Supreme Court rules that an admission order under Section 7 of IBC initiating CIRP is binding and cannot be resiled from in collateral proceedings, affirming finality of tribunal decisions.
Admission Order Under IBC Binding in Collateral Proceedings: SC
The Supreme Court has held that an order admitting an application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, and initiating the Corporate Insolvency Resolution Process (CIRP), is final and binding. Such an admission cannot be challenged or resiled from in subsequent collateral proceedings.
The Court upheld concurrent orders by the NCLT and NCLAT, emphasizing that once a financial debt and default are admitted, the debtor cannot later deny the liability in other forums. This principle ensures finality and prevents multiplicity of litigation.
The decision strengthens the efficacy of the IBC regime by precluding repetitive challenges to admitted claims. Practitioners must advise clients that admissions before the NCLT carry preclusive effect in civil and arbitration proceedings.
Citations
- Section 7, Insolvency and Bankruptcy Code, 2016
