Assigned debt can support insolvency action; SARFAESI objections and NPA status do not bar admission if default is shown.

An assignee of a financial debt can be treated as a financial creditor for initiating proceedings under Section 7 of the Insolvency and Bankruptcy Code, because a valid assignment transfers the lender's rights without extinguishing the borrower's liability. Pending SARFAESI action, a challenge to the assignment deed, or the absence of NPA classification does not by itself bar admission of an insolvency application. Where loan records, accounts and dues show prima facie debt and default, the insolvency framework may be triggered, with moratorium under Section 14 and appointment of an Interim Resolution Professional.

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Issues: (i) whether an assignee of the original lender's debt is a financial creditor entitled to maintain an under Section 7 of the Insolvency and Bankruptcy Code, 2016; (ii) whether the existence of SARFAESI proceedings, the challenge to assignment, or the absence of NPA classification barred admission of the insolvency petition; and (iii) whether the corporate debtor had committed default warranting admission and moratorium.

Issue (i): whether an assignee of the original lender's debt is a financial creditor entitled to maintain an application under Section 7 of the Insolvency and Bankruptcy Code, 2016.

Analysis: The definition of financial creditor under Section 5(7) of the Insolvency and Bankruptcy Code, 2016 includes a person to whom a financial debt has been legally assigned or transferred. The assignment of the debt under Section 5 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 was treated as valid for the purpose of invoking insolvency jurisdiction. The transfer of the debt did not extinguish the borrower's liability, and the assignee stepped into the shoes of the original lender.

Conclusion: The assignee was held entitled to maintain the petition as a financial creditor.

Issue (ii): whether the existence of SARFAESI proceedings, the challenge to assignment, or the absence of NPA classification barred admission of the insolvency petition.

Analysis: Pending proceedings under SARFAESI and before the High Court were held not to be a bar to consideration of the insolvency application. NPA classification was held to be relevant for SARFAESI invocation but not a condition precedent for commencement of insolvency proceedings under the Insolvency and Bankruptcy Code, 2016. The Tribunal also noted that the pendency of a civil challenge to the assignment deed did not defeat the petition at this stage.

Conclusion: No legal bar to admission of the insolvency petition was found on these grounds.

Issue (iii): whether the corporate debtor had committed default warranting admission and moratorium.

Analysis: On the basis of the loan documents, audited accounts, statement of dues, and other records, the Tribunal found prima facie proof of debt and default within Section 3(12) of the Insolvency and Bankruptcy Code, 2016. The debtor was unable to service even interest, and the defaulted financial debt was established. In those circumstances, the Tribunal invoked the insolvency framework for the benefit of all stakeholders and granted moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016, with appointment of an Interim Resolution Professional.

Conclusion: Default was established and the petition was admitted with moratorium.

Final Conclusion: The insolvency application was admitted, moratorium commenced, and the Interim Resolution Professional was appointed to carry forward the corporate insolvency resolution process.

Ratio Decidendi: An assignee of a financial debt is a financial creditor entitled to initiate insolvency proceedings, and SARFAESI-related objections or NPA classification do not by themselves bar admission of a petition under Section 7 when default is otherwise established.

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