A) ABSTRACT / HEADNOTE

This judgment addresses the proper scope of constitutional judicial review under Article 226 where a High Court interdicted initiation of personal insolvency proceedings under Part III, Chapter III of the Insolvency and Bankruptcy Code, 2016 (the IBC), by holding that the guarantor’s liability had been waived. The Supreme Court reversed the High Court, holding that the Adjudicating Authority had followed the statutory process under Sections 95–100 IBC by appointing a Resolution Professional under Section 97 and directing a Section 99 report.

The Court emphasised the distinction between the facilitative, fact-gathering role of the Resolution Professional (recommendatory report) and the adjudicatory function vested in the Adjudicating Authority under Section 100 to admit or reject applications. Relying on the earlier constitutional analysis in Dilip B. Jiwrajka v. Union of India and its own decision in Mohammed Enterprises (Tanzania) Ltd v. Farooq Ali Khan, the Court held that the High Court wrongly precluded the statutory mechanism, usurped fact-finding functions and decided a mixed question of fact and law (existence/waiver of debt) at a pre-adjudicatory stage.

The decision re-asserts judicial restraint where specialised statutory tribunals are empowered to determine disputed facts and preserves the IBC’s procedural scheme as a “complete code” with its own safeguards and remedies.

Keywords: Personal insolvency, Article 226, Section 95 IBC, Resolution Professional, Section 99 report, judicial restraint.

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT 

The appeal arises from a writ petition at the Karnataka High Court which restrained the National Company Law Tribunal (Adjudicating Authority) from proceeding with a personal-guarantor insolvency application filed under Section 95 IBC. The bank (appellant) had issued demand notices after default by its corporate borrower. The guarantor (respondent no.1) had earlier sent a letter proposing a Rs. 25 crore full-and-final settlement against invoked claims of approximately Rs. 244 crores.

The Adjudicating Authority, on 16.02.2024, appointed a Resolution Professional under Section 97 and directed him to examine the application and submit a report under Section 99. The guarantor then filed a writ under Article 226, asserting waiver/discharge of his liability; the High Court accepted that contention after examining the documents and held the insolvency petition not maintainable, thereby stopping the statutory process and leading to disposal of the Adjudicating Authority’s petition on 19.06.2024.

The Supreme Court granted leave and confronted the core question whether the High Court was justified in exercising constitutional review so as to preclude the statutory mechanism envisaged under Sections 95–100 IBC and, in effect, to decide existence/waiver of debt at a pre-admission stage. The Court revisited its prior reasoning in Dilip B. Jiwrajka v. Union of India (constitutional validity and procedural framework of Sections 95–100), and in Mohammed Enterprises (Tanzania) Ltd v. Farooq Ali Khan (principles restricting High Court interference in IBC proceedings), to delineate the proper roles of the Resolution Professional and the Adjudicating Authority.

The judgment underscores that the Resolution Professional’s Section 99 function is investigatory and recommendatory, while the ultimate judicial determination of admission under Section 100 is the Adjudicating Authority’s domain; High Courts must exercise restraint and avoid substituting their own findings on mixed questions of law and fact at the facilitative stage.

D) FACTS OF THE CASE 

Respondent no.1 was a promoter and director of Associate Décor Limited (corporate debtor). From 2010 onwards the corporate debtor availed multiple loans from a consortium led by Bank of Baroda (appellant) and other banks. On 10.07.2014 respondent no.1 executed a deed of guarantee to secure those corporate borrowings. Following the corporate debtor’s defaults and initiation of CIRP, the appellant issued a demand notice dated 11.08.2020 invoking the personal guarantees and quantified dues at around Rs. 244 crores. In response, by letter dated 14.12.2020 the guarantors (including respondent no.1) offered Rs. 25 crores as a full and final settlement.

Pursuant to Rule 7(1) (Form B) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019, the appellant issued a statutory demand in February 2021 and filed an application under Section 95(1) IBC read with Rule 7(2) seeking initiation of personal insolvency proceedings. The Adjudicating Authority on 16.02.2024 appointed a Resolution Professional under Section 97 and directed preparation of a Section 99 report to determine whether the debt remained unpaid and whether the application complied with statutory thresholds. The Adjudicating Authority recorded that objections raised by respondent no.1 on limitation and waiver/discharge of the guarantee would be examined after the Resolution Professional filed his report.

Nonetheless, respondent no.1 moved the High Court under Article 226, contending that his liability had been discharged/waived; the High Court entertained evidence and documents, concluded waiver, allowed the writ and interdicted the Tribunal proceedings. Following the High Court order, the Adjudicating Authority disposed of the insolvency petition on 19.06.2024. The Supreme Court was then approached by the bank to challenge the High Court’s pre-emptive interference with the IBC’s statutory machinery.

E) LEGAL ISSUES RAISED

i. Whether a High Court may, in exercise of Article 226, preclude initiation of personal insolvency proceedings under Section 95 IBC by deciding, at the pre-Section 99 stage, that a guarantor’s liability has been waived?

ii. Whether appointment of a Resolution Professional under Section 97 and the subsequent Section 99 report preclude interlocutory judicial determination of jurisdictional facts by a High Court?

iii. What is the respective role of the Resolution Professional (facilitative/investigatory) and the Adjudicating Authority (adjudicatory under Section 100) in personal-guarantor insolvency proceedings?

F) PETITIONER / APPELLANT’S ARGUMENTS

The bank contended that the Adjudicating Authority correctly followed Sections 95–100 by appointing a Resolution Professional to collect evidence and file a Section 99 report. The appellant argued that factual questions (existence of debt, limitation, waiver) fall within the statutory inquiry and cannot be prematurely decided by the High Court; interference would subvert the IBC’s scheme and the adjudicative role of the Tribunal.

The bank relied on the constitutional and statutory architecture explained in Dilip B. Jiwrajka v. Union of India and submissions that High Courts must exercise restraint where a specialised statutory regime provides dedicated procedures and remedies.

G) RESPONDENT’S ARGUMENTS

Counsel for respondent no.1 submitted that documentary material showed waiver/discharge and that continuation of Tribunal proceedings would be a futile exercise. It was urged that the High Court could examine maintainability and jurisdictional facts where such facts are demonstrably apparent on the record; Jiwrajka was distinguishable and did not apply to situations where an application is not maintainable at the threshold. The respondent stressed protection against unjustified harassment by insolvency proceedings.

H) RELATED LEGAL PROVISIONS 

i. Insolvency and Bankruptcy Code, 2016 — Section 95(1) (application for personal insolvency against guarantor).
ii. Section 97 (appointment of Resolution Professional).
iii. Section 99 (duties of Resolution Professional — information, evidence, report).
iv. Section 100 (adjudicatory power to admit or reject).
v. Insolvency Rules, 2019 — Rule 7 (Form B demand).
vi. Article 226, Constitution of India (judicial review).

I) JUDGEMENT

The Supreme Court allowed the bank’s appeal and set aside the High Court order (28.05.2024), restoring the Adjudicating Authority’s proceedings from the stage of appointment of the Resolution Professional on 16.02.2024. The Court framed the decisive principle: Stages under Sections 95–99 IBC are non-adjudicatory; they are procedural, investigatory and intended to collate material so the Adjudicating Authority can exercise its adjudicatory function under Section 100.

Reliance was placed on Dilip B. Jiwrajka where this Court held that appointment of a Resolution Professional is mandatory and that the RP’s report is the repository of factual findings to be judicially scrutinised later by the Tribunal. The bench noted that the Adjudicating Authority itself recorded that objections on limitation and waiver would be addressed after the RP’s report; that course respected legislative design and avoided premature substitution by the High Court.

The Court reiterated established doctrines of judicial restraint: where a specialised statutory forum exists and a code provides mechanisms and remedies, High Courts should not usurp the tribunal’s fact-finding or decision-making role except in exceptional circumstances. The impugned High Court order transgressed this boundary by independently assessing documents and concluding waiver a mixed question of fact and law that properly belongs to the Adjudicating Authority after Section 99 material is assembled.

The Court relied on its prior pronouncement in Mohammed Enterprises (Tanzania) Ltd v. Farooq Ali Khan to reinforce that the IBC is a “complete code” and High Courts must respect protocols, lest legal discipline be undermined. Accordingly, the Supreme Court restored the Tribunal’s file to proceed expeditiously from the 16.02.2024 order and declined to award costs.

a. RATIO DECIDENDI

The controlling ratio is that High Courts, in exercise of Article 226, must not preclude or short-circuit the statutory process established under Sections 95–100 IBC by deciding contested factual or mixed questions at the facilitative stage. Appointment of a Resolution Professional under Section 97 and the preparatory inquiry under Section 99 are mandatory and not judicial adjudicatory stages; the Adjudicating Authority’s decision under Section 100 on admission is the first judicial determination on merits.

Where a tribunal is empowered to determine both law and fact under a specialised code, constitutional courts must exercise restraint and avoid substituting their own findings unless the statutory process is shown to be vitiated by jurisdictional defect or mala fides. The High Court’s finding of waiver at the pre-Section 99 stage improperly usurped the statutory adjudicatory role and therefore warranted interference by this Court.

b. OBITER DICTA

The Court observed obiter that the IBC contains sufficient checks, remedial avenues and appeals; adherence to statutory protocol preserves balance between order and justice. It remarked that the Resolution Professional’s report is recommendatory and does not bind the Adjudicating Authority, thereby preserving judicial oversight at the admission stage. The Court also noted that judicial review remains available to protect jurisdictional limits but must be exercised with rigour and caution; routine intervention at preliminary fact-gathering stages would erode the statutory scheme. Such comments underscore the Court’s intent to sustain the IBC as an autonomous regulatory regime while not excluding constitutional remedies in exceptional cases.

c. GUIDELINES

i. High Courts should not adjudicate mixed questions of law and fact at the Section 97/99 stage.
ii. Where Section 99 inquiry is pending, the statutory process must be allowed to run so the RP may gather evidence and file a report.
iii. Interference under Article 226 is permissible only for clear jurisdictional defects, mala fides, or when statutory safeguards fail.
iv. Adjudicating Authority must decide admission under Section 100 after judicial scrutiny of RP’s report.

J) CONCLUSION & COMMENTS

The judgment firmly anchors the separation of roles within the IBC: investigatory facilitation by the Resolution Professional versus judicial adjudication by the Adjudicating Authority. By restoring the statutory trajectory, the Court reaffirmed that the IBC’s procedural code must operate unimpaired unless clear constitutional grounds for intervention exist.

Practically, this decision curtails pre-emptive writ petitions seeking to short-circuit personal-guarantor insolvency applications when the statutory investigatory machinery is engaged. For practitioners, the lesson is twofold: litigants should deploy Article 226 cautiously where a dedicated statutory forum and process are operative; and tribunals and parties must ensure prompt, thorough Section 99 compliance to avoid delay and to present a complete factual matrix for Section 100 adjudication. The Court’s reliance on Dilip B. Jiwrajka and Mohammed Enterprises signals continuity in Jurisprudence protecting specialized insolvency procedure from routine constitutional interruption.

The ruling preserves institutional competence, prevents forum-shopping at the pre-admission stage, and underlines the importance of letting the IBC’s internal safeguards and timelines function so that substantive adjudication occurs in the forum mandated by Parliament.

K) REFERENCES

a. Important Cases Referred

1. Mohammed Enterprises (Tanzania) Ltd v. Farooq Ali Khan, [2025] 1 SCR 177 : 2025 SCC OnLine SC 23.

2. Dilip B. Jiwrajka v. Union of India, [2023] 16 SCR 562 : (2024) 5 SCC 435.

3. Thansingh Nathmal v. Superintendent of Taxes, Dhubri, [1964] 6 SCR 654 : AIR 1964 SC 1419.

4. United Bank of India v. Satyawati Tondon, [2010] 9 SCR 1 : (2010) 8 SCC 110.

5. South Indian Bank Ltd v. Naveen Mathew Philip, [2023] 4 SCR 18 : 2023 SCC OnLine SC 435.

b. Important Statutes Referred

1. Insolvency and Bankruptcy Code, 2016, Sections 94–100 (Part III, Chapter III).

2. Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 — Rule 7 (Form B).