
The NCLAT reaffirmed that the maintainability of a Section 7 application under the Insolvency and Bankruptcy Code (IBC) can be decided either separately or alongside other substantive issues. The ruling came in an appeal filed by the corporate debtor challenging the NCLT’s order admitting a Section 7 application filed by the respondent.
The corporate debtor had objected to the application’s maintainability, arguing that the Adjudicating Authority’s decision to address substantive issues on merits while ruling on maintainability precluded them from raising those issues in later proceedings. The respondent countered that due process was followed, with both parties being afforded sufficient opportunities to present their cases.
The NCLAT observed that while the Adjudicating Authority is not required to address maintainability separately, it has the discretion to do so. In this case, the maintainability objection was appropriately resolved first. However, the tribunal emphasized the need to ensure justice by allowing both parties to argue the substantive issues fully.
The tribunal ruled that although the maintainability of the application was rightly upheld, questions regarding debt and default should be decided afresh by the Adjudicating Authority, providing both parties the opportunity to present evidence.
The appeal was disposed of with directions to adjudicate the remaining issues on merits, ensuring a fair opportunity for both sides to argue their cases.
Pioneer Urban Land & Infrastructure Ltd. v. Presidia Araya Residents Welfare Association
Company Appeal (AT) (Insolvency) No. 97 of 2025
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