The Supreme Court on Wednesday (February 18) reaffirmed that the remedy under Section 7 of the Insolvency & Bankruptcy Code (IBC) to initiate the Corporate Insolvency Resolution Process (CIRP) is not discretionary but mandatory, leaving the adjudicating authority with no option but to admit the application once the existence of a debt and a default is established.
“The Adjudicating Authority is not required to go into the inability of a corporate debtor to pay its debt. This is a clear departure from the scheme of winding up envisaged under Section 433(e) of the erstwhile Companies Act, 1956 which required the Adjudicating Authority to come to a finding with regard to the inability of the company to pay the debt and thereby arrive at a…