IBC Section 7 application prevails despite parallel recovery proceedings where financial debt and default are established.

A Section 7 IBC application was treated as complete where the record showed loan sanction and disbursement, acceptance of terms, execution of loan and guarantee documents, acknowledgements of liability, and continuing non-payment; financial debt and default were therefore established and the petition was found maintainable for CIRP admission. Pendency of SARFAESI proceedings and a civil suit did not bar the insolvency application, because the IBC's overriding and moratorium provisions were applied to hold that parallel recovery actions do not defeat a complete Section 7 petition once debt and default are proved. The text states that insolvency proceedings were commenced and an interim resolution professional was appointed.

---

---

Issues: (i) Whether the financial creditor's application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was complete and whether financial debt and default were established so as to admit the petition; (ii) Whether pendency of proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and a civil suit barred initiation of insolvency proceedings under the Insolvency and Bankruptcy Code, 2016.

Issue (i): Whether the financial creditor's application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was complete and whether financial debt and default were established so as to admit the petition.

Analysis: The record showed sanction and disbursement of the loan, acceptance of the loan terms by board resolution, execution of loan documents and guarantees, subsequent acknowledgements of liability, and material showing continued non-payment. The application was found to be complete and the existence of a financial debt above the threshold, together with default, stood proved.

Conclusion: The petition was maintainable and was admitted for initiation of the Corporate Insolvency Resolution Process.

Issue (ii): Whether pendency of proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and a civil suit barred initiation of insolvency proceedings under the Insolvency and Bankruptcy Code, 2016.

Analysis: The moratorium and overriding-effect provisions of the Insolvency and Bankruptcy Code, 2016 were applied to hold that earlier recovery proceedings, including proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, did not prevent a Section 7 proceeding. The pendency of other recovery actions did not defeat the insolvency application once default and debt were established.

Conclusion: The objection based on parallel proceedings and alleged bar of law was rejected.

Final Conclusion: Insolvency proceedings were commenced against the corporate debtor, moratorium was declared, and an interim resolution professional was appointed.

Ratio Decidendi: Pendency of separate recovery or enforcement proceedings does not bar a complete Section 7 insolvency application where financial debt and default are proved, because the Insolvency and Bankruptcy Code, 2016 operates with overriding effect.

---