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NCLT Has Discretion To Not Admit Financial Creditor's CIRP Application? Supreme Court Allows Open Court Hearing For Review

LIVELAW NEWS NETWORK
14 Sep 2022 4:52 PM GMT
NCLT Has Discretion To Not Admit Financial Creditors CIRP Application? Supreme Court Allows Open Court Hearing For Review
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The Supreme Court on Wednesday allowed open court hearing for the review petition filed against the judgment in Vidarbha Industries Power Ltd. vs Axis Bank Limited which held that the National Company Law Tribunal has discretion to not admit the insolvecny application filed by a financial creditor even if the corporate debtor is in default.A bench comprising Justices Indira Banerjee and...

The Supreme Court on Wednesday allowed open court hearing for the review petition filed against the judgment in Vidarbha Industries Power Ltd. vs Axis Bank Limited which held that the National Company Law Tribunal has discretion to not admit the insolvecny application filed by a financial creditor even if the corporate debtor is in default.

A bench comprising Justices Indira Banerjee and MM Sundersh listed the review petition filed by Axis Bank for hearing in open court on September 19.

The judgment delivered on July 12, 2022 by a bench comprising Justices Indira Banerjee and JK Maheshwari held that it is not mandatory for the Adjudicating Authority to admit an application to initiate Corporate Insolvency Resolution Process even if a debt existed and the Corporate debtor is in default.

The court observed that, ordinarily, the Adjudicating Authority (NCLT) would have to exercise its discretion to admit and initiate CIRP on satisfaction of the existence of a financial debt and default on the part of the Corporate Debtor in payment of the debt, unless there are good reasons not to admit the petition.

"Ordinarily, the Adjudicating Authority (NCLT) would have to exercise its discretion to admit an application under Section 7 of the IBC of the IBC and initiate CIRP on satisfaction of the existence of a financial debt and default on the part of the Corporate Debtor in payment of the debt, unless there are good reasons not to admit the petition.. The Adjudicating Authority (NCLT) has to consider the grounds made out by the Corporate Debtor against admission, on its own merits", the impugned judgment had observed.

Case Title : Axis Bank Ltd versus Vidarbha Industries Power Ltd | RP(Civil) 1043/2022

Click here to read/download the order

 


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