#IBC Section 7

NCLAT rules that a financial creditor’s interest default exceeding ₹1 crore constitutes a valid default under Section 7 of the IBC, even if the corporate debtor breached a One Time Settlement (OTS). The ruling clarifies that service of notice via MCA-registered email suffices for CIRP initiation, impacting creditors’ rights and insolvency proceedings.

The NCLAT has ruled that ongoing settlement discussions and partial debt repayments cannot override clear evidence of financial default under Section 7 of the IBC. This clarifies that corporate insolvency proceedings remain valid if the debt is undisputed and due, reinforcing creditor rights against tactical delays and undermining the integrity of the insolvency process.

Supreme Court rules that admission of debt by an Interim Resolution Professional during Corporate Insolvency Resolution Process does not constitute acknowledgment under Section 18 of the Limitation Act, 1963. Financial creditors filing Section 7 IBC petitions after limitation expiry remain time-barred, regardless of moratorium or COVID extensions.

Supreme Court holds that a bank cannot initiate insolvency proceedings under Section 7 of the IBC if the loan was disbursed to a builder rather than the corporate debtor. The ruling underscores that financial creditor status requires a direct lending arrangement, not merely a contractual transaction.

Bombay High Court holds that prolonged delays in reserved IBC matters undermine the Code's statutory timelines, directing constitution of a special NCLT bench to dispose of a Section 7 petition pending since 2019. The ruling reinforces the judiciary's intolerance for procedural stagnation in insolvency proceedings, impacting creditors and corporate debtors awaiting resolution.

The NCLAT has ruled that a No Objection Certificate for charge satisfaction does not equate to legal discharge of financial debt under IBC Section 7. Only verified financial statements and NeSL records can conclusively establish default, setting a critical precedent for creditors and resolution professionals relying on procedural documents over substantive evidence.