Insolvency and Bankruptcy Board of India v. Lalit Kumar Jain
Background
In November 2019, the Central Government brought into force provisions of the Insolvency and Bankruptcy Code that extended insolvency resolution proceedings to personal guarantors of corporate debtors (such as promoters who had personally guaranteed company loans). Several writ petitions challenging this notification as unconstitutional were filed in the Delhi High Court and other High Courts across the country. The Insolvency and Bankruptcy Board of India asked the Supreme Court to transfer all these scattered writ petitions to itself, to avoid the risk of different High Courts reaching conflicting conclusions on the same legal question.
Decision Breakdown
The Supreme Court allowed the transfer petitions, holding that because the Insolvency and Bankruptcy Code was still a relatively new law, it was important for the Supreme Court itself to authoritatively settle how its provisions on personal guarantors should be interpreted, rather than risk a patchwork of conflicting High Court rulings. It directed all the pending writ petitions challenging the notification to be transferred from the various High Courts to the Supreme Court, and also directed that no further such petitions be entertained by any High Court going forward, though any interim orders already passed by High Courts would continue until further orders.
Lesson Learnt
When an important and relatively untested question of law is being litigated simultaneously in multiple High Courts, the Supreme Court can consolidate all those cases before itself to ensure one consistent, binding answer rather than conflicting regional rulings.