The Supreme Court on Wednesday decided to reconsider its earlier judgment, which held that the National Company Law Tribunal (NCLT), while examining the existence of debt and default by a corporate debtor, in an application by a financial creditor for initiation of corporate insolvency resolution process, has the discretion to admit or not admit the plea.
Also Read|Opting power subsidy: Adequate arrangements for hassle-free process, say Discoms
The SC bench allowed the review petition and decided to relook at its decision in the open court on September 19. In the case Axis Bank vs Vidarbha Industries Power, the apex court had held that Section 7(5)(a) of the IBC conferred a discretionary power on the adjudicating authority to admit an application for initiation of the CIRP, and such power is required to be exercised with caution.
Also Read| Investment in realty sector at $3.4 billion in H1 2022, expected to hit $6 billion by 2022 end, says report
It had differed from the long-settled view that the moment the NCLT was satisfied that a default has occurred, the application must be admitted unless it is incomplete.
Until this order, the courts had held that the NCLT can only check for compliance and adherence to the legal framework and not interfere in the commercial aspect of negotiation or resolution.