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The Tax Publishers IBC--CIRP Supreme Court Ruling : Whether Admission of Application under section 7(5)(a) of IBC is Mandatory or Discretionary? Vishambhar Dayal Recently, the Supreme Court in the case of Vidarbha Industries Power Ltd. v. Axis Bank Ltd. 2022 TaxPub(CL) 2668 (SC) answered the moot question that whether admission of application under section 7(5)(a) of Insolvency and Bankruptcy Code, 2016 ('the Code') is mandatory or discretionary. The learned author discusses and analyses the case law along with intent and objectives of the Code. 1. What is section 7(5)(a) of the Code ? Section 7 relates to initiation of corporate insolvency resolution process by financial creditor. It provides for manner of application to be filed by financial creditor before adjudicating authority where a default has occurred. Sub-section (5)(a) of the Code gives discretionary power to adjudicating authority to either admit or reject application upon his satisfaction that a default has occurred and application is complete and there is no disciplinary proceedings pending against proposed resolution professional. An adjudicating authority has to communicate about his order of rejection or admission to the financial creditor and corporate debtor within a period of 7 days of such admission or rejection of application. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

IBC--CIRP

Supreme Court Ruling : Whether Admission of Application under section 7(5)(a) of IBC is Mandatory or Discretionary?

Vishambhar Dayal

Recently, the Supreme Court in the case of Vidarbha Industries Power Ltd. v. Axis Bank Ltd. 2022 TaxPub(CL) 2668 (SC) answered the moot question that whether admission of application under section 7(5)(a) of Insolvency and Bankruptcy Code, 2016 ('the Code') is mandatory or discretionary. The learned author discusses and analyses the case law along with intent and objectives of the Code.

1. What is section 7(5)(a) of the Code ?

Section 7 relates to initiation of corporate insolvency resolution process by financial creditor. It provides for manner of application to be filed by financial creditor before adjudicating authority where a default has occurred. Sub-section (5)(a) of the Code gives discretionary power to adjudicating authority to either admit or reject application upon his satisfaction that a default has occurred and application is complete and there is no disciplinary proceedings pending against proposed resolution professional. An adjudicating authority has to communicate about his order of rejection or admission to the financial creditor and corporate debtor within a period of 7 days of such admission or rejection of application.