The Supreme Court held that the pendency of a counterclaim for damages against a financial creditor does not operate as a legal bar to the initiation of corporate insolvency resolution proceedings when the existence of financial debt and default is otherwise established in accordance with the Insolvency and Bankruptcy Code, 2016.
The Court was hearing a statutory appeal arising from proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016, challenging the admission of a corporate insolvency resolution process initiated by a consortium of banks led by the State Bank of India against a corporate debtor.
A Bench of Justice P.S. Narasimha and Justice Manoj Misra while stating that “initiation of proceedings…