The Supreme Court Bench comprising Justices Indira Banerjee and J.K. Maheshwari was hearing an Open Court Hearing for the Review Petition against the Vidarbha Industries Judgment where it was held that the power of the National Company Law Tribunal to admit an application for initiation of the CIRP by a Financial Creditor under Section 7(5)(a) of the Insolvency and Bankruptcy Code, is discretionary and not mandatory.
The Supreme Court bench allowed an Open Court Hearing for the Review Petition filed against its Judgment decided on 12 July 2022, in Vidarbha Industries Power Limited v. Axis Bank Limited, REED 2022 SC 07529, where it was held that power of the National Company Law Tribunal to admit an application for initiation of the CIRP by a Financial Creditor under Section 7(5)(a) of the Insolvency and Bankruptcy Code, is discretionary and not mandatory.
The Supreme Court observed that two courses of action are available to the Adjudicating Authority in a petition under Section 7 of IBC. The Adjudicating Authority must either admit the application under clause (a) sub-section (5) of Section 7 or it must reject the application under clause (b) of sub-section (5). The statute does not provide for the Adjudicating Authority to undertake any other action, but for the two choices available.
The Supreme Court was of the view that the observations made in the Vidarbha Industries judgment, REED 2022 SC 07529 were in the context of the facts of the case and should not be interpreted as the words of the statute itself. Supreme Court rejected the review petition against Vidarbha Industries judgment which held that the power of the National Company Law Tribunal to admit an application for initiation of the CIRP by a Financial Creditor under Section 7(5)(a) of the Insolvency and Bankruptcy Code, is discretionary and not mandatory.
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