Section 7 insolvency admission turns on proved default, a complete application, and no disciplinary bar despite consortium or SARFAESI objections.
A section 7 insolvency application is maintainable where the financial creditor proves a complete application, default in repayment, and a proposed interim resolution professional without pending disciplinary proceedings. The record here included sanction documents, restructuring papers, balance confirmations, account statements and security documents, and showed that the debt remained unpaid after the account was classified as an NPA. Consortium lending did not defeat the petition because a financial creditor may proceed alone or jointly, while pending SARFAESI action and a rejected one-time settlement did not bar initiation of insolvency proceedings in view of the Code's overriding effect. The CIRP was therefore commenced, an interim resolution professional was appointed, and moratorium consequences followed.
Issues: (i) Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was complete and whether default in repayment of financial debt was established. (ii) Whether the objections based on consortium lending, alleged absence of privity, pendency of SARFAESI action, and pending one-time settlement barred admission of the petition.
Issue (i): Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was complete and whether default in repayment of financial debt was established.
Analysis: The financial creditor placed on record the sanction documents, restructuring papers, balance confirmation letters, statements of accounts certified under the Bankers' Books Evidence Act, and related security documents. The corporate debtor had availed the facilities, the account was classified as non-performing asset, and the material on record showed non-payment of the outstanding financial debt. The application was also found to be complete and the proposed interim resolution professional had no pending disciplinary proceedings.
Conclusion: The application was complete and default was proved.
Issue (ii): Whether the objections based on consortium lending, alleged absence of privity, pendency of SARFAESI action, and pending one-time settlement barred admission of the petition.
Analysis: Section 7 permits a financial creditor to move the adjudicating authority by itself or jointly with other financial creditors, so a separate privity objection arising from consortium lending could not defeat the petition. The pendency of SARFAESI proceedings did not bar initiation of insolvency proceedings because the Insolvency and Bankruptcy Code operates with overriding effect. The record also showed rejection of the settlement proposal, and the objections did not displace the statutory conditions for admission.
Conclusion: The objections did not bar admission of the petition.
Final Conclusion: The corporate insolvency resolution process was commenced, an interim resolution professional was appointed, and moratorium consequences under the Code followed.
Ratio Decidendi: Once default, completeness of the section 7 application, and absence of disciplinary proceedings against the proposed resolution professional are shown, admission of the petition follows and collateral objections such as consortium lending or pending SARFAESI action do not prevent initiation of insolvency proceedings.