IBC admission survives pending debt recovery proceedings where moratorium applies and debt or default is not disproved.

Pending proceedings under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 did not bar admission of an application under Section 7 of the Insolvency and Bankruptcy Code, 2016. Once the moratorium under Section 14 of the Code commenced, the recovery proceedings could not continue. The appellant also failed to substantiate the plea that no debt or default existed, as no clear affidavit supported that contention and the loan taken by the corporate debtor was acknowledged. The admission of the insolvency application was therefore not liable to be interfered with.

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Issues: Whether the admission of an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 could be interfered with on the ground that proceedings under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 were pending and that no debt was payable.

Analysis: The pending recovery proceedings before the Debt Recovery Tribunal did not bar initiation of the Corporate Insolvency Resolution Process. Once moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 commenced, the pending proceedings could not continue. The appellant was unable to support the plea of absence of debt or default by a clear affidavit, and also acknowledged that the corporate debtor had taken the loan from the bank.

Conclusion: The admission of the insolvency application was not liable to be interfered with, and the challenge failed.

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