In a recent ruling titled Vijay Kumar Singhania v. Bank of Baroda, the Supreme Court of India brought in the much-needed clarity regarding the requirement of filing a record of default with an Information Utility (IU) during a section 7 petition under the Insolvency and Bankruptcy Code 2016 (IBC) and held that the filing of such records maintained by the IU is not mandatory.
The said issue arose before the National Company Law Appellate Tribunal (NCLAT) wherein the Appellate Tribunal vide judgment dated 13.12.2023 affirmed that the Ld. Adjudicating Authority had correctly relied on Regulation 2A(a) of the (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) and Section 7(3)(a) of the IBC, to hold that it is not mandatory to provide the records maintained by an IU as the only evidence to suffice the requirement of the debt being due and payable. In view of the above, the NCLAT dismissed the appeal.
This judgment of the NCLAT, as affirmed by the Hon’ble Supreme Court, clarifies the position pertaining to the requirement for a Financial Creditor to prove default under the IBC. It emphasizes that the absence of a record of default from an information utility does not invalidate a Section 7 application. As such, even after amendment of the IU Regulations w.e.f. 14.06.2022, no amendments have been carried out either in section 7 of the IBC, which empowers a financial creditor to file record of the default recorded in the information utility or such other record and default as may be specified, or in the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 to this effect. However, with the said judgment, we expect an amendment to this effect shall be notified soon.