The Supreme Court has repeatedly held that the provisions of IBC cannot be used as a means to recover dues.
In the Mobilix Innovations vs Kirusa Software case, the apex court decided that in a pre-existing dispute that is not spurious, hypothetical or illusionary, the court has to reject the insolvency application filed against an entity.
In the Swiss Ribbons vs Union of India case, the top court highlighted that the primary focus of the legislation is to ensure revival and continuation of the corporate debtor by protecting the entity from its own management and from a corporate death by liquidation.
Given the law laid down in the Swiss Ribbon case, it becomes clear that rather than the “inability to pay debts”, it is the “determination…
Read the full article at: https://www.bqprime.com/business/nclat-provides-clarity-that-ibc-is-not-a-debt-recovery-mechanism