The financial creditors initiated the corporate insolvency resolution process (CIRP) against Romi Digital Publications Ltd. (RDPL) under Section 7 of the Insolvency and Bankruptcy Code, 2016, since it defaulted in paymen

No, the NCLT cannot keep pending the application for initiation of CIRP filed by the financial creditor under section 7 of the Insolvency and Bankruptcy Code, 2016. The NCLT has only two choices: either to accept it or reject it, but it cannot keep it in pending. The facts of the case are similar to that of the case decided by the Supreme Court in the matter of E S Krishnamurthy & Ors. Vs. M/s Bharath Hi Tech Builders Pvt. Ltd. The issue before the Apex Court was to decide on whether the Adjudicating Authority could dismiss the petition under Section 7 because the corporate debtor had started the process of settling with the financial creditors while handling an application under the Code without considering its merits. Whether the NCLT and NCLAT were right in their approach to reject the appellants' Section 7 petition at the "pre-admission stage" and order them to reach a settlement with the Respondent within three months. In the said matter, Supreme Court held that the Adjudicating Authority must either admit the CIRP application or it must reject the same. The Code does not provide for the Adjudicating Authority to undertake any other action, but for the two choices available. Also, the Adjudicating Authority is empowered only to verify whether a default has occurred or not. 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) of the Code. The Adjudicating Authority cannot compel a party to the proceedings before it to settle a dispute.