Striking down an NCLT ruling the Supreme Court reiterated that the insolvency law cannot be invoked as a mechanism for debt recovery, and on Thursday cautioned that the insolvency process is a remedy with “far-reaching consequences” and must be used for cases of genuine insolvency or financial distress and not for the enforcement of money decrees.
The apex court said that the Code was enacted to provide for the reorganisation and insolvency resolution of corporate persons in a time bound manner for the maximisation of the value of assets and it cannot “be misused as a tool for recovery or as a lever to coerce payment.”
“It is not debt recovery legislation… It is not a proceeding for the benefit of individual creditors seeking to…