SC quashes NCLAT decision on CIRP proceedings when legitimate disputes exist
The Supreme Court, in Kay Bouvet Engineering v Overseas Infrastructure Alliance, has held that an adjudicating authority must reject an application for Corporate Insolvency Resolution Process (CIRP) as long as a dispute truly exists in fact, and is not spurious, hypothetical, or illusory. Once the Operational Creditor has filed an application which is otherwise complete, the adjudicating authority must reject the application under section 9(5)(ii)(d) of the Insolvency & Bankruptcy Code (IBC), if a notice has been received by the Operational Creditor or if there is a record of dispute in the information utility. The National Company Law Tribunal's (NCLT) decision to reject the application of Overseas Infrastructure, and acknowledging the existence of a legitimate dispute, had been overturned by the National Company Law Appellate Tribunal (NCLAT). The SC quashed the decision of the NCLAT, maintaining the original decision by the NCLT.