In Brief
The Supreme Court upheld the constitutional validity of the Insolvency and Bankruptcy Code, 2016, rejecting challenges to its various provisions. The Court held that the Code's classification between financial and operational creditors, exclusion of operational creditors from voting in the creditors' committee, Section 12A's 90% approval threshold for settlements, Section 29A's eligibility restrictions, Section 53's distribution waterfall, and other challenged provisions do not violate Article 14 (equality). The Court found an intelligible differentia between creditor classes rationally related to the Code's twin objectives of corporate revival and asset value maximization. The Court applied deferential judicial scrutiny to economic legislation and upheld Parliament's experimental approach, noting that the Code had substantially increased credit flow and achieved recovery rates of 202% of liquidation value. All petitions were disposed of.
The lawyer headnote and full judgment text are available to registered users.