Debt Default Triggers CIRP

The National Company Law Tribunal (NCLT), Mumbai Bench, held that once the existence of a financial debt and default is established, the Adjudicating Authority cannot refuse admission of a Section 7 application merely because the corporate debtor has pending arbitral proceedings, prospective claims against a third party, or alleges that the default arose due to external circumstances. 

The Tribunal admitted the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor and rejected allegations that the insolvency proceedings were initiated maliciously under Section 65 of the Insolvency and Bankruptcy Code, 2016.