In Brief
Kotak Mahindra Bank Limited challenged the NCLAT's decision that rejected its application to initiate insolvency proceedings against a corporate guarantor, arguing the claim was barred by limitation. The Supreme Court held that a Recovery Certificate issued under the Debt Recovery Act constitutes a 'financial debt' under the IBC, making its holder a 'financial creditor' entitled to initiate insolvency proceedings. The Court affirmed that issuance of a Recovery Certificate creates a fresh cause of action, allowing creditors to file CIRP applications within three years from that date, not from the original date of default. The judgment clarified that statutory definitions using 'includes' are inclusive and not exhaustive, and reaffirmed the principle that the IBC should be interpreted to preserve ongoing concerns while maximizing creditor recovery.
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