Financial debt and default established under insolvency law; Section 7 petition admitted after recall notice and non-payment evidence.

A loan advanced under a loan agreement with interest was treated as a financial debt, making the applicant a financial creditor for a Section 7 insolvency petition. The objections on exact default quantum, CIBIL record, links to other transactions, pending winding-up proceedings concerning the project company, and pledged debentures did not rebut the record of disbursement, recall, and non-payment. The recall notice and supporting documents established the date of default and showed failure to repay the admitted liability. The application was found complete, no disciplinary bar was shown against the proposed interim resolution professional, and the petition was admitted.

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Issues: Whether the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 was maintainable and whether the debt and default were established so as to admit the corporate insolvency resolution process against the corporate debtor.

Analysis: The loan advanced under the loan agreement, carrying interest, constituted a financial debt within the meaning of Section 5(8)(a) of the Insolvency and Bankruptcy Code, 2016, and the petitioner was a financial creditor. The objections regarding the exact quantum of default, the CIBIL statement, the alleged linkage with other transactions, the pending winding up proceedings against the project company, and the pledged debentures did not dislodge the record of disbursement, recall, and non-payment. The date of default was identified from the recall notice and the materials showed that the corporate debtor had failed to repay the admitted liability. On the available documents, the application was complete and no disciplinary impediment was shown against the proposed interim resolution professional.

Conclusion: The debt and default were held to be established, and the petition under Section 7 was admitted.

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