Supreme Court upholds NCLAT decision allowing insolvency proceedings under Section 7 IBC despite absence of interest clause The SC dismissed an appeal challenging NCLAT's order allowing initiation of CIRP under Section 7 of IBC. The dispute concerned whether credit facility ...
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Supreme Court upholds NCLAT decision allowing insolvency proceedings under Section 7 IBC despite absence of interest clause
The SC dismissed an appeal challenging NCLAT's order allowing initiation of CIRP under Section 7 of IBC. The dispute concerned whether credit facility provided by appellant to respondent-corporate debtor constituted financial debt under Section 5(8) of IBC. NCLAT held that fund infusion by appellant constituted financial debt, making appellant a financial creditor entitled to file Section 7 application. The court ruled that absence of interest clause does not preclude a transaction from being financial debt if it has commercial effect of borrowing. SC found no grounds to interfere with NCLAT's decision.
The Supreme Court, through Hon'ble Justices J. B. Pardiwala and R. Mahadevan, reviewed the appeal against the National Company Law Appellate Tribunal's order dated 19-2-2025 in Company Appeal (AT) (Ins.) No.1427 of 2023. After considering the submissions and materials, the Court found "no good reason to interfere with the impugned order." Consequently, the Civil Appeal was dismissed, and all pending applications were disposed of.
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