Whether the Adjudicating Authority is bound to admit an application under section 7 of the Code when it is alleged that there is contributory negligence arising out of non-disbursement of the amount sanctioned by the Financial Creditor leading to the alleged default by the Corporate Debtor – State Bank of India Vs. N. S. Engineering Projects Pvt. Ltd. – NCLT Kolkata Bench
The Adjudicating Authority held that Section 7(5)(a) of the Code stipulates that where the Adjudicating Authority is satisfied that a default has occurred, it may by order admit such application. It cannot be extended to a fact situation where the Financial Creditor, by its own acts of omission and commission, contributes to the default on the part of the Corporate Debtor. We are not convinced that this is a fit case for initiating CIRP against the Corporate Debtor. The present proceedings initiated by the Financial Creditor seems to be for purposes other than insolvency resolution of the Corporate Debtor, and is, therefore, liable to be rejected.
