Complete section 7 insolvency application and proven default justify admission despite parallel recovery proceedings.

A complete section 7 application under the Insolvency and Bankruptcy Code, 2016, supported by loan documents, account statements and SARFAESI notices, was treated as sufficient to show financial debt and default where the corporate debtor did not effectively dispute liability. Pending proceedings before the Debt Recovery Tribunal were held not to bar initiation of insolvency resolution, as the Code operates with overriding effect. On satisfaction of the admission requirements, the petition was admitted and the statutory consequences followed, including appointment of the interim resolution professional, public announcement, invitation of claims and commencement of moratorium under section 14.

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Issues: (i) Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was complete and discloses a financial debt and default so as to warrant admission. (ii) Whether the corporate insolvency resolution process, appointment of an interim resolution professional, and moratorium should follow admission.

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

Analysis: The petition was found complete in all respects and supported by the loan and security documents, account statements, notice under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and other material showing disbursement of financial facilities and continued non-payment. The corporate debtor did not effectively deny the debt or the occurrence of default. Pending proceedings before the Debt Recovery Tribunal were held to be no bar to initiation of insolvency resolution proceedings under the Code, which operates with overriding effect.

Conclusion: The application was maintainable and the existence of financial debt and default stood established in favour of the petitioner.

Issue (ii): Whether the corporate insolvency resolution process, appointment of an interim resolution professional, and moratorium should follow admission.

Analysis: Once the requirements for admission were satisfied, the petition was required to be admitted under section 7(5) of the Insolvency and Bankruptcy Code, 2016. Consequential directions for public announcement, invitation of claims, appointment of the proposed interim resolution professional, and declaration of moratorium under section 14 followed as statutory consequences of admission.

Conclusion: The petition was admitted, the interim resolution professional was appointed, and moratorium was ordered.

Final Conclusion: Insolvency proceedings were commenced against the corporate debtor, and the matter stood disposed of with the statutory consequences of admission brought into force.

Ratio Decidendi: Where a complete section 7 application establishes a financial debt and default, the Adjudicating Authority must admit the petition and initiate the corporate insolvency resolution process notwithstanding parallel recovery proceedings, since the Code has overriding effect and admission triggers the statutory moratorium and related directions.

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