Module: General Practice
Q61: With reference to the IBC (Amendment) Bill, 2025 regarding the admission of insolvency applications, consider the following statements:
The Adjudicating Authority "must" admit a Section 7 application if debt and default are established.
The amendment legislatively overrides the Supreme Court's Vidarbha Industries judgment which gave NCLT discretionary power to reject applications based on solvency.
The record of default with an Information Utility is now conclusive proof for admission.
Which of the statements given above are correct?
The amendment legislatively overrides the Supreme Court's Vidarbha Industries judgment which gave NCLT discretionary power to reject applications based on solvency.
The record of default with an Information Utility is now conclusive proof for admission.
Which of the statements given above are correct?
✅ Correct Answer: D
Context (2025 Amendment): The 2025 Bill mandated strict admission norms.
Statement 1 and 2 Correct: The amendment clarifies that the NCLT has no discretion to reject an application if a debt exists and a default has occurred.
This explicitly overrules the Vidarbha Industries Power Ltd ruling, which had allowed Tribunals to pause insolvency if the company had valid receivables.
Statement 3 Correct: To speed up admission, the record of default with an Information Utility is treated as conclusive evidence, removing the need for lengthy arguments on the existence of default.
Statement 1 and 2 Correct: The amendment clarifies that the NCLT has no discretion to reject an application if a debt exists and a default has occurred.
This explicitly overrules the Vidarbha Industries Power Ltd ruling, which had allowed Tribunals to pause insolvency if the company had valid receivables.
Statement 3 Correct: To speed up admission, the record of default with an Information Utility is treated as conclusive evidence, removing the need for lengthy arguments on the existence of default.