Case Analysis on Vidarbha Power Industries Limited v. Axis Bank Limited – By Adv. Anant Vijay
Vidarbha was the first case to deal exclusively with the question of the nature of the S. 7 provision, whereby the Apex Court applied its judicial mind to interpret the legislative intent behind the use of the words “may” in S.7 in comparison to “shall” in S. 9. Although the reasoning provided for differentiation created between FC and OC is partially correct, by providing discretion to the AA, the ratio undermined the importance of the twin test of debt and default used by the AA for determining the admission of a CIRP application initiated by a FC. It further heightened the scope of misuse of such power and ambiguity, resulting in conflicting precedents. To tackle such issues, provide clarity to its legislative intent, and reinstate the objectives of IBC, the parliament needs to introduce an amendment in S. 7, mandating the admission of CIRP on the twin test.