Section 7 insolvency maintainable despite interest dispute, as admitted financial debt exceeded the default threshold.

An application under section 7 of the Insolvency and Bankruptcy Code was found maintainable where the corporate debtor admitted receipt of financial advance and part-payment, leaving an unpaid financial liability. Although the contractual rate of interest was disputed as excessive, the Tribunal treated the underlying debt as continuing to exist and found that, even after excluding interest, the default exceeded the statutory minimum threshold under section 4. The objection based on the Bengal Money-Lenders Act, 1940 was not accepted as defeating default, and no challenge was raised under sections 185 or 186 of the Companies Act, 2013.

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Issues: Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was maintainable and deserved admission where the corporate debtor admitted receipt of financial advance but disputed the contractual rate of interest as excessive.

Analysis: The admitted factual foundation was that financial advance had been disbursed to the corporate debtor and part-payment had been made, leaving an unpaid financial liability. The dispute centered on the rate of interest, which was found to be excessive, but the Tribunal held that even excluding the interest component, the record still disclosed a financial debt exceeding the statutory minimum default threshold. Reference was made to the statutory minimum default requirement under section 4 of the Insolvency and Bankruptcy Code, 2016. The objection based on the Bengal Money-Lenders Act, 1940 was not accepted as defeating the existence of default. The Tribunal also noted that no defence was raised that the advance violated sections 185 and 186 of the Companies Act, 2013.

Conclusion: The section 7 application was admitted. The corporate debtor was held to be in default of a financial debt exceeding the statutory threshold, and Corporate Insolvency Resolution Process was directed to commence with moratorium and appointment of an Interim Resolution Professional.

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