Timeline

- **2016-05-27 — Inter Corporate Deposit…**: Inter corporate deposit agreement was executed between the Corporate debtor and the…
- **2016-09-22 — Assignment of…**: The aforesaid intra corporate deposit…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 95(1) — Application by creditor to initiate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-95)

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