Section 7 insolvency admission upheld on proof of debt and default; third-party impleadment requests were rejected.

The Tribunal rejected the bank's impleadment request because its interest in the flats was found to be contractual and premature, with no present proprietary right to intervene in the insolvency proceedings. It also rejected the flat purchasers' impleadment application, following the procedural direction that third parties should not be permitted to intervene at that stage of the Section 7 petition. On the insolvency claim, the Tribunal held that the financial debt and default were established through the loan assignment, restructuring, additional funding, and default record, and that the corporate debtor's objections did not displace the material on record. The Section 7 petition was admitted, CIRP commenced, moratorium was issued, and an Interim Resolution Professional was appointed.

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Issues: (i) Whether the intervention and impleadment application filed by the bank was maintainable and whether the applicant was a proper and necessary party to the insolvency proceedings; (ii) Whether the impleadment application filed by the flat purchasers was maintainable; (iii) Whether the company petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 was to be admitted on proof of debt and default.

Issue (i): Whether the intervention and impleadment application filed by the bank was maintainable and whether the applicant was a proper and necessary party to the insolvency proceedings.

Analysis: The application was examined in the light of the tripartite arrangements and the conditional no-objection letter relied upon by the bank. The Tribunal held that the bank's claimed interest in the flats was premature, that its rights flowed from contractual arrangements rather than any present proprietary entitlement in the subject property, and that it had not established a right to intervene in the pending company petition.

Conclusion: The impleadment application filed by the bank was rejected.

Issue (ii): Whether the impleadment application filed by the flat purchasers was maintainable.

Analysis: The Tribunal followed the earlier appellate direction that, at the stage of consideration of the company petition, no third party should be given liberty to intervene. The flat purchasers' request was treated as covered by the same procedural constraint and was not entertained on merits as an impleadment claim at that stage.

Conclusion: The impleadment application filed by the flat purchasers was rejected.

Issue (iii): Whether the company petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 was to be admitted on proof of debt and default.

Analysis: The Tribunal found that the financial debt was supported by the loan assignment, the subsequent restructuring and additional funding, and the record of default. It held that, for admission under Section 7, the Adjudicating Authority is required to be satisfied that default has occurred, and that the dispute raised by the corporate debtor did not displace the debt and default shown on the record. The petition was therefore treated as fit for admission and an Interim Resolution Professional was appointed, with moratorium directions issued.

Conclusion: The company petition was admitted and Corporate Insolvency Resolution Process was initiated against the corporate debtor.

Final Conclusion: The intervention applications failed, while the insolvency petition was admitted and CIRP commenced against the corporate debtor with moratorium and appointment of an Interim Resolution Professional.

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