The Delhi High Court Tuesday sought the Centre’s reply on a plea challenging the Insolvency and Bankruptcy Code (IBC) Ordinance which suspended proceedings against defaults arising on or after March 25 for six months in view of the COVID-19 pandemic.
A bench of Chief Justice D N Patel and Justice Prateek Jalan issued notice to the Ministry of Law and the Insolvency and Bankruptcy Board of India (IBBI) seeking their stand by August 31 on the plea which seeks setting aside of the amendment made in the IBC by the ordinance
Mahajan said the petitioner — Rajeev Suri — has been unable to show his locus for filing the instant PIL.
According to the IBC Ordinance issued on June 5, default on repayments from March 25, the day when the nationwide lockdown began to curb the spread of coronavirus infections, would not be considered for initiating insolvency proceedings for a certain period of time.
Insolvency proceedings would not be initiated for “any default arising on or after March 25, 2020 for a period of six months or such further period, not exceeding one year from such date, as may be notified in this behalf”, the ordinance has said.
Under the IBC, an entity can seek insolvency proceedings against a company even if the default is only for one day. This is subject to the minimum threshold of Rs 1 crore. Earlier, the threshold was Rs 1 lakh.