A shadow on solvency: Deconstructing Section 10A of India's insolvency code in a global pandemic

Abstract This paper critically examines Section 10A of India's Insolvency and Bankruptcy Code (IBC), a measure introduced during the COVID 19 (Coronavirus Disease 2019) pandemic to suspend the initiation of the Corporate Insolvency Resolution Process for defaults occurring between March 2020 and March 2021 ( Ramesh Kymal v. Siemens Gamesa Renewable Power Pvt Ltd 3 SCC 224). While intended to protect businesses, the provision's clause that no application ‘shall ever be filed’ for such defaults created a permanent extinguishment of creditor remedies under the IBC, functioning as a blunt instrument with severe consequences (Ibid. See also Samisti Legal, ‘Impact of Section 10A of the IBC: Relief or Roadblock?’ (Samisti Legal, 29 April 2025) accessed 25 July 2025). This paper argues that the blanket prohibition, lacking a causality test or judicial discretion, was manifestly arbitrary and disproportionate, violating Articles 14 and 21 of the Constitution ( Anita Kushwaha v. Pushap Sudan 2016 8 SCC 509). It deconstructs the legislative choice of an Ordinance, which cemented the measure's permanence, and highlights a core paradox: suspending a rehabilitative law during a crisis, treating it as a threat rather than a tool for rescue. A comparative analysis with the calibrated approaches based on discretion of the United Kingdom, United States, and Singapore underscores the anomalous nature of India's response (Corporate Insolvency and Governance Act 2020 UK). The paper also maps the uncoordinated actions of regulatory bodies like the Reserve Bank of India and Insolvency and Bankruptcy Board of India, which amplified uncertainty, and assesses the economic fallout, including the moral hazard and disproportionate harm to operational creditors. Concluding that Section 10A is a case study in legislative overbreadth, it proposes policy recommendations for a more resilient and constitutionally sound insolvency framework ( Ramesh Kymal n 1).