Bankruptcy code being misused by firms facing insolvency, govt tells apex court

New Delhi, Feb 5, 2026

“Unfortunately, IBC platform is nowadays being misused like anything. You get all the assets undervalued then you indulge in a kind of auction, which is also completely a pre-planned game. Somebody from the family or close friends comes and buys it,” said the CJI

Solicitor General Tushar Mehta conveyed this to a three-judge bench presided by Chief Justice of India Surya Kant.

The Centre on Wednesday told the Supreme Court that it is “seriously considering” looking at the alleged misuse of proceedings under The Insolvency and Bankruptcy Code, 2016, by companies facing insolvency.

Solicitor General Tushar Mehta conveyed this to a three-judge bench presided by Chief Justice of India Surya Kant while it was hearing a petition for probe into the alleged bank frauds involving Reliance Anil Dhirubhai Ambani Group (RADAG).

Appearing for petitioner E A S Sarma, Advocate Prashant Bhushan told the bench, also comprising Justices Joymalya Bagchi and Vipul M Pancholi, that a group company, which had dues of over Rs 47,000 crore, was sold for a mere Rs 455 crore “to the brother’s company.”

The CJI then said, “Unfortunately, IBC platform is nowadays being misused like anything. You get all the assets undervalued then you indulge in a kind of auction, which is also completely a pre-planned game. Somebody from the family or close friends comes and buys it.”

[The Indian Express]