Well Argued · Landmark Win

Swiss Ribbons v. Union of India (2019): the case, the argument and the legacy

Updated for 2026 · Claw Editorial

In 2019, the Supreme Court decided whether India's new insolvency law would stand or fall. The Insolvency and Bankruptcy Code of 2016 had rewired how failing companies are rescued or wound up, and many of its provisions had been challenged as unfair or unconstitutional. The Court upheld the Code almost entirely, and in doing so steadied one of the most consequential economic reforms of the decade. This is the story of that ruling, not a full law report.

01What was at stake

Before the Insolvency and Bankruptcy Code, resolving a failing company in India could take many years, with creditors stuck and value draining away. The 2016 Code changed the logic: a strict, time-bound process in which creditors, not the old management, drive the outcome, and in which a defaulting promoter can be kept from quietly buying the company back at a discount.

Those changes were powerful, and they were resented by many who stood to lose. A batch of petitions challenged key features of the Code: the different treatment of financial and operational creditors, the structure of the tribunals, and the bar on certain persons, including defaulting promoters, from bidding for the companies they had run into the ground. If the challenges succeeded, the Code could have unravelled.

This is an editorial account written for readers who admire good advocacy. It is not legal advice.

02How it was argued

The challengers argued that the Code treated operational creditors, such as suppliers, worse than financial creditors, such as banks, and that this difference offended the guarantee of equality. They attacked the bar in Section 29A, which keeps certain persons from submitting a resolution plan, as too wide and arbitrary. They also questioned the setup and functioning of the adjudicating tribunals.

The defence of the Code rested on the idea that insolvency is not an ordinary dispute between equals. Financial and operational creditors are genuinely different in the role they play and the information they hold, so treating them differently is a reasonable classification, not discrimination. The bar on defaulting promoters, it was argued, served the entirely legitimate aim of stopping those who had caused the default from exploiting the process to regain control cheaply.

Justice R. F. Nariman led a careful dissection of each challenge, weighing the fairness concerns against the purpose and design of the law.

03What the court held

The Court upheld the Code almost in its entirety. It held that the distinction between financial and operational creditors is founded on an intelligible difference and a rational purpose, and so does not violate the equality guarantee. It upheld Section 29A, agreeing that keeping defaulting promoters and other disqualified persons out of the bidding is a legitimate safeguard, not arbitrary punishment. It also sustained the tribunal framework, while directing improvements to its functioning.

Where it saw a genuine problem, the Court read provisions sensibly rather than striking them down, preserving the architecture of the law while smoothing its rough edges.

A reform this ambitious was always going to be tested in court. The Code survived that test, and with it survived the idea that defaulters do not get to profit from their own default.

The result was a strong signal of stability for creditors, investors and the markets that depend on a predictable insolvency regime.

04Why it still matters

Swiss Ribbons gave the Insolvency and Bankruptcy Code the constitutional certainty it needed to function as intended. By upholding the creditor-driven design and the bar on defaulting promoters, the judgment protected the core bargain of the reform: that value is preserved, timelines are respected, and those who ran a company into default cannot simply walk back in. It is cited in a great deal of the insolvency litigation that has followed.

The story is one of advocacy at the intersection of law and the economy. The advocates defending the Code had to persuade the Court that classifications many found uncomfortable were in fact fair and purposeful. Winning that argument did more than settle a case; it secured the ground on which a national reform now stands.

That is exactly the kind of advocacy a publication like Well Argued exists to put on record.

05Related landmark wins

The enforcement of the law and accountability of the powerful connect this case to others in the Well Argued series:

• the Enviro-Legal Action fight to make polluters pay.
• Lily Thomas and the disqualification of convicted lawmakers.

06About Well Argued

Well Argued is a free, curated publication by Claw that gives an advocate a hard-won court victory an audience, turning a winning judgement into a short, well-told story that Claw shares across its social channels, its website and the AI answer engines. The advocacy that defends a hard reform through a barrage of challenges is exactly the kind of work that deserves an audience, even though it reads as dry doctrine until you see the stakes behind it. Wins like Swiss Ribbons are what Well Argued exists to tell.

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