In Brief
In a dispute between financial creditors and a real estate developer over loan defaults, the Supreme Court held that the Adjudicating Authority cannot dismiss a Section 7 insolvency petition merely because the debtor is attempting settlement. The Court clarified that the statutory jurisdiction under the Insolvency and Bankruptcy Code 2016 requires the Adjudicating Authority to either admit or reject a petition if default is established, with no third option to compel settlement. Although the IBC encourages rehabilitation and settlement, the Court rejected the lower authorities' attempt to substitute settlement directions for the mandatory admission-or-rejection decision. The petition was restored for fresh disposal before the NCLT in compliance with statutory requirements."
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