Information Utility Record Enough to Prove IBC Default: SC

Record of Default From Information Utility Is Sufficient Proof for Section 7 Admission: Supreme Court

Published: 15 October 2026 · NyayVidhan

The Supreme Court upheld the admission into insolvency of the companies owning the JW Marriott Hotel, Bangalore and the Crowne Plaza Hotel, Pune, on Omkara ARC's Section 7 petitions. Default need only be shown on a summary, prima facie standard; an authenticated Information Utility record of default is by itself sufficient and displaceable only by clear, cogent material; and a positive EBITDA does not disprove default (paras 47, 55, 58, 65).

Key holdings

The occurrence of default is a static historical event; disputes over interest or quantum go to claims verification in the CIRP, not to admission (paras 42-47).

An authenticated Information Utility record of default is by itself sufficient and carries a presumption rebuttable only by clear, cogent, credible and compelling material (paras 55, 58).

Loan papers, account statements, acknowledgements and correspondence may together establish default at the second tier (paras 57-58).

Profitability or a positive EBITDA is irrelevant to default; the Code is triggered by default, not balance-sheet insolvency (paras 65-66).

The Court recorded an objection that the appellants' compilation contained AI-generated non-existent judgments; costs were proposed but not imposed after the first appellant's death (para 74).

Judgment digest by NyayVidhan: a summary of the court's judgment, not its text. The judgment itself is the authoritative version.

Brief Facts

Piramal lent Rs.600 crores to GSTAAD Hotels and Neo Capricorn Plaza in 2017, and the companies also took ECLGS facilities (paras 3, 6). In December 2022 the loans were assigned to Omkara; the Karnataka High Court upheld the assignment and this Court dismissed the special leave petition (paras 7, 11). Defaults were registered with the Information Utility NeSL on 09.02.2023, and Omkara recalled the loans and filed Section 7 petitions citing default as on 15.11.2022 (paras 8-10). After a remand, the NCLT again admitted both petitions on 08.07.2025 and the NCLAT affirmed (paras 12-16). The companies argued that the cash management arrangement and the debt service reserve cured any default and that they were profitable (paras 22-23).

Court's Findings

Under Section 62 the Court decides only questions of law, and concurrent findings of the specialised tribunals stand unless perverse (paras 27-28). Omkara's status as assignee was settled in the Karnataka litigation, and reopening it is barred by issue estoppel (paras 30-32). Default under Section 3(12) is met by non-payment of any part or instalment; its occurrence is a static historical event, while the quantum is dynamic and left to claims verification in the CIRP (paras 41-46). Because the Information Utility gives the debtor notice and three reminders, an authenticated record operates as an admission and estoppel under Sections 31 and 115 of the Evidence Act and raises a presumption displaceable only by clear, cogent, credible and compelling material (paras 51-55). Other Form 1 documents may establish default collectively (paras 56-57), and the 2026 amendment to Section 7(5) only clarifies this (paras 67-69). Here the NeSL records, the statement of accounts and the companies' own letter of 23.12.2022 showed default, and a debt service coverage ratio of 0.12 belied the profitability plea (paras 59-65).

Legal Principle

At the admission stage under Section 7 of the IBC, default need only be shown on a summary, prima facie standard, and disputes over quantum do not stop admission. An authenticated Information Utility record of default is by itself sufficient and can be displaced only by clear, cogent material, not bare denial (paras 47, 55, 58).

Precedents Relied Upon

Innoventive Industries Ltd. v. ICICI Bank (2018) 1 SCC 407
Relied Upon Discussed at ¶ 25, 39
Once the Adjudicating Authority is satisfied from the information utility records or other evidence that a default has occurred, the Section 7 application must be admitted unless it is incomplete; it does not matter that the debt is disputed so long as it is due.
Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17
Relied Upon Discussed at ¶ 28
Noticed the Bankruptcy Law Reforms Committee's finding that the earlier insolvency fora lacked business or financial expertise, to which specialised tribunals were the legislative answer.
Maitreya Doshi v. Anand Rathi Global Finance Ltd. (2023) 17 SCC 606
Relied Upon Discussed at ¶ 25, 28
The Court ought not lightly to substitute its own reading of the material for the concurrent findings of the specialised tribunals under the Code.

View all precedents (9)

Devas Multimedia (P) Ltd. v. Antrix Corpn. Ltd. (2023) 1 SCC 216
Relied Upon Discussed at ¶ 25, 28
The Court ought not lightly to substitute its own reading of the material for the concurrent findings of the specialised tribunals under the Code.
Kalyani Transco v. Bhushan Power & Steel Ltd. 2025 SCC OnLine SC 2093
Relied Upon Discussed at ¶ 25, 28
Where two adjudicating authorities under a special statute take a concurrent view, interference is unwarranted unless the view ignores mandatory statutory provisions, rests on extraneous considerations or is ex facie arbitrary or illegal.
Vidarbha Industries Power Ltd. v. Axis Bank Ltd. (2022) 8 SCC 352
Referred To Discussed at ¶ 23
Cited by the appellants: an event of default must arise from the agreement, any discretion must not be exercised arbitrarily, and the corporate debtor's liquidity and financial health are relevant.
E.S. Krishnamurthy v. Bharath Hi-Tech Builders (P) Ltd. (2022) 3 SCC 161
Referred To Discussed at ¶ 25
Cited by the respondent; not separately discussed.
M. Suresh Kumar Reddy v. Canara Bank (2023) 8 SCC 387
Referred To Discussed at ¶ 25
Cited by the respondent; not separately discussed.
Axis Bank Ltd. v. Vidarbha Industries Power Ltd. (review order) (2023) 7 SCC 321
Referred To Discussed at ¶ 25
Cited by the respondent; not separately discussed.

Record of Default From Information Utility Is Sufficient Proof for Section 7 Admission: Supreme Court

Judgment Intelligence

Key holdings

Brief Facts

Court's Findings

Legal Principle

Precedents Relied Upon

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