Power to admit insolvency application not binding even when debt owed: SC

The bench said NCLT failed to appreciate the question of time-bound initiation and completion of corporate insolvency resolution process could only arise if companies were bankrupt or insolvent

In a breather to defaulting companies, the Supreme Court held that the provision to admit an application starting the insolvency process is not binding even when a debt is owed.

The appeal was filed by Vidarbha Industries, which is a power generating company, against the order of the National Company Law Appellate Tribunal (NCLAT).

NCLAT had refused to stay the insolvency proceedings started by Axis Bank against the company.  

A Bench comprising Justices Indira Banerjee and JK Maheshwari said the adjudicating authority (NCLT) failed to appreciate that the question of time-bound initiation and completion of corporate insolvency resolution process