Prior SARFAESI action does not bar insolvency admission when default is proved and statutory requirements are met.

A financial creditor was properly authorised to file the section 7 application where the bank's authorisation letter, power of attorney and vakalatnama empowered the officer to initiate and conduct insolvency proceedings. A prior notice issued under the SARFAESI Act did not bar initiation of corporate insolvency resolution process, because earlier recovery action under another statute did not defeat the Insolvency and Bankruptcy Code, which has overriding effect. Default was proved through bank statements and supporting records, and the corporate debtor's account had been classified as a non-performing asset. The application was admitted, moratorium was declared, and the proposed interim resolution professional was appointed.

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Issues: (i) Whether the financial creditor was duly authorized to file the application under section 7; (ii) Whether a prior notice under section 13(2) of the SARFAESI Act barred initiation of corporate insolvency resolution process; (iii) Whether default was proved and the application was liable to be admitted with consequential moratorium and appointment of an interim resolution professional.

Issue (i): Whether the financial creditor was duly authorized to file the application under section 7.

Analysis: The application was supported by the bank's authorization letter, the general power of attorney, and the vakalatnama. The record showed that the concerned officer was empowered by the bank to initiate insolvency proceedings and to conduct the case on behalf of the financial creditor.

Conclusion: The filing of the application was held to be properly authorized.

Issue (ii): Whether a prior notice under section 13(2) of the SARFAESI Act barred initiation of corporate insolvency resolution process.

Analysis: The Tribunal held that issuance of a SARFAESI notice did not create any bar to a proceeding under the Insolvency and Bankruptcy Code. It noted that the Code was not in force when the SARFAESI notice was issued and that the Code has overriding effect. The existence of a prior recovery step under another statute did not defeat the insolvency remedy.

Conclusion: The prior SARFAESI notice did not prevent admission of the insolvency application.

Issue (iii): Whether default was proved and the application was liable to be admitted with consequential moratorium and appointment of an interim resolution professional.

Analysis: The bank statements and other supporting materials established a debt and default in the stated amount. The corporate debtor's account had also been declared a non-performing asset. No disqualification of the proposed interim resolution professional was shown, and the statutory requirements for commencement of insolvency proceedings were satisfied.

Conclusion: The application was admitted, moratorium was declared, and the proposed interim resolution professional was appointed.

Final Conclusion: The insolvency petition succeeded on merits, leading to commencement of the corporate insolvency resolution process against the corporate debtor and the attendant statutory consequences.

Ratio Decidendi: A prior action under SARFAESI does not bar admission of a section 7 insolvency application when default is established and the statutory requirements for commencement of corporate insolvency resolution process are otherwise fulfilled.

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