IBC Is Not a Recovery Shortcut: SC Rejects CIRP in Builder-Bank-Borrower Dispute

Dhanlaxmi Bank Limited Vs Mohammed Javed Sultan & Ors. (Supreme Court of India) In a significant ruling under the Insolvency and Bankruptcy Code, 2016, the Supreme Court held that insolvency proceedings cannot be invoked as a coercive recovery mechanism where the dispute is predominantly contractual and already pending before an appropriate forum like the DRT. The case arose from a quadripartite arrangement involving a bank, corporate debtor, builder, and infrastructure authority relating to purchase of a commercial property. Although the bank sanctioned a loan to the corporate debtor, th...