Section 7 insolvency admission: proved debt and default, consortium lead bank authority, and parallel recovery actions did not bar CIRP.

Section 7 admission turns on proof of financial debt, default, and a complete application, with only a summary enquiry at the admission stage. On the record of loan documents, account statements, acknowledgements, and balance-sheet entries, the Tribunal found debt and default established and the application complete, so the corporate insolvency process was admitted and the proposed interim resolution professional was appointed. The lead bank, authorised under the consortium arrangement, was competent to act for the lenders. Objections based on NPA classification, disputed quantum, and pending SARFAESI or DRT proceedings did not bar admission.

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Issues: (i) Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was complete and whether the financial debt and default were established so as to warrant admission; (ii) Whether the lead bank was competent to file the application on behalf of the consortium and whether objections based on NPA classification, quantum of claim, and parallel SARFAESI/DRT proceedings could defeat admission.

Issue (i): Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was complete and whether the financial debt and default were established so as to warrant admission.

Analysis: The application was supported by sanction letters, loan documents, balance and security confirmations, demand promissory notes, guarantee documents, statements of accounts certified under the Bankers' Books Evidence Act, 1891, and the corporate debtor's balance sheet acknowledging indebtedness. The corporate debtor had availed and utilized the facilities, and the record showed persistent default in repayment. The Tribunal also found that the proposed interim resolution professional satisfied the statutory requirements and that the application was otherwise complete. In a section 7 proceeding, the Adjudicating Authority is required only to ascertain the existence of debt and default in summary adjudication.

Conclusion: The debt and default were proved, the application was complete, and the conditions for admission under section 7 were satisfied in favour of the petitioner.

Issue (ii): Whether the lead bank was competent to file the application on behalf of the consortium and whether objections based on NPA classification, quantum of claim, and parallel SARFAESI/DRT proceedings could defeat admission.

Analysis: The inter se consortium agreement recognized the applicant as the lead bank and authorized it to act for the consortium, including taking action for enforcement of securities and related proceedings. The Tribunal held that NPA classification under the SARFAESI framework had no bearing on maintainability under the Code, and that pendency of SARFAESI or DRT proceedings did not bar initiation of corporate insolvency resolution process. It further held that disputes on the exact quantum of default did not preclude admission, since the Adjudicating Authority is not required to determine the precise amount due at the admission stage.

Conclusion: The lead bank was competent to file the application, and the objections regarding NPA, quantum, and parallel proceedings were rejected.

Final Conclusion: The Tribunal admitted the section 7 application, initiated corporate insolvency resolution process against the corporate debtor, appointed the proposed interim resolution professional, and imposed moratorium under the Code.

Ratio Decidendi: In a section 7 proceeding, admission follows once the Adjudicating Authority is satisfied that a financial debt and default exist, the application is complete, and no disciplinary proceeding is pending against the proposed resolution professional; questions on exact quantum, NPA status, or parallel recovery proceedings do not bar admission.

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