2021 INSC 0842 1 Reportable IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION C ivil Appeal No 3325 of 2020 E S Krishnamurthy & Ors. …. Appellants Versus M/s Bharath Hi Tech Builders Pvt. Ltd. …. Respondent J U D G M E N T Dr Dhananjaya Y Chandrachud , J 1 Admit . 2 The present appeal under Section 62 of the Insolvency and Bankruptcy Code 2016 1 has arisen from a judgment of the National C ompany Law Appellate Tribunal 2 dated 30 July 2020, which upheld an order dated 28 February 2020 of the National Company Law Tribunal 3 at it s Bengaluru Bench. 1 “IBC” 2 “NCLAT ”/“Appellate Authority ” 3 “NCLT ”/“Adjudicating Authority ” 9 priority, and the respondent should not be pushed into liquidation, until as the last resort . 14 The NCLAT’s judgment and order dated 30 July 2020 has now been challenged before this Court by a variety of individuals – some of whom were original petitioners before the NCLT and went in appeal before the NCLAT, some who joined the appeal before the NCLA T directly, some who were original petitioners before the NCLT but did not join the appeal before the NCLAT and others who have joined the cause before this Court for the first time. A tabular representation is provided below: S.No. Name Position before th is Court Position before NCLAT Position before NCLT 1 Brig. E.S. Krishnamurthy First Appellant Appellant Petitioner 2 Dhwani Nishith Sanghvi Second Appellant Appellant Petitioner 3 Kriti Milind Ranka Third Appellant Appellant Petitioner 4 Marie Therese Lima Fernandes Fourth Appellant Appellant Petitioner 5 Nitin Dinkar Palekar Fifth Appellant Appellant Petitioner 6 Sunil Jain Sixth Appellant Appellant Petitioner 7 Bhupesh Dinger Seventh Appellant Appellant Petitioner 8 Battula Satish Eight Appellant Appellant Not a Party 9 Shashi Arora Ninth Appellant Appellant Not a Party 10 Gangasagar Neminath Hemade Tenth Appellant Not a Party Petitioner 11 P.V. Lakshminarayana Eleventh Appellant Not a Party Petitioner 12 Shaila S Kothari Twelfth Appellant Not a Party Not a Party 13 Nemmara Raju Dorai Mahadevan Thirteenth Appellant Not a Party Not a Party 14 Mayank Gupta Fourteenth Appellant Not a Party Not a Party 15 Manjushri Basu Fifteenth Appellant Not a Party Petitioner 16 Madhukar V. Limaye Sixteenth Appellant Not a Party Petitioner 17 Dipankar Kanjilal Seventeenth Appellant Not a Party Not a Party 10 During the course of the appeal, there have also been two applications 10 seeking impleadment in the proceedings by ten individuals who are similarly placed to the appellants. Some of these individuals were also original petitioners before the NCLT. 15 We have heard Mr Srijan Sinha, Counsel for the a ppellants and Ms A akan ksha Nehra, Counsel for the respondent. 16 On behalf of the appellants , the principal challenge is on the ground that : (i) The Appellate Authority as well as the Adjudicating Authority have acted beyond the scope of their jurisdiction under the IBC , and thus their orders are liable to be set aside since they were coram non judice. Reliance has been placed upon the judgment of this Court in Embassy Property Developments (P) Ltd. v. State of Karnataka 11 in support of this proposition; (ii) The impugned orders are contrary to the mandate of Section 7 of the IBC. Th is ground has been sought to be substantiated by urging as follows: (a) The orders of the Adjudicating Authority and the Appellate Authority are contrary to the principl es enunciated in the judgment of this Court in I nnov entive Industries Ltd. v. ICICI Bank 12 ("Innov entive Industries ”), with respect to the scope and extent of the enquiry which has to be made in a petition under Section 7 of the IBC . This Court has held that while entertaining the petition under Section 7, the Adjudicating Authority has to merely satisfy itself whether a default has 10 IA No 4783 of 2021 and IA No 97193 of 2021 11 (2020) 13 SCC 308 12 (2018) 1 SCC 407 , paras 28 and 30 11 occurred. As such, Section 7(5) only provides the Adjudicating Authority with two options – to pass an admission order under Section 7(5)(a) or reject the petition under Section 7(5)(b). Thus, unless the debt has not become due or is interdicted by some law, the Adjudicating Authority must admit a petition under Section 7; (b) Admittedly, in the present case, the respondent has committed an act of default as understood in the provisions of Section 3(12) of the IBC . This is evident from the fact that it is willing to settle the debt owed to the appellants , which was also noted by the Adjudicating Authority . Further, t he dispute between the respondent and as many as 70 original petitioners had not been settled, at th e time when the Adjudicating Authority pass ed its order . In spite of this, the Adjudicating Authority failed to act in accordance with the provisions of Section 7(5)(a) and issue an order admitting the application; and (c) Further , the Appellate Authority has also erred in observing that the petition under Section 7 was disposed of at a ‘ pre-admission stage’ by the Adjudicating Authority . Where the Adjudicating Authority is not satisfied that the financial debt is owed and a default has occurred, Section 7(5)(b) provides that it shall reject the application. Thus, an option to dispose at a ‘pre- admission stage’ is not available to the Adjudicating Authority ; 12 (iii) The Adjudicating Authority and Appellate Authority have acted beyond the scope of their jurisdiction in ‘directing’ the parties to settle with the respondent. To substantiate this argument, it has been urged: (a) The Adjudicating Authority as well as the Appellate Authority are creatures of the statute – the IBC – a nd are bound by its provisions. Thus, their jurisdiction is limited by the provisions of the IBC; (b) Hence, once there is an admitted default by the respondent, the Adjudicating Authority was statutorily bound to admit the petition and has acted patently beyond its jurisdiction in not entertaining it on the ground that there was a possibility of a settlement. The Appellate Authority has merely placed its stamp of approval on the judgment of the Adjudicating Authority. In doing so, Adjudicating Authority and Appellate Authority have acted as courts of equity, which is not prescribed by the IBC. In support of this proposition, reliance has been placed upon the judgment of this Court in Pratap Technocrats (P) Ltd. and Others v. Monitoring Committee of Reliance Infratel Limited and Another 13 (“Pratap Technocrats”) ; (c) In any case, o ut of 83 petitioners before the Adjudicating Authority, only 13 had entered into a settlement . A s a result , there was no settlement with the remaining 7 0 petitioner s. Moreover, even in respect of the financial creditors with whom the respondent had entered into a 13 2021 SCC OnLine SC 569, paras 37, 47 and 50 13 settlement, the respondent had fai led to compl y with the settlement even before the passing of the impugned order; (d) Further, t he direction by the Adjudicating Authority to the respondent to settle all individual claims is beyond its jurisdiction , as a judicial authority cannot dispose of a petition with a direction to settle a dispute. At the highest, a proceeding may be adjourned in order to enable the part ies to explore the possibility of a settlement . In the present case, as many as four opportunities were granted to the respondent to resolve the dispute with the petitioners, but to no avail . Hence, once the parties failed to arrive at a settlement , the judicial authority wa s duty bound to decide the case on merits alone; and (e) Finally, the admi ssion of the petition by the Adjudicating Authority would not have automatically nullified any potential for settlement. This Court has held in its judgment in Swiss Ribbons Pvt Ltd and Anr. v. Union of India and Ors. 14 that even after a petition under Section 7 of the IBC is admitted and before the Committee of Creditors 15 is formed, the parties can settle the dispute. Further, even after the CoC is formed, Section 12A of the IBC does provide for a mechanism through which the petition can be withdrawn (if the parties were to reach a settlement) ; 14 (2019) 4 SCC 17 15 “CoC” 14 (iv) The IBC envisages two classes of credito rs – financial and o perational cre dito rs. Except some differences in their rights and role in the CIRP, the IBC confers equal rights upon both the classes of creditors. However, through the impugned judgment, t he Appellate Authority has created a sub-cla ss within the class of f inancial creditors by observing that in the resolution of disputes relating to claims of allottees in housing projects , their rights have to be given primacy and the project entity/corporate debtor should not be sent into liquidation only at the behest of the other investors ; and (v) The threshold requirement of 10 per cent allotees of a housing project filing a petition under Section 7 of the IBC has been upheld by this Court in Manish Kumar v. Union of India 16 (" Manish Kumar”). However, in paragraph 181, this Court has held that such a requirement only needs to be assessed at the threshold while admitting the petition. Hence, if subsequent to the admission, withdrawal applications are preferred and the 10 per cent threshold is reduced, it shall not affect the maintainability of the original petition. Thus, in the present case, the 83 original petitioners did meet the 10 per cent threshold and the petition should have been admitted. B ased on the above submissions, the appellants have prayed that the orders of the NCLAT and NCLT be set aside, and the original petition under Section 7 of the IBC be restored for a decision on its admissibility under Section 7(5) of the IBC. 16 (2021) 5 SCC 1 15 17 On the other hand, the respondent counter s by submitt ing that: (i) The present appeal has been filed by the appellants to obviate the procedural requirements of Section 7 of the IBC. It has been urged: (a) The petition under Section 7 was instituted by the first appellant on behalf of himself and 82 other petitioners/proposed purchasers. Out of these 83 petitioners, only 7 of the original petitioners (including the first appellant) approached the NCLAT in appeal. The present appeal has been filed by the first appellant on behalf of the following persons: i. Firs t to seventh appellants, who were parties before the NCLT and the NCLAT ; ii. Eight and ninth appellants, who were not parties to the original petition under Section 7 but had filed an appeal before the NCLAT ; iii. Tenth, eleventh, fifteenth and sixteenth appellants, who were parties before the NCLT but not before the NCLAT; and iv. Twelfth to fourteen and seventeenth appellants, who were neither parties before the NCLT nor the NCLAT; The reduced number of litigants establishes that the respondent h as made efforts to settle the disputes with many of the proposed purchasers; (b) Further, the Parliament has amended Section 7 with effect from 28 December 2019, which was upheld by the judgment of this Court in 16 Manish Kumar (supra). The amendment has introduced the threshold requirement (of 10 per cent or 100 home buyers) for filing a petition under Section 7, with the objective of protecti ng a corporate debtor from being dragged into insolvency proceedings by an isolated set of creditors; (c) Thus, the present appeal being a continuation of the original proceedings under Section 7, the threshold requirement would have to be met. Evidently, with the reduced number of litigants, it is not met; and (d) Further, if the appellants have to file a fresh proceeding before the Adjudicating Authority or if the ir proceedings are restored before the Adjudicating Authority at this stage, they would still have to fulfil the mandatory requirement of bringing together 100 creditors in the same class or 10 per cent of the tot al number of such creditors; (ii) The present proceedings have only been filed by the appellants to arm -twist the respondent, instead of taking up the settlements offered to them: (a) The first appellant preferred a petition on behalf of 82 home buyers. The Adjudicating Authority in its order dated 28 February 2020 recorded that the respondent had fully settled with 140 investors against a payment of Rs 27.25 crores. Further, it was not ed that the claim s of 13 petitioners before the NCLT were settled, 40 were in the process of settlement and 39 were pending settlements. It was in this 17 backdrop that the NCLT disposed of the petition, with specific directions that the appellants could appr oach it if the respondent did not settle their claims within three months; (b) Even after the disposal of the proceedings by the NCLT, the respondent has continued to settle with proposed purchasers. However, while numerous efforts have been made to arrive at a settlement with the appellants, none of the options offered were agreeable to them; (c) During the pendency of the appeal , agreed amounts have been paid in full to the eighth, fourteenth and sixteenth appellants in November 2020. With respect to the tenth, twelfth, thirteenth and seventeenth appellants , a settlement was arrived at and cheques have been handed over by the respondent to them, which have not been encashed; and (d) The respondent reiterates its commitment to settle with the proposed purchasers, despite the real -estate industry being severely affected due to the COVID -19 pandemic; and (iii) The respondent should not be pushed to insolvency merely because a few of its allege d creditors are not willing to settle. In any case, the appellants are merely speculative investors and are not allottees within the meaning of Section 5(8)(12) of the IBC, and thus they have no claim under Section 7 of the IBC. 18 On the above hypothes is, it has been submitted that the appellants are utilising the process to facilitate recovery whereas the primary focus of IBC is to ensure revival and continuation of the corporate debtor , and to protect it from corporate death by liquidation. 18 The rival submi ssions will now be considered. 19 At the very outset, there is a factual question in relation to the settlements which have been made by the respondent with the present appellants. The respondent has alleged that settlement s have been reached with the eighth, fourteenth and sixteenth appellants and agreed amounts have been paid in full. Further, settlement s were arrived at with tenth, twelfth, thirteenth and seventeenth appellants and cheques have been handed over to them, but they have not been encashed. However, the appellants note that while a settlement amount was agreed between the respondent and the fourteenth appellant, it was never actually paid before the appeal was filed. Further, upon the filing of the present appeal, when the respondent offered a new settlement amount, it was rejected by the fourteenth appellant. Similarly, no settlement has been arrived at with the sixteenth appellant. In respect of the tenth, twelfth, thirteenth and seventeenth appellants, it is submitted that the cheques were issued in June 2020 but the respondent itself in October 2020 told them not to encash them till the outcome of the present appeal . Presently, the appellants acknowledge that final settlements have been reached between the respondent and the eighth, tenth and t welfth appellants. This position has not been controverted by the respondent. 19 20 The central question in this appeal then is whether the NCLT and the NCLAT were correct in their approach of rejecting the appellants’ petition under Section 7 of the IBC at the ‘pre -admission stage’ , and directing them to settle with the respondent within 3 months. Section 7 of the IBC provides for the initiation of CIRP by a financial creditor or a class of financial creditors . Section 7, as it stood prior to its amendments in 2019 17, is reproduced below: “7. Initiation of corporate insolvency resolution process by financial creditor. —(1) A financial creditor either by itself or jointly with other financial creditors, or any other person on behalf of the financial creditor, as may be notified by the Central Government, may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred: Explanation. —For the purposes of this sub- section, a default includes a default in respect of a financial debt owed not only to the applicant financial creditor but to any other financial creditor of the corporate debtor. (2) The financial creditor shall make an application under sub- section (1) in such form and manner and accompanied with such fee as may be prescribed. (3) The financial creditor shall, along with the application furnish— (a) record of the default recorded with the information utility or such other record or evidence of default as may be specified; (b) the name of the resolution professional proposed to act as an interim resolution professional; and (c) any other information as may be specified by the Board. (4) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub- section (2), ascertain the existence of a default from the records of an information 17 Through Act 26 of 2019 and Act 1 of 2020 20 utility or on the basis of other evidence furnished by the financial creditor under sub- section (3): (5) Where the Adjudicating Authority is sati sfied that— (a) a default has occurred and the application under sub- section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application; or (b) default has not oc curred or the application under sub- section (2) is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, it may, by order, reject such application: Provided that the Adjudicating Authority shall, before rejectin g the application under clause (b) of sub- section (5), give a notice to the applicant to rectify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority. (6) The corporate insolvency resolution process shal l commence from the date of admission of the application under sub- section (5). (7) The Adjudicating Authority shall communicate— (a) the order under clause (a) of sub- section (5) to the financial creditor and the corporate debtor; (b) the order under clause (b) of sub- section (5) to the financial creditor, within seven days of admission or rejection of such application, as the case may be. ” 21 Sub-S ection (1 ) of Section 7 enables the f inancial creditor to file an application for initiati on of CIRP against the corporate debtor before the Adjudicating Authority “when a default has occurred”. The expression “ default” is defined in Section 3(12) of the IBC in the following terms: “(12) “default” means non- payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the debtor or the corporate debtor, as the case may be; ” 21 The definition of default adverts to the non -payment of a debt , when it has become due and payable in whole or in part , by the debtor or the corporate debtor. Since the definition of “default” incorporates the expression “debt ”, it is necessary to advert to the definition of the latter expression under Section 3(11) of the IBC : “ (11) “debt” means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt; ” Thus, a “debt ” is defined to be a liability or an obligation in respect of a claim due from any person. This includes a financial debt and an operational debt. 22 If the above criteria are met, the financial creditor can make an application under sub- Section (2) of Section 7, in the manner prescribed, along with the necessary fees . Sub -Section (3 ) requires the f inancial creditor, inter alia , to furnish a record of the default with the information utility or such other record or evidence of default as may be specified along with the application. Under sub- Section (4), the Adjudicating Authority must , within 14 days of the receipt of the application under sub -Section (2 ), ascertain the existence of a default from the record of an information utility or on the basis of other information furnished by the financial creditor under sub-Section (3). 23 Sub-Section (5) of Section 7 is comprised in two parts : Clause (a) , which is the first part , empowers the Adjudicating Authority to admit the application where it is satisfied that : (i) a default has occurre d; (ii) the application under sub- Section (2) is complete; and (iii) no disciplinary proceeding is pending against the proposed 22 resolution professional ; Clause (b) , which is the second part, empowers the Adjudicating Authority to reject the application where it is satisfied that : (i) default has not occurred; or (ii) the application under sub- Section (2) is incomplete; or (iii) a disciplinary proceeding is pending against the proposed resolution professional. Under sub- Section (7), the Adjudicat ing Authority has to communicate its order of acceptance or rejection to the f inancial creditor and the corporate debtor or the financial creditor, as the case may be. In accordance with sub- Section (6), the CIRP process commences from the date of the admission of the application under sub- Section (5). Thus, a time limit for the completion of the CIRP within a period of 180 days (under sub- Section (1 ) of Section 12, subject to a further extension under sub- Section (3 )) commences from the date of the admission of the application to initiate the process. 24 On a bare reading of the provision, it is clear that both , C lauses (a) and (b) of sub -Section (5) of Section 7, use the expression “it may , by order” while referring to the power of the Adjudicating Authority . In Clause (a) of sub- Section (5), the Adjudicating Authority may , by order , admit the application or in Clause (b) it may , by order , reject such an application. Thus, two c ourses of action are available to the Adjudicating Authority in a petition under Section 7. The Adjudicating Authority must either admit the application under Clause (a) of sub-Section (5 ) or it must reject the application under Clause (b) of sub- Section (5) . The statute does not provide for the Adjudicating Authority to undertake any other ac tion , but for the two choices available. 23 25 In Innov entive Industries (supra) , a two-judge Bench of this Court has explained the ambit of Section 7 of the IBC , and held that the Adjudicating Authority only has to determine whether a “default” has occurred, i.e. , whether the “debt” (which may still be disputed) was due and remained unpaid. If the Adjudicat ing Authority is of the opinion that a “default” has occurred, it has to admit the application unless it is incomplete. Speaking through Justice Rohinton F Nariman, the Court has observed: “28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the Explanation to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor — it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under sub- section (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authorit y) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the c orporate debtor in Part II, particulars of the proposed interim resolution professional in Part III, particulars of the financial debt in Part IV and documents, records and evidence of default in Part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the registered office of the corporate debtor. The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of t he information utility or on the basis of evidence furnished by the financial creditor, is important. This it must do within 14 days of the receipt of the application. It is at the stage of Section 7(5), where the adjudicating authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the “debt”, which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted 24 unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under sub -section (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be. […] 30. On th e other hand, as we have seen, in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is “due” i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority may reject an application and not otherwise. ” (emphasis supplied ) 26 In the present case, t he Adjudicating Authority noted that it had listed the petition for admission on diverse dates and had adjourned it, inter alia , to allow the parties to explore the possibility of a settlement. Evidently, no settlement was arrived at by all the original petitioners who had instituted the proceedings. The Adjudicating Authority noticed that joint consent terms dated 12 February 2020 had been filed before it . But it is common ground that these consent terms did not cover all the original petitioner s who were before the Adjudicating Authority . The Adjudicating Authority was appris ed of the fact that the claims of 140 investors had b een fully settled by the respondent . The respondent also noted that of the claims of the original petitioners who have moved the Adjudicating Authority, only 13 have been 25 settled while , according to it “40 a re in the process of settlement and 39 are pending settlements ”. Eventually, the Adjudicating Authority did not entertain the petition on the ground that the procedure under the IBC is summary, and it cannot manage or decide upon each and every claim of the individual home buyers. The Adjudicating Authority also held that since the process of settlement was progressi ng “in all seriousness” , instead of exami ning all the individual claims, it would dispose of the petition by directing the respondent to settle all the remaining claims “seriously” within a definite time frame. The petition was accordingly disposed of by directing the respondent to settle the remaining claims no later than within three months , and that if any of the remaining original petitioner s were aggrieved by the settlement process, they would be at liberty to approach the Adjudicating Authority again in accordance with law. The Adjudicating Authority’s decision was also upheld by the Appellate Authority , who supported its conclusions. 27 The Adjudicating Authority has clearly acted outside the terms of its jurisdiction under Section 7(5) of the IBC . The Adjudicating Authority is empowered only to verify whether a default has occurred or if a default has not occurred. Based upon its decision, the Adjudicating Authority must then either admit or reject an application respectively. These are the only two courses of action which are open to the Adjudicating Authority in accordance with Section 7(5). The Adjudicating Author ity cannot compel a party to the proceedings before it to settle a dispute. 28 Undoubtedly, settlement s have to be encouraged because the ultimate purpose of the IBC is to facilitate the continuance and rehabilitation of a corporate 26 debtor , as distinct from allowing it to go into liquidation. As the Statement of Objects and Reasons accompanying the introduction of the Bill indicates , the object ive of the IBC is to facilitate insolvency resolution “ in a time bound manner” for maximisation of the value of assets, promot ion of entrepreneurship, ensuring the availability of credit and balanc ing the interest of all stakeholders . What the Adjudicating Authority and Appellate Authority , however , have proceeded to do in the present case is to abdicate their jurisdiction to decide a petition under Section 7 by directing the respondent to settle the remaining claims within three months and leaving it open to the original petitioner s, who are aggrieved by the settlement process , to move fresh proceedings in accordance with law. Such a course of action is not contemplated by the IBC. 29 The IBC is a complete code in itself. The Adjudicating Authority and the Appellate Authority are creatures of the statute. T heir jurisdiction is statutorily conferred. The statute which confers jurisdiction also structures, channelises and circumscribe s the ambit of such jurisdiction. Thus, while the Adjudicating Author ity and Appellate Authority can encourage settlements, they cannot direct them by acting as courts of equity. In Pratap Technocrats (supra), a two-judge Bench of this Court, speaking through Justice DY Chandrachud, held: “47. These decisions have laid down that the jurisdiction of the Adjudicating Authority and the Appellate Authority cannot extend into entering upon merits of a business decision made by a requisite majority of the CoC in its commercial wisdom. Nor is there a residual equity based jurisdiction in the Adjudicating Authority or the Appellate Authority to interfere in this decision, so long as it is otherwise in 27 conformity with the provisions of the IBC and the Regulations under the enactment. […] 50. Hence, on ce the requirements of the IBC have been fulfilled, the Adjudicating Authority and the Appellate Authority are duty bound to abide by the discipline of the statutory provisions. It needs no emphasis that neither the Adjudicating Authority nor the Appellate Authority have an uncharted jurisdiction in equity. The jurisdiction arises within and as a product of a statutory framework. ” ( emphasis supplied ) 30 In Arun Kumar Jagatramka v. Jindal Steel & Power Ltd. 18, a two judge Bench of this Court issued a note of caution to the Adjudicating Authorit ies and the Appellate Authority against judicial interfer ence with the framework created by the IBC. Speaking through Justice DY Chandrachud, the Court held: “95…we do take this opportunity to offer a note of caution for NCLT and NCLAT, functioning as the adjudicatory authority and appellate authority under the IBC respectively, from judicially interfering in the framework envisaged under the IBC. As we have noted earlier in the judgment, the IBC was introduced in order to overhaul the insolvency and bankruptcy regime in India. As such, it is a carefully considered and well thought out piece of legislation which sought to shed away the practices of the past. The legislature has al so been working hard to ensure that the efficacy of this legislation remains robust by constantly amending it based on its experience. Consequently, the need for judicial intervention or innovation from NCLT and NCLAT should be kept at its bare minimum and should not disturb the foundational principles of the IBC…” 18 (2021) 7 SCC 474 28 31 In the synopsis which has been appended to the paper book, a tabulated statement has been appended for the purpose of indic ating the status of the settlement process. The statement is reproduced below: Sl. No. Name Settlement Proposed Date of Proposal Accepted/ Rejected Defaulted in Settlement Date of Defa ult 1 E.S. Krishnamurthy Yes 14.12.2019 Rejected N.A. N.A. 2 Dhwani Sanghvi Yes 14.12.2019 Rejected N.A. N.A. 3 Sunil Jain Yes September 2019 Rejected N.A. N.A. 4 Lakshminarayan P.V. Yes May 2019 Accepted then subsequently rejected N.A. N.A. 5 Milind Raka No N.A. N.A. N.A. N.A. 6 Nitin Palekar No N.A. N.A. N.A. N.A. 7 Marie Therese Lima Fernandes No N.A. N.A. N.A. N.A. 8 Shashi Arora Yes 30.08.2019 Rejected N.A. N.A. 9 Bhupesh Dinger Yes December 2019 Rejected N.A. N.A. 10 Shaila S Kothari Yes 13.07.2019 Accepted Yes 31.10.2019 11 Nemmara Mahadevan Yes 24.06.2019 Accepted Yes August 2018 12 Satish Battula Yes 06.07.2018 Accepted Yes 31.08.2019 13 Mayank Gupta Yes 08.03.2018 Accepted Yes 30.09.2019 14 Gangasagar Neminath Hemade Yes 02.08.2029 Accepted Yes 2019 15 Manjushri Basu No (not till the passing of order by Adjudicatin g Authority) Settlement received after passing of order by Adjudicatin g Authority however no cheques provided. N.A. N.A. N.A. 16 Madhukar V. Limaye No (not till the passing of order by Adjudicatin g Authority) Settlement received after passing of order by Adjudicatin N.A. N.A. N.A. 29 g Authority however no cheques provided. 17 Dipankar Kanjilal Yes July 2019 Accepted Yes September 2019 The above statement indicates that a settlement has admittedly not been arrived at by the respondent with all the appellants . Moreover, in the present appeal, impleadment applications have also been filed on behalf of an additional set of individuals claiming non-payment of their dues by the respondent . 32 For the above reasons , we have come to the conclusion that the order of the Adjudicating Authority, and the direction s which eventually came to be issued, suffered from an abdication of jurisdiction. The Appellate Authority sought to make a distinction by observ ing that the directions of the Adjudicating Authority were at the ‘ pre- admission stage’, and that the order was not of such a nature which was prejudicial to the rights and interest of the stakeholders. The Appellate Authority was cognizant of the fact that even the time schedule for settlement which had been indicated by the Adjudicating Authority had elapsed, but then noted the impact of the outbreak of C OVID-19 pandemic on the real estate market, including on the respondent . W hile acknowledging that the consent terms were “filed by some of the stake holders though may not be all encompassing”, the Appellate Authority nonetheless proceeded to dismiss the appeal as not maintainable. The observation that the appeal was not maintainable is erroneous. Plainly , the Adjudicating Authority fail ed to exercise the jurisdiction which was entrusted to it. A clear case for 30 the exercise of jurisdiction in appeal was thus made out, which the Appellate Authority then failed to exercise. 33 We may note at this stage that the provisions of Section 7 of the IBC have been amended with retrospective effect from 28 December 2019 by Act 1 of 2020. These provisions have been construed in the judgment of this Court in Man ish Kumar (supra). Since we are inclined to restore the proceedings back to the Adjudicating Authority for a fresh consideration, it is not necessary for this Court to dwell on any other aspect, save and except for what weighed with the Adjudicating Authority in disposing of the petition without adjudicating on other issues of maintainability or merits . We leave open all the r ights and contentions of the parties to be urged before and decided by the Adjudicating Authority. 34 We accordingly allow the appeal and set aside the impugned judgment and order dated 30 July 2020 of the NCLAT in Company Appeal (AT) (Insolvency) No 649 of 2020 and of the NCLT dated 28 February 2020 in CP (IB) No.188/BB/2019. The petition under Section 7 of the IBC (i.e. , CP (IB) No.188/BB/2019) is accordingly restored to the NCLT for disposal afresh. 31 35 The impleadment applications shall stand disposed of , with liberty being granted to the applicants to adopt appropriate proceedings in accordance with law before the Adjudicating Authority , or before such other forum as they may be advised. 36 Pending application( s), if any, shall stand disposed of. …….…………………………...............................J [Dr Dhananjaya Y Chandrachud] …….…………………………...............................J. [A S Bopanna] New Delhi; December 14, 2021