The Supreme Court of India has dismissed an appeal filed by Dhanlaxmi Bank Limited, affirming that the Insolvency and Bankruptcy Code (IBC) should not be utilized as a coercive mechanism for debt recovery in cases involving intertwined contractual obligations. The Court upheld an order by the National Company Law Appellate Tribunal (NCLAT) which had set aside the initiation of the Corporate Insolvency Resolution Process (CIRP) against a corporate debtor.
A Bench comprising Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe observed that the IBC is a collective resolution mechanism and not a forum for adjudicating individual contractual claims or compelling payments in cases of genuine financial distress.