Sep 30, 2022

SC Holds That Section 7(5)(A) of IBC Confers Discretionary Power on NCLT To Admit Application of Financial Creditor Seeking Initiation of CIRP of Corporate Debtor

The SC in the case of Vidarbha Industries Power Ltd. v. Axis Bank Ltd.,[1] held that the use of the word “may” in Section 7(5)(a) of the Insolvency and Bankruptcy Code (‘IBC’) is intended to confer discretionary power on the National Company Law Tribunal (‘NCLT’) to admit an application of a financial creditor seeking initiation of the Corporate Insolvency Resolution Process (‘CIRP’) of the corporate debtor. It held that in case of an application filed by financial creditor, the NCLT may examine expedience of initiation of CIRP, taking into account all relevant facts and circumstances, including the overall financial health and viability of the corporate debtor. The NCLT may in its discretion not admit the application of a financial creditor.


[1] Vidarbha Industries Power Ltd. v. Axis Bank Ltd., 2022 SCC OnLine SC 841.




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