Section 7 insolvency admission upheld after valid service, matched accounts, and proved default

Service of the section 7 application was treated as compliant because the papers were sent to the corporate debtor's correspondence address and then to its registered office, and the debtor appeared after service. Objections based on discrepancy in account statements and alleged suppression of material facts were rejected because the figures matched and no payment had been made during the relevant period. As default was established and the financial creditors had proposed an interim resolution professional with written consent, the statutory requirements for admission were held satisfied, the application was admitted, and the corporate insolvency resolution process commenced with moratorium and ancillary directions.

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Issues: (i) Whether service of the section 7 application on the corporate debtor was in accordance with the prescribed procedure. (ii) Whether the objections relating to discrepancy in account statements and alleged suppression of material facts were made out. (iii) Whether the financial creditors had established default so as to warrant admission of the application and commencement of the corporate insolvency resolution process.

Issue (i): Whether service of the section 7 application on the corporate debtor was in accordance with the prescribed procedure.

Analysis: The application and documents were served at the address furnished by the corporate debtor for correspondence and were also subsequently sent to its registered office by speed post. The record showed appearance by the corporate debtor after such service, and the statutory requirement of service under the application rules was treated as complied with.

Conclusion: The service objection was rejected.

Issue (ii): Whether the objections relating to discrepancy in account statements and alleged suppression of material facts were made out.

Analysis: The Tribunal compared the figures in the application with the statement of accounts and found them to tally. It also noted that no payment had been made during the period relied upon by the corporate debtor to allege suppression, and therefore no material fact was withheld. The cited objection based on mismatch of accounts was found inapplicable on the facts.

Conclusion: The objections regarding discrepancy and suppression were rejected.

Issue (iii): Whether the financial creditors had established default so as to warrant admission of the application and commencement of the corporate insolvency resolution process.

Analysis: The record disclosed outstanding debt due to the financial creditors and the default was not denied. The financial creditors had also proposed an interim resolution professional with the requisite written consent. On this basis, the statutory requirements for admission under the insolvency code were held to be satisfied.

Conclusion: The application was admitted, the corporate insolvency resolution process was commenced, and the interim resolution professional was appointed.

Final Conclusion: The application succeeded in full, the corporate debtor was brought under insolvency resolution, and moratorium and ancillary insolvency directions were issued in accordance with the code.

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