NCLT Not a Debt Collection Forum; Operational Creditor’s Application to Initiate CIRP Must Be Dismissed If the Debt Is Disputed: Supreme Court

[20 July 2022] The Supreme Court observed that application of the Operational Creditor for initiation of Corporate Insolvency Resolution Process (CIRP) must be dismissed, if the debt is disputed.

It is not the object of the IBC that CIRP should be initiated to penalize solvent companies for non-payment of disputed dues claimed by an operational creditor, the bench of Justices Indira Banerjee and V. Ramasubramanian observed.

The bench also remarked that the adjudicating authority under IBC i.e., NCLT is not a ‘debt collection forum’ and the objective of IBC is not to penalize solvent companies for non-payment of disputed dues claimed by an operational creditor.