Supreme Court clarifies Recovery Certificate is a "financial debt" under IBC Section 5, enabling CIRP initiation within three years.

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....Initiation of CIRP - period of limitation - whether the issuance of Recovery Certificate would not trigger the right to sue. - A liability in respect of a claim arising out of a Recovery Certificate would be a “financial debt” within the meaning of clause (8) of Section 5 of the IBC. Consequently, the holder of the Recovery Certificate would be a financial creditor within the meaning of clause (7) of Section 5 of the IBC. As such, the holder of such certificate would be entitled to initiate CIRP, if initiated within a period of three years from the date of issuance of the Recovery Certificate. 85 - the application under Section 7 of the IBC was within limitation and the learned NCLAT has erred in holding that it is barred by limitation. - SC....