Part 1 of 8 · Admission, Threshold & Limitation

Section 238 gives the IBC overriding effect over any other law for the time being in force, including state legislation that is inconsistent with it — the Maharashtra Relief Undertakings Act could not suspend the debtor's liability under the Code.

Only whether a debt exists and a default has occurred (based on record/evidence of default) — it is not required to conduct a full adjudicatory inquiry into disputes as a civil court would.

The NCLT rejected Innoventive's preliminary objection and admitted the Section 7 application; the NCLAT affirmed that admission; Innoventive then appealed to the Supreme Court on the question of the state law's overriding effect.

Because its core holding on Section 238 — that the Code overrides inconsistent laws generally — is a foundational principle applied wherever another statute's mechanism collides with the Code's process, not just in the specific state-law context it arose from.

A dispute that is real and pre-existing (i.e., raised before receipt of the demand notice) and represents a plausible contention requiring further investigation — not one that is spurious, hypothetical, or illusory.

No. It only checks whether a plausible dispute exists on the record; it does not adjudicate who is right on the merits.

The NCLT found Mobilox's dispute illusory and admitted the application; the NCLAT disagreed, finding a genuine dispute existed and reversing admission — the Supreme Court ultimately sided with the NCLAT's view.

Operational debts often arise from ordinary commercial transactions where disputes over quality, delivery, or performance are common and genuine, unlike financial debt (typically evidenced by clear loan/security documentation) — the higher threshold guards against operational creditors using CIRP as a pressure tactic in genuine commercial disagreements.

It upheld the distinction as constitutionally valid, finding an intelligible differentia and rational nexus with the object of the Code, given financial creditors' greater expertise in assessing a debtor's viability and restructuring.

Resolution (revival of the corporate debtor) is the primary objective; liquidation is meant to be a measure of last resort, not the default outcome.

Because it was a constitutional challenge to the validity of the Code's provisions themselves (brought under Article 32), a category of dispute outside the NCLT's jurisdiction and appropriately heard directly by the Supreme Court.

Later constitutional challenges to specific IBC mechanisms — such as the allottee-filing threshold upheld in Manish Kumar and the personal guarantor process upheld in Dilip B Jiwrajka — apply the same rational-nexus reasoning first validated here.

That "may admit" confers genuine discretion — the AA is not bound to admit an application merely because debt and default are proved, and can consider the debtor's broader financial position.

It clarified that admission remains the general rule once default is established, and that the discretion recognised in Vidarbha should be exercised sparingly, in exceptional circumstances only — not treated as a routine basis for refusing admission.

The corporate debtor had a substantial arbitral award receivable in its favour, which — if realised — would have resolved its financial distress; this was treated as a relevant factor bearing on whether admission was warranted despite the default.

It overstates the law — M Suresh Kumar Reddy narrowed Vidarbha's holding, confirming admission remains the norm once default is proved, with discretion reserved for rare, exceptional circumstances rather than general application.

Yes — the Supreme Court held it applies by virtue of Section 238A, and has done so from the Code's inception in 2016, even though Section 238A was inserted only later with retrospective effect.

Article 137, the residual provision, prescribing a period of three years from when the right to apply accrues.

Because they viewed the IBC as a distinct, self-contained, time-bound insolvency trigger mechanism rather than an ordinary civil suit for recovery, reasoning that general limitation principles built for civil litigation shouldn't automatically transplant onto it.

That the IBC should not be misused as a back-door recovery mechanism for debts that are already time-barred under ordinary civil law — applying limitation keeps the Code focused on genuine, live insolvency resolution rather than stale recovery claims.

From the date of default as defined under Section 3(12) of the Code, not from the later date on which the account may have been classified as an NPA.

No — NPA classification is merely a regulatory/accounting event and does not, by itself, restart or extend the limitation clock for filing a Section 7 application.

That the continuing/running nature of the loan account itself kept extending the limitation period — an argument the Supreme Court rejected in the absence of any valid acknowledgment of debt under Section 18 of the Limitation Act.

A valid acknowledgment of debt by the corporate debtor within the limitation period, which under Section 18 of the Limitation Act would have given the creditor a fresh limitation period from the date of such acknowledgment — a point developed further in Laxmi Pat Surana.

Disbursal of a sum of money against consideration for the time value of money — the essential character of a borrowing.

No — the Supreme Court held its lease/land allotment dues did not carry the hallmark of financial debt merely because payment was structured in deferred installments, so NOIDA was not treated as a financial creditor.

Pioneer Urban Land found that home-buyer advances funded the developer's construction in a manner with the commercial effect of a borrowing, satisfying the financial debt test; here, the lease/allotment structure lacked that same borrowing-like disbursal-against-time-value-of-money character, so it fell short of the test despite superficially similar deferred payment terms.

Financial creditor status carries a seat and voting rights on the Committee of Creditors, giving direct influence over the resolution plan; without that status, an entity's claim is treated differently and it has no vote in shaping or approving the plan.

Yes — the Supreme Court held the bar applies based on the date of default, not the date of filing; even an application filed before Section 10A existed is barred if the underlying default occurred on or after 25 March 2020.

Defaults occurring on or after 25 March 2020 — the date of the nationwide Covid-19 lockdown. Defaults that occurred before that date are not barred by Section 10A.

Because Kymal's own demand notice had specified 30 April 2020 as the date of default, and the Court held to this self-declared date rather than accepting a later attempt to recharacterise it as falling before the cutoff.

That the bar is permanent for defaults within the specified window — it is not merely a temporary suspension that lifts once the Ordinance period ends; an application for such a default can never be filed under Sections 7, 9, or 10, even after the suspension period is over.

No — the Supreme Court held the exception was plainly inapplicable on these facts, with debt and default conclusively established, reinforcing that the exception remains a narrow, rarely-invoked one.

No — the Supreme Court held that a society which is not itself a creditor, and has not been recognised as an authorised representative of allottees under the IBC's representative mechanisms, has no statutory locus standi to intervene, however sympathetic its members' situation.

It issued fresh guidelines directing the CoC and Resolution Professional to take specific steps to safeguard homebuyers' interests during the CIRP, grounded in the Code's underlying intent rather than the Society having a formal right to intervene.

It clarified that revival does not exclude recovery altogether — the Code only excludes the abuse of insolvency proceedings as a pure pressure tactic; legitimate recovery pursued through a properly proved Section 7 application is not objectionable simply because recovery is also an effect of admission.

Yes — the Supreme Court held such entries can be treated as acknowledgment of liability, extending the limitation period afresh from the date of that acknowledgment.

Because the corporate debtor had made valid acknowledgments of its debt (confirmations and requests for extension of time) within the original three-year window, resetting the limitation period afresh from each such acknowledgment.

That the limitation period is three years from the date of accrual of the right to sue — i.e., the date of default — consistent with B K Educational Services.

B K Educational Services establishes that the Limitation Act applies at all; Babulal Vardharji Gurjar fixes the starting point (date of default); this case (alongside Laxmi Pat Surana) supplies the concrete mechanism — including the specific, commonly-encountered scenario of balance sheet entries — by which that starting point can be reset through acknowledgment.

The date of submission of the resolution plan — not the date of CIRP commencement.

Clauses (c) and (h) of Section 29A, which would otherwise typically disqualify promoters and guarantors connected to the corporate debtor's financial distress.

Digamber Anand Rao Pingle Vs. Shrikant Madanlal Zawar & Ors., which had treated the CIRP initiation date (rather than the plan submission date) as the relevant cut-off for MSME status.

Because an MSME's business typically attracts serious interest primarily from its own promoter; excluding that promoter under a strict application of Section 29A could leave no viable resolution applicant at all, defeating the Code's revival objective for small enterprises specifically.

No — the Court held financial creditors may rely on either an IU record or any other specified document from the classes set out in Regulation 8(2) of the CIRP Regulations; the IU route is not mandatory.

Because NCLT's rule-making authority is limited to the four corners of Section 424 of the Companies Act, and the Registrar's order imposed a new substantive evidentiary mandate that exceeded this limited scope, while also conflicting with Section 7(3)(a) of the IBC itself.

Section 7(3)(a) of the IBC and Section 424 of the Companies Act are superior statutory provisions; the NCLT Rules, being delegated legislation, sit at a lower layer and cannot obstruct or override the operation of these superior parent statutory provisions.

The introduction of Regulation 2A in the CIRP Regulations, which formally codified financial creditors' flexibility to use alternative evidence of default rather than being limited to Information Utility records.