Initiation Of Recovery Proceedings Before DRT Does Not Preclude Financial Creditor From Filing Application U/S 7 Of IBC: NCLAT

The NCLAT held that initiation of recovery proceedings before the Debt Recovery Tribunal (DRT) does not preclude a financial creditor from filing an application under Section 7 of the Insolvency and Bankruptcy Code (IBC). The case involved a situation where a creditor had initiated recovery proceedings before the DRT and later filed for insolvency under Section 7. The NCLAT ruled that such actions are not mutually exclusive. The judgment reinforced the financial creditor’s ability to pursue multiple legal avenues for recovery without being restricted by the choice of forum. This decision clarifies the flexibility of creditors in invoking IBC for insolvency resolution alongside other recovery methods under applicable laws.