Financial debt and default under insolvency law justify admission once filing authority and procedural requirements are satisfied.

A Section 7 IBC application was held to be properly instituted through an authorised bank officer where board resolutions and delegation records supported the authority letter. The Tribunal also held that a single financial creditor may file independently, and consortium arrangements cannot restrict the statutory right to initiate insolvency proceedings. Defects in the proposed Interim Resolution Professional's consent form were treated as curable, and pending restructuring discussions did not bar admission absent a binding compromise. As the financial debt and continuing default were established through loan and account records, and no disciplinary proceeding was pending against the proposed professional, admission and commencement of CIRP followed as a statutory mandate.

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Issues: (i) Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was validly instituted through an authorised officer of the financial creditor. (ii) Whether the financial creditor could maintain the Section 7 application independently without impleading or obtaining consent from the consortium banks. (iii) Whether defects in the proposed Interim Resolution Professional's consent form and the pendency of a debt restructuring proposal barred admission of the application. (iv) Whether the debt and default were established so as to warrant admission of the insolvency application and commencement of the corporate insolvency resolution process.

Issue (i): Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was validly instituted through an authorised officer of the financial creditor.

Analysis: The bank produced the relevant board resolution and the internal delegation authorising the competent authority to issue authority letters for filing applications under the Code. The authority letter issued in favour of the officer who filed the petition was thus traceable to a valid institutional decision and ratification. The objection was therefore only technical and did not displace the filing authority.

Conclusion: The application was validly filed by an authorised representative of the financial creditor.

Issue (ii): Whether the financial creditor could maintain the Section 7 application independently without impleading or obtaining consent from the consortium banks.

Analysis: Section 7(1) permits a financial creditor to apply either by itself or jointly with other financial creditors. The Code gives overriding effect to its provisions, and contractual consortium arrangements cannot curtail the statutory right of an individual financial creditor to initiate insolvency proceedings when default has occurred.

Conclusion: The application was maintainable at the instance of the applicant bank alone.

Issue (iii): Whether defects in the proposed Interim Resolution Professional's consent form and the pendency of a debt restructuring proposal barred admission of the application.

Analysis: The proposed resolution professional had given consent and filed the prescribed form, and the defect complained of was treated as a curable technical lapse. The Tribunal also held that, in the absence of any binding compromise or approved restructuring, mere pendency of restructuring discussions could not justify indefinite deferment of a Section 7 petition. The Code requires expeditious action and does not permit the adjudicating authority to keep the matter in abeyance on that ground.

Conclusion: The procedural objection failed, and the pending restructuring proposal did not prevent admission.

Issue (iv): Whether the debt and default were established so as to warrant admission of the insolvency application and commencement of the corporate insolvency resolution process.

Analysis: The loan agreements, account statements, balance confirmations, security documents, NPA classification and other material demonstrated disbursement of money against consideration for time value of money and a continuing default in repayment. The application was complete and no disciplinary proceeding was pending against the proposed Interim Resolution Professional. On satisfaction of these statutory conditions, Section 7(5)(a) required admission of the application.

Conclusion: Financial debt and default were established, and the application was liable to be admitted.

Final Conclusion: The insolvency proceeding was admitted, the interim resolution professional was appointed, and moratorium and public announcement directions were issued to commence the corporate insolvency resolution process.

Ratio Decidendi: Under Section 7 of the Insolvency and Bankruptcy Code, 2016, once existence of financial debt and default is shown and the application is complete with no disciplinary proceeding pending against the proposed resolution professional, admission of the application follows as a matter of statutory mandate.

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