NCLT admits ₹7.28 crore insolvency plea based on loan records and NeSL evidence; rules commercial viability is not a valid ground to reject CIRP admission.
NCLT Upholds Admission Despite Claims of Commercial Viability
The National Company Law Tribunal (NCLT) has admitted a ₹7.28 crore financial debt petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, rejecting the corporate debtor’s argument that its commercial viability warranted dismissal of the insolvency application. The admission was based on authenticated loan records and evidence from the National E-Governance Services Limited (NeSL) confirming default.
The corporate debtor argued that the business remained operationally viable and contributed to employment and economic activity, seeking to avoid CIRP. However, the NCLT reiterated that commercial viability is not a statutory ground to resist admission once a default is established. Judicial precedent, including Essar Steel India Ltd. v. Satyam Infrastructure, confirms that the IBC prioritizes debt recovery and creditor rights over industrial continuity in early stages.
This decision reinforces the principle that the existence of default—verified through reliable information utilities—is the threshold issue. Lawyers must caution clients against conflating business sustainability with statutory compliance under the IBC. Timely restructuring outside insolvency remains advisable to prevent involuntary resolution triggers.
Citations
- Insolvency and Bankruptcy Code, 2016, Section 7
- Essar Steel India Ltd. v. Satyam Infrastructure
