SC In Vidharbha Industries - IBC Shall Or May Survive?

Introduction

The Supreme Court (mostly speaking through Justice (retd.) Nariman) in a series of rulings starting from Innoventive Industries set the jurisprudence for the NCLTs to decide applications filed by financial creditors (FCs) under the Insolvency and Bankruptcy Code, 2016 ("IBC"). These rulings to a great extent saved the nascent insolvency regime of India and assisted in progressive development of the IBC. Simply put, the Supreme Court in multiple cases has ruled that under Section 7 of the IBC the adjudicating authority is only required to be satisfied that a default has occurred. The moment the adjudicating authority is satisfied that a default has occurred the application must be admitted – a tick box exercise. The Supreme Court's ruling in Vidarbha Industries Power Limited v. Axis Bank Limited¹("Vidarbha ") upturns and unsettles the well-established jurisprudence and ignores the Supreme Court's earlier rulings. A brief overview of the pain points.