Corporate insolvency admission under section 10 allowed where debt, default and eligibility were shown; creditor intervention rejected.

At the section 10 admission stage under the Insolvency and Bankruptcy Code, the NCLT held that an operational creditor could not intervene to obstruct the threshold inquiry, which is confined to the corporate debtor's debt, default, completeness of the application, and eligibility. It further held that pendency of Delhi High Court proceedings and the restraint order did not bar the corporate debtor from seeking insolvency relief, as the order was directed against disposal of assets and creation of third-party interests. Finding the statutory requirements satisfied, the tribunal admitted the application, commenced the corporate insolvency resolution process, imposed moratorium, and appointed an interim resolution professional.

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Issues: (i) Whether an operational creditor could be permitted to intervene at the stage of admission of an application filed by a corporate debtor under section 10 of the Insolvency and Bankruptcy Code, 2016. (ii) Whether the pendency of the Delhi High Court proceedings and the restraint order prevented the corporate debtor from maintaining the section 10 application. (iii) Whether the requirements for admission under section 10, namely existence of debt and default and absence of disqualification, were satisfied.

Issue (i): Whether an operational creditor could be permitted to intervene at the stage of admission of an application filed by a corporate debtor under section 10 of the Insolvency and Bankruptcy Code, 2016.

Analysis: The objection was examined against the scheme of the Code, under which admission under section 10 is to be decided on the corporate debtor's debt, default, and eligibility, rather than by allowing an operational creditor to obstruct the threshold inquiry. The intervenor's claim was noted, but it was held that such intervention was not warranted at the admission stage.

Conclusion: The operational creditor was not allowed to intervene.

Issue (ii): Whether the pendency of the Delhi High Court proceedings and the restraint order prevented the corporate debtor from maintaining the section 10 application.

Analysis: The restraint order in the other proceedings was construed as protection against disposal of assets and creation of third-party interests, not as a prohibition against taking recourse to insolvency law. The filing of the section 10 application was treated as consistent with the object of restructuring and revival and not contrary to that order.

Conclusion: The application was not barred by the Delhi High Court proceedings.

Issue (iii): Whether the requirements for admission under section 10, namely existence of debt and default and absence of disqualification, were satisfied.

Analysis: On the materials filed, the corporate debtor disclosed financial and operational debts, the occurrence of default, and its eligibility to apply. The application was found complete, and the statutory conditions for commencement of the corporate insolvency resolution process were held to be met.

Conclusion: The requirements for admission under section 10 were satisfied.

Final Conclusion: The corporate debtor's insolvency application was accepted, the corporate insolvency resolution process commenced, moratorium operated, and an interim resolution professional was appointed to take charge of the process.

Ratio Decidendi: At the admission stage of a corporate debtor's application under section 10, the adjudicating authority is concerned with completeness, debt, default, and eligibility, and an operational creditor cannot be allowed to derail admission by intervention where no statutory bar exists.

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