A plea was moved on Wednesday in the Delhi High Court challenging various provisions of the Insolvency and Bankruptcy Code, claiming they were in violation of fundamental rights.
A bench of Acting Chief Justice Gita Mittal and Justice C Hari Shankar listed the petition on October 10, when a similar pending plea would come up for hearing.
The petition filed by a steel manufacturing company challenged the validity of several provisions of the IBC, saying they violated the principles of natural justice.
Modern Steels Ltd., in its petition, sought quashing of implementation of Section 7 of the code saying it does not offer an opportunity of hearing to a corporate debtor against whom an application for corporate insolvency resolution has been filed before the National Company Law Tribunal. Section 7 of the Code relates to initiation of the corporate insolvency resolution process by financial creditor.
A corporate debtor means a corporate entity owes a debt to any person.
The plea, filed through advocate Ayush Sharma, claimed that Section 7 of the IBC, issued by the Centre, was violative of fundamental right of equality before the law and ultra vires to the Constitution as it does not provide any right of fair hearing to the corporate debtor.
It also sought direction to quash sections 13(1)(c), 16 and 17 of the IBC, claiming these violated the fundamental right of the corporate debtor to practise any profession or to carry on any occupation, trade or business.
“By these sections, the adjudicating authority can appoint an interim professional who has zero experience in handling the affairs of the company, for example, a lawyer, and because of his lack of experience in day-to-day activities of the corporate debtor, it may not recover from the insolvency,” the plea said.