The BLRC Report is one of the most critical documents to understand the interpretation and intention of provisions of the IBC. The BLRC under the heading “5.2.2 How can the IRP be triggered?”, discusses that the trigger point to be adopted for financial creditors under the IBC is the existence of default on payment. The Code presupposes that instituting insolvency is the final resolve and at this stage, all that the AA has to look into is whether the application is complete and whether there is existence of default. It states,
“In case the financial creditor triggers the IRP, the Adjudicator verifies the default from the information utility (if the default has been filed with an information utility, tit such be incontrovertible evidence of the existence of a default) or otherwise confirms the existence of default through the additional evidence adduced by the financial creditor, and puts forward the proposal for the RP to the Regulator for validation.”
Thus, the interpretation adopted by the Supreme Court clearly contradicts the legislative intent.
Source: Barandbench
