Ongoing Settlement Cannot Be A Basis To Reject Petition Under IBC - Supreme Court

The Adjudicating Authority (“AA”) cannot simply dismiss a petition under section 7 of the Insolvency & Bankruptcy Code, 2016 (“IBC”),on the basis that the corporate debtor has initiated the process of settlement with the financial creditors, held by the Hon'ble Supreme Court of India, in the matter of E S Krishnamurthy & Ors. Vs. M/s Bharath Hi Tech Builders Pvt. Ltd.  Civil Appeal No. 3325 of 2020 on 14^th December 2021.

The Appellant filed a petition under section 7 of the IBC for initiating the Corporate Insolvency Resolution Process (“CIRP”) in respect of the respondent, the National Company Law Tribunal (‘NCLT') declined to admit the petition and instead directed the respondent to settle the claims, The National Company Law Appellate Tribunal (“NCLAT”) also confirmed the order of the NCLT in appeal.