Order Of DRT Setting Aside NPA Classification Does Not Negate Existence Of Financial Debt Or Occurrence Of Default: NCLT Delhi

The Delhi bench of the National Company Law Tribunal (NCLT) has ruled that an order passed by the Debt Recovery Tribunal (DRT) setting aside the classification of a borrower's account as a Non-Performing Asset (NPA) by a bank does not automatically negate the existence of a financial debt or the occurrence of a default under the Insolvency and Bankruptcy Code (IBC). This ruling clarifies that the IBC operates independently of the DRT process in determining financial debt and default, thereby safeguarding the rights of financial creditors to initiate insolvency proceedings even if the NPA classification is challenged or overturned in another forum.