Section 32 A of the Insolvency and Bankruptcy Code (IBC)
Context: Supreme Court in its judgment upholds the validity of Section 32 A of the Insolvency and Bankruptcy Code (IBC).
What did the Supreme Court say in its judgment?
- The Supreme Court held that the successful bidders for a corporate debtor under the Insolvency and Bankruptcy Code (IBC) would be immune from any investigations being conducted either by any investigating agencies such as the Enforcement Directorate (ED) or other statutory bodies such as Securities and Exchange Board of India (SEBI).
- In its judgment, the apex court, while upholding the validity of Section 32 A of IBC, said it was important for the IBC to attract bidders who would offer reasonable and fair value for the corporate debtor to ensure the timely completion of corporate insolvency resolution process (CIRP).
- The extinguishment of the criminal liability of the corporate debtor is apparently important to the new management to make a clean break with the past and start on a clean slate.
Why is the SC upholding Section 32A important?
- Since the IBC came into being in 2016, the implementation of resolution plan of several big ticket cases has been delayed because of various challenges mounted by its own agencies and regulators.
- To give confidence to other bidders to proceed with confidence while bidding on such disputed companies and their assets.
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