The Supreme Court, in a recent Judgment, observed that there is no requirement under Section 5(8) of the Insolvency and Bankruptcy Code, 2016 (IBC) that there can be a debt only when there is a default.
The Court was deciding a batch of Civil Appeals preferred by the China Development Bank and others against the Judgment of the National Company Law Appellate Tribunal (NCLAT).
The two-Judge Bench of Justice Abhay S. Oka and Justice Pankaj Mithal held, “… under Section 3(12), ‘default’ has been defined. This definition of ‘default’ becomes relevant only while invoking the provisions of Section 7(1) of the IBC when the CIRP is sought to be initiated by the Financial Creditor. Section 7(1) provides that a Financial Creditor…
