Case Note & Summary
The High Court of Bombay addressed the question of whether the amendment to sub-section (4) of Section 96 of the Insolvency and Bankruptcy Code, 2016 (IBC), which came into effect on 26.05.2026, operates retroactively. The petitioners argued that the amendment was remedial and aimed at preventing misuse of the interim moratorium, thus it should apply to pending applications. They cited various judgments to support their claim that the amendment's intent was to address a mischief in the law. Conversely, the respondents contended that the amendment should apply prospectively, emphasizing that the interim moratorium constituted a substantive right that could not be retroactively altered. The court analyzed the arguments, considering the legislative intent and the nature of the interim moratorium. Ultimately, the court held that the amendment should apply retroactively to pending applications, aligning with the legislative purpose of curbing misuse of the IBC provisions. The decision underscored the importance of interpreting amendments in light of their intended objectives and the need to prevent abuse of legal protections.
Headnote
A) Insolvency Law - Retroactive Application of Amendments - Interpretation of Section 96(4) of the IBC - Insolvency and Bankruptcy Code, 2016, Section 96 - The court examined whether the amendment to Section 96(4) should apply to pending applications or only to future filings. It was held that the amendment was intended to address misuse of the interim moratorium and should apply retroactively to pending proceedings to fulfill legislative intent (Paras 1-12).
Issue of Consideration
Whether sub-section (4) of Section 96 of the Insolvency and Bankruptcy Code, 2016 operates retroactively.
Final Decision
The court held that the amendment to Section 96(4) of the IBC applies retroactively to pending applications, aligning with the legislative intent to prevent misuse of the interim moratorium.
Law Points
- Insolvency and Bankruptcy Code
- 2016
- Section 96
- retroactive application
- interim moratorium
- legislative intent
