Kotak Mahindra Bank vs. A. Balakrishnan and MS Prasad Properties and Investments Pvt. Ltd.

Insolvency and Bankruptcy Code 2016 has brought drastic changes in the legal regime of debt recoveries. Interpretation of the code by the judiciary unfolds various parameter of the code for the purpose of regulation of the Insolvency resolution process of the corporate debtors and the creditors. Section 7 of the said Code gives the opportunity to the financial creditors to initiate the insolvency resolution process against the corporate debtor. The interpretation of the said section has been brought up before the apex court time and again. In the present case the question before the court is Whether a recovery certificate issued under Recovery of Debt and Bankruptcy Act 1993 by Debt Recovery Tribunal would constitute financial debt against the corporate debtor or not. Hence would it be qualified for the initiation of resolution process under section 7 of the IBC 2016. Since the recovery certificate was issued before the code is passed, so whether it will not be barred by the limitation period of filing the insolvency process. The judgment passed by the Hon’ble Supreme court has been discussed below and a understanding to it’s obiter dicta is attempted by the author.