NCLT Admits ₹7.28 Cr Insolvency Plea Despite Viability Claim

NCLT Admits ₹7.28 Crore Insolvency Petition Overruling Viability Objection

The National Company Law Tribunal (NCLT) has admitted a Section 7 petition under the Insolvency and Bankruptcy Code (IBC), 2016, for a defaulted financial debt of ₹7.28 crore. The corporate debtor had contested admission, arguing that the company remained commercially viable. However, the tribunal held that viability is not a legal ground to reject a petition if default and debt are established.

The financial creditor produced loan agreements, repayment records, and authenticated data from the National e-Governance Services Limited (NeSL) to prove the existence and default of the debt. These documents met the evidentiary standard under Section 2(za) and Section 5(7) of the IBC. The tribunal reiterated that the limited scope of inquiry under Section 7 is confined to determining whether a default has occurred, not the long-term feasibility of the enterprise.

"Commercial viability, while relevant during resolution, does not negate the right to initiate CIRP when a financial debt and default are substantiated,"

This decision aligns with the Supreme Court’s interpretation in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. that the IBC does not require a pre-admission assessment of business prospects. The ruling reinforces the primacy of creditor rights and procedural certainty in the early stages of insolvency. Legal practitioners must focus on evidentiary documentation of debt and default, rather than economic arguments, at the admission phase.