Section 10 insolvency filing rejected where disputes, incomplete disclosure and SARFAESI-driven delay tactics showed abuse of process.

An application under section 10 of the Insolvency and Bankruptcy Code should not be admitted mechanically on filing alone; the Adjudicating Authority must examine the existence of default, the completeness and bona fides of disclosure, and whether the process is being used abusively. Where the debt and securities are seriously disputed and SARFAESI recovery measures have already advanced, a filing that appears aimed at delaying enforcement rather than seeking genuine insolvency resolution is not fit for admission. On the facts noted, the petition was treated as a misuse of the insolvency framework and was dismissed with costs.

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Issues: Whether the application under section 10 of the Insolvency and Bankruptcy Code, 2016 deserved admission when the alleged default was disputed, the corporate debtor had not approached with clean hands, and the petition appeared to be filed to obstruct ongoing recovery action under the SARFAESI regime.

Analysis: The application under section 10 was not to be admitted mechanically on the basis of mere completion of the prescribed form. The Adjudicating Authority had to examine whether default existed, whether the disclosure was complete and bona fide, and whether the proceeding was being used abusively. The pleadings and correspondence showed that the debt and securities were seriously disputed by the corporate debtor, while the financial creditor had already taken coercive recovery steps, including issuance of notice under section 13(2), possession measures, and a proposed e-auction. The application was found to be filed at a stage when SARFAESI enforcement had substantially progressed, and the conduct of the corporate debtor indicated an attempt to misuse insolvency proceedings to delay recovery rather than to invoke the Code for a genuine insolvency resolution.

Conclusion: The application under section 10 was not fit for admission and was dismissed, with costs imposed on the corporate debtor.

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