Analyzing The Conundrum Vis-A-Vis NCLT's Power To Admit CIRP Application

INTRODUCTION

The Insolvency and Bankruptcy Code, 2016 ('IBC') enables financial creditors and operational creditors of a corporate debtor to initiate the corporate insolvency resolution process ('CIRP'), under Section 7 and Section 9 of the IBC, respectively.

Supreme Court ('SC'), recently in case of Vidarbha Industries Power Limited v. Axis Bank Limited, [Civil Appeal No. 4633 of 2021], has examined the issue, whether NCLT has discretionary or a mandatory power to admit an application for initiation of the CIRP proceedings by a financial creditor under Section 7(5)(a) of the IBC.

Vidarbha Industries Power Limited ('VIPL'), is engaged in production of electricity for which tariff is regulated by the Maharashtra Energy Regulatory Commission ('MERC') and the Appellate Tribunal for Electricity (referred herein as 'APTEL'). Axis Bank Limited ('Respondent'), as a financial creditor filed an application under Section 7 of the IBC to initiate CIRP against VIPL ('A