Landmark Judgments – IBC Yearly Round-Up 2022

Vidarbha Industries Power Limited v. Axis Bank Limited (Civil Appeal No. 4633 of 2021):

Previously there existed a mechanical role of the National Company Law Tribunal ("NCLT") in CIRPs initiated by a financial creditor under Section 7 of the Code. However, in this judgment, the Supreme Court held that there exists a discretionary power to admit or reject a petition despite the financial creditor satisfying the debt and default test or twin test.

In this case, Vidharbha Industries was a power generation company and there was a sum of INR 1,730 crores realisable by it in terms of the order of the Appellate Tribunal for Electricity ("APTEL"). In light of the order, the Supreme Court came to the conclusion that the amount receivable was more than the claim amount and therefore the touchstone for initiating the insolvency does not lie in a mechanical exercise of jurisdiction in the admission of CIRPs under Section 7 of the Code. Moreover, the Court also gave the