VIDARBHA INDUSTRIES POWER LIMITED vs AXIS BANK LIMITED

Bench: 2 — Indira Banerjee, J.K. Maheshwari

In Brief

Vidarbha Industries, a coal-fired thermal power plant operator, defaulted on loans from Axis Bank and was served with an insolvency petition. The company sought to stay the proceedings, claiming that a pending regulatory award of Rs. 1,730 crores in its favour would enable it to pay all debts. Both the NCLT and NCLAT rejected the stay, holding that once default is proved, the tribunal must admit the insolvency petition. The Supreme Court allowed the appeal, holding that Section 7(5)(a) of the Insolvency Code grants discretionary, not mandatory, power to admit petitions. The Court distinguished between financial and operational creditors and ruled that tribunals must consider the debtor's overall financial health and pending favourable awards before admitting CIRP applications.

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Insolvency and Bankruptcy Corporate Insolvency Resolution Process Statutory Interpretation Discretion vs Mandatory Duty Financial Creditors Operational Creditors Electricity Regulation Judicial Discretion

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