New Delhi, Feb. 19 -- The Supreme Court on Wednesday held that once a financial debt and default are established, admission of an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) is mandatory.

The adjudicating authority is only required to ascertain the existence of default within 14 days based on records or evidence produced by the financial creditor and cannot examine the corporate debtor's ability to repay or related disputes at this stage.

A Bench of Chief Justice Surya Kant and Justices Joymalya Bagchi and Vipul M. Pancholi dismissed an appeal by the promoter of Hiranmaye Energy Ltd. challenging the initiation of Corporate Insolvency Resolution Process (CIRP) by REC Ltd.

Background

REC Ltd. had sanctioned R...