Insolvency & Bankruptcy Code: Important Judgments By Supreme Court In 2025

In this article, LiveLaw brings to you a summary of important judgments rendered by the Supreme Court in 2025 in connection with the Insolvency and Bankruptcy Code, 2016. The same are as follows:1. 'IBC A Complete Code' : Supreme Court Disapproves Of High Court Exercising Writ Jurisdiction To Interdict CIRPCase: Mohammed Enterprises (Tanzania) Ltd. v. Farooq Ali Khan & Ors. [Citation: 2025 LiveLaw (SC) 19]In this case, a bench of Justices PS Narasimha and Manoj Misra disapproved of a High Court order interdicting a Corporate Insolvency Resolution Process (CIRP) under the IBC. It observed that the IBC is a complete code in itself, having sufficient checks and balances, and thus, the exercise of supervisory and judicial review powers by High Courts demands rigorous scrutiny and judicious application.In arriving at the decision, the Court was guided by the earlier decision in Committee of Creditors of KSK Mahanadi Power Company Ltd. v. M/s Uttar Pradesh Power Corporation Ltd, where a bench led by former CJI DY Chandrachud underlined the importance of concluding CIRP and took exception to Telangana High Court deferring a CIRP in the exercise of powers under Article 226 of the Constitution. In the said case, it was held that the High Court was not justified in deferring the CIRP when the main relief sought in the writ petition to consolidate the CIRP of two companies was refused. 2. IBC | For Resolution Plan Involving Combination, Prior Approval Of Competition Commission Mandatory Before CoC Examination : Supreme CourtCase: Independent Sugar Corporation Ltd. v. Girish Sriram Juneja & Ors. [Citation: 2025 LiveLaw (SC) 126]In this case, a bench of Justices Hrishikesh Roy, Sudhanshu Dhulia and SVN Bhatti, by 2:1 majority, observed that a resolution plan under the IBC, containing a proposed combination(a merger or amalgamation of entities), should only be placed before the Committee of Creditors, after it has been approved by the Competition Commission of India. The Court referred to Section 31(4) proviso of IBC and pointed out that the use of 'prior' makes it clear that the legislature's intent was to create an exception. However, Justice Bhatti disagreed, saying that the condition for prior approval from the CCI was not mandatory.3. Supreme Court Disapproves Of High Court Interdicting Insolvency Process Against Personal Guarantor At Threshold Stage In Writ Jurisdiction Case: Bank of Baroda v. Farooq Ali Khan & Ors. [Citation: 2025 LiveLaw (SC) 234]In this case, a bench of PS Narasimha and Manoj Mishra, while deciding an appeal pertaining to insolvency proceedings initiated against a personal guarantor, observed that the High Court should not have prohibited such proceedings by holding that the guarantor's liability has been waived. “It is well-settled that when statutory tribunals are constituted to adjudicate and determine certain questions of law and fact, the High Courts do not substitute themselves as the decision-making authority while exercising judicial review”, it said.4. IBC Moratorium Does Not Bar Execution Of Penalties Imposed Under Consumer Protection Act : Supreme Court Case: Saranga Anilkumar Aggarwal v. Bhavesh Dhirajlal Sheth & Ors. [Citation: 2025 LiveLaw (SC) 284]In this case, a bench of Justices Vikram Nath and PB Varale ruled that an interim moratorium under Section 96 of the IBC does not apply to penalty proceedings under Section 27 of the Consumer Protection Act, 1986. The Court explained that Section 79(15) of the IBC excludes certain liabilities, such as fines and penalties, from the moratorium's effect. As a result, penalties imposed by Consumer Redressal Forums under the regulatory statutes like the CP Act do not fall within the scope of the moratorium.5. Supreme Court Wonders Why NCLAT Wrote Long Order On Delay Condonation Application Despite High Pendency Case: Power Infrastructure India v. Power Finance Corporation Ltd. & Anr. [Citation: 2025 LiveLaw (SC) 285]In this case, a bench of Justice Abhay S Oka and Justice Ujjal Bhuyan expressed surprise that NCLAT, despite having a high pendency of cases, devoted extensive time and effort to writing a 17-page order on a delay condonation application. It remarked that lengthy submissions and pleadings by members of the Bar often contribute to unnecessarily verbose orders.6. No S.138 NI Act Case Against Ex-Director Of Company When Cause Of Action Arose After IBC Moratorium Was Declared: Supreme CourtCase: Vishnoo Mittal v. M/s Shakti Trading Company [Citation: 2025 LiveLaw (SC) 314]In this case, a bench of Justice Sudhanshu Dhulia and Justice Ahsanuddin Amanullah held that if the cause of action for the offence of cheque dishonor under Section 138 of the Negotiable Instruments Act, 1881 has arisen after the declaration of moratorium with respect to the company as per the IBC, then the proceedings under S.138 NI Act cannot be continued against the ex-director of the company.The Court reasoned that upon imposition of the moratorium, the board ...

Insolvency & Bankruptcy Code: Important Judgments By Supreme Court In 2025

Debby Jain

Tags