Section 7 insolvency admission upheld where authorisation, default, and complete application were proved despite parallel recovery proceedings.
A Section 7 application under the Insolvency and Bankruptcy Code was held maintainable where it was supported by a board resolution and specific power of attorney, and the authorised officer was competent to file it; the objection on lack of authorisation was rejected. Pendency of SARFAESI and DRT proceedings did not bar admission because the Code operates as a complete code with overriding effect, so parallel recovery steps were no legal impediment once default and completeness were shown. Financial debt and continuing default were established through loan documents, account statements, balance confirmations and related records, and the application satisfied statutory requirements, so the application was admitted, the corporate insolvency resolution process commenced, moratorium was declared, and an interim resolution professional was appointed.
Issues: (i) whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was maintainable and properly authorised, (ii) whether pendency of proceedings under the SARFAESI Act, 2002 and before the Debts Recovery Tribunal barred admission of the insolvency application, and (iii) whether default in repayment of financial debt was established so as to warrant admission and commencement of the corporate insolvency resolution process.
Issue (i): whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was maintainable and properly authorised.
Analysis: The application was supported by a specific power of attorney executed pursuant to a board resolution of the bank, and the authorised officer was a senior banking official competent to institute insolvency proceedings on behalf of the financial creditor. The record also showed that the proposed interim resolution professional satisfied the statutory requirement of no pending disciplinary proceedings.
Conclusion: The objection to maintainability on the ground of lack of authorisation was rejected.
Issue (ii): whether pendency of proceedings under the SARFAESI Act, 2002 and before the Debts Recovery Tribunal barred admission of the insolvency application.
Analysis: The Code was treated as a complete code with overriding effect under Section 238 of the Insolvency and Bankruptcy Code, 2016. Pendency of parallel recovery proceedings was held not to be a legal bar to initiation of corporate insolvency resolution process once default and completion of the application were established.
Conclusion: The objection based on pendency of SARFAESI and DRT proceedings failed.
Issue (iii): whether default in repayment of financial debt was established so as to warrant admission and commencement of the corporate insolvency resolution process.
Analysis: The loan documents, security creation, balance confirmations, account statements certified under the Banker's Books Evidence Act, 1891, and other material demonstrated disbursal of money against time value, the existence of financial debt, and continuing default. The application was complete and no disciplinary proceeding was pending against the proposed interim resolution professional, satisfying the statutory conditions for admission under Section 7.
Conclusion: Default was proved and the application was admitted, with commencement of the corporate insolvency resolution process, appointment of the interim resolution professional, and declaration of moratorium.
Final Conclusion: The petitioning financial creditor succeeded in securing admission of the insolvency application, and the corporate debtor was brought under the insolvency regime with consequential moratorium and IRP appointment.
Ratio Decidendi: Once the adjudicating authority is satisfied that a financial debt exists, default has occurred, the application is complete, and the proposed resolution professional faces no disciplinary proceeding, it must admit a Section 7 application; parallel recovery proceedings do not bar such admission because the Insolvency and Bankruptcy Code has overriding effect.