The Supreme Court of India has held that the Insolvency and Bankruptcy Code (IBC) cannot be used as a shortcut to recover money or to pressure someone into making payments. It clarified that insolvency proceedings are not meant to resolve disputes over how much money is actually due under a court decree.
A Bench of Justices P S Narasimha and Alok Aradhe observed that insolvency proceedings have serious consequences and should be used only in cases of genuine financial distress, not as a way to enforce payment of dues.
“A creditor who approaches the NCLT not with any genuine concern for the resolution of the corporate debtor but purely to secure payment of his individual dues is acting contrary to the purpose and spirit of the Code,” the…