5 Vidarbha Industries Power Limited vs.
Axis Bank Limited
Supreme Court of India Civil Appellate Jurisdiction
Civil Appeal No. 4633 of 2021
FACTS This case is an appeal u/s 62 of the Insolvency and Bankruptcy Code 2016, against a judgment and order dated 2nd March, 2021 passed by the NCLAT, New Delhi in Company Appeal (AT) (Insolvency) No. 117 of 2021, whereby the ld. Tribunal refused to stay the proceedings initiated by the Respondent, Axis Bank Limited, against the appellant for initiation of the Corporate Insolvency Resolution Process (CIRP) u/s 7 of the IBC as the Tribunal was of the opinion that the appellant has no justification in stalling the process and seeking a stay of CIRP, which in essence has manifested in blocking the passing of the order of admission of application of the respondent u/s 7 of I&B Code.
QUESTION OF LAWIs section 7(5)(a) of IBC a mandatory or a discretionary provision?
RULING In this case, the Adjudicating Authority (NCLT) and the Appellate Tribunal (NCLAT) proceeded on the premise that an application must necessarily be entertained u/s 7(5)(a) of the IBC if a debt existed and the Corporate Debtor was in default of payment of debt. In other words, the Adjudicating Authority (NCLT) found Section 7(5)(a) of the IBC to be mandatory, with which the Appellate Tribunal (NCLAT) agreed since the Adjudicating Authority (NCLT) did not consider the merits of the content
