Appellate Tribunal upholds insolvency application under Section 7

The National Company Law Appellate Tribunal upheld the order admitting the application under Section 7 of the Insolvency and Bankruptcy Code, 2016. The challenge by the Appellant-Shareholder was dismissed as the dispute between the Corporate Debtor and the Financial Creditor, which was subject to arbitration, could not be used to oppose the insolvency application. The Tribunal found that there was a debt and default by the Corporate Debtor, leading to the correct admission of the application. The appeal was dismissed, and no costs were awarded.

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Issues Involved:
Challenge to order admitting application under Section 7 of the Insolvency and Bankruptcy Code, 2016.

Analysis:
The judgment by the National Company Law Appellate Tribunal, New Delhi, involved a challenge by the Appellant-Shareholder against the order passed by the Adjudicating Authority admitting the application under Section 7 of the Insolvency and Bankruptcy Code, 2016. The application was filed by the Respondents for the initiation of the Corporate Insolvency Resolution Process of a specific company, referred to as the 'Corporate Debtor.'

The Appellant's Senior Counsel argued that there was a dispute between the Corporate Debtor and the Financial Creditor, which had been referred to arbitration. However, it was noted that such a dispute could not be used to oppose an application under Section 7 of the Insolvency and Bankruptcy Code. This ground could only be considered if the application had been made under Section 9 of the I&B Code.

Upon examination of the case, it was found that there was indeed a debt, and the Corporate Debtor had defaulted in payment to the Financial Creditor. The Adjudicating Authority had correctly admitted the application as it was deemed complete. Consequently, the National Company Law Appellate Tribunal found no reason to interfere with the order dated 12th March, 2018. The appeal was dismissed, and no costs were awarded in this matter.

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