The Supreme Court of India has held that the National Company Law Appellate Tribunal (NCLAT) cannot delve into the actual merits of a dispute while considering an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC). A Division Bench comprising Justice Sanjay Kumar and Justice R. Mahadevan set aside the NCLAT’s decision to initiate insolvency against GLS Films Industries Private Limited, ruling that the mere existence of a “plausible” pre-existing dispute is sufficient to bar the admission of a Corporate Insolvency Resolution Process (CIRP).
The case arose from an appeal by GLS Films Industries Private Limited (the appellant/Corporate Debtor) against a judgment of the NCLAT which had reversed the…