Debt assignment and curable authorisation defects do not block insolvency admission once default is proved.

Objections to an assignee's standing under a debt assignment were rejected because the receivable remained an assignable asset and the borrower's rights were not affected by transfer of the financial asset. Defects in authorisation and related filing irregularities were treated as curable once supporting board authority documents were produced, and they did not defeat maintainability after completion of the application. On the facts, settlement discussions, dishonoured cheques and admitted liability established default and satisfaction of the statutory threshold, so the insolvency petition was admitted, moratorium was declared, and an interim resolution professional was appointed for commencement of CIRP.

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Issues: (i) Whether the objection to the assignment of debt and transfer of financial assets rendered the application under section 7 of the Insolvency and Bankruptcy Code, 2016 not maintainable; (ii) whether the application was invalid for want of proper authorisation and other curable defects; and (iii) whether default by the corporate debtor was established so as to warrant admission of the insolvency petition.

Issue (i): Whether the objection to the assignment of debt and transfer of financial assets rendered the application under section 7 of the Insolvency and Bankruptcy Code, 2016 not maintainable.

Analysis: The challenge to the chain of assignment was rejected. The debt was treated as an assignable asset of the lender, and the transfer of the receivable was held not to affect the borrower's rights. The objection based on the assignee's registration under the SARFAESI framework was found unsustainable in view of the settled position that banks may transfer their assets inter se and that such transfer is not barred merely because the assignee purchased the debt at a discount or because the borrower questioned the earlier assignment.

Conclusion: The objection to maintainability on the ground of defective or illegal assignment failed and was rejected.

Issue (ii): Whether the application was invalid for want of proper authorisation and other curable defects.

Analysis: The Tribunal required clarification on the authority of the signatory and the supporting board authorisation. The financial creditor filed an affidavit and supporting authority documents, which were accepted as curing the defect. The Tribunal also treated the objections regarding mismatch in figures and allied procedural defects as not going to the root of maintainability once the application was complete and the default was established. The corporate debtor's contrary stands were also held to be impermissible.

Conclusion: The objection based on lack of authorisation and incompleteness was overruled.

Issue (iii): Whether default by the corporate debtor was established so as to warrant admission of the insolvency petition.

Analysis: The corporate debtor had itself engaged in settlement discussions, issued cheques towards part-payment, and those cheques were dishonoured. This was treated as clear evidence of admitted liability and default. The Tribunal held that the debt exceeded the statutory threshold and that the default justified commencement of the corporate insolvency resolution process under section 7 of the Code.

Conclusion: Default was established and the petition was admitted.

Final Conclusion: The insolvency application was allowed, the moratorium under the Code was declared, and an interim resolution professional was appointed for commencement of the corporate insolvency resolution process.

Ratio Decidendi: For admission under section 7 of the Insolvency and Bankruptcy Code, 2016, the Adjudicating Authority must be satisfied that a financial debt exists and default has occurred, while objections to the legality of inter se assignment of debt and curable defects in authorisation do not defeat admission once the application is otherwise complete and the default is established.

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