# In the matter of Smt. Sudipa Nath & Ors. vs. Union of India & Ors. WP(C) (PIL) 04 of 2023

> HC judgment dated 2023-01-18. Citation: TCN-2023-HC-00087. The case involves a Public Interest Litigation (PIL) filed under Article 226 of the Constitution of…

- **Court:** HC
- **Order date:** 18 Jan 2023
- **Citation:** TCN-2023-HC-00087
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/high-courts-new-delhi/smt-sudipa-nath-ors-vs-union-of-india-ors-wp-bff4c983

## Summary

### Background

The case involves a Public Interest Litigation (PIL) filed under Article 226 of the Constitution of India, challenging the constitutional validity of Section 66(1) of the Insolvency and Bankruptcy Code (IBC), 2016. The petitioner, a practicing advocate, claims that Section 66(1) is ultra vires Article 14 of the Constitution, arguing it is manifestly arbitrary and unconstitutional. The petitioner seeks a writ of Mandamus directing the respondents to take steps to declare Section 66(1) as such. The petitioner also contends that fraudulent activities are being perpetrated by corporate entities to defraud creditors and siphon off public money, and that the IBC itself is in the public interest.

## Facts

The petitioner, a practicing advocate and resident of Tripura, filed a Public Interest Litigation (PIL) challenging the constitutional validity of Section 66(1) of the Insolvency and Bankruptcy Code (IBC), 2016. The petitioner argued that Section 66(1) is ultra vires Article 14 of the Constitution of India, claiming it is manifestly arbitrary and unconstitutional. The petitioner sought a writ of Mandamus directing the respondents to take steps to declare Section 66(1) as such. The petitioner contended that corporate entities are engaging in fraudulent activities to defraud creditors and siphon off public money. The petitioner relied on several judgments, including Usha Ananthasubramanian vs. Union of India, South India Paper Mills Pvt. Ltd vs. Sree Rama Vilasam Press

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## Issues and analysis

### Issue 1: Whether Section 66(1) of the Insolvency and Bankruptcy Code, 2016 is ultra vires Article 14 of the …

**Ratio:** The principle is that a law can be struck down as unconstitutional if it is manifestly

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**Reasoning:** The court reasoned that Section 66(1) confers jurisdiction on the NCLT to fix liabilities

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**Interpretation:** The interpretation of Article 14 requires that laws must be reasonable and not

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**Application:** The court applied the principle of reasonableness to Section 66(1) and found

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## Parties

- **Judges:** THE CHIEF JUSTICE…; ARINDAM…
- **Appellants:** Sudipa…
- **Respondents:** Union of…
- **Other parties:** Kohi…

## Timeline

- **2023-01-18 — Date of H…**: The date on which the court…
- **2023-01-18 — Date of Prono…**: The date on which the court…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 66(1) — Fraudulent trading or wrongful trading](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-66)

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