Interim CIRP directions cannot be used to challenge IBC eligibility when the admission order remains unassailed.

A challenge to interim directions in a pending CIRP could not be used to reopen the corporate debtor's eligibility under the IBC where the section 7 admission order had not been appealed. The appellate tribunal noted that the objection based on the debtor being a financial service provider was not raised at admission and, in any event, the challenge before it was confined to directions for refund of funds transferred in breach of moratorium. On that basis, the status issue was not decided in the appeal, the interim directions remained intact, and any alleged moratorium violation could attract action under the Code's penal provisions.

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Issues: Whether the appeal against the interim directions passed during the corporate insolvency resolution process could succeed on the ground that the corporate debtor was a financial service provider excluded from the Insolvency and Bankruptcy Code, 2016, when the order admitting the section 7 application had not been challenged.

Analysis: The challenge was directed only against the subsequent order requiring refund of funds transferred in breach of moratorium and related directions. The plea that the corporate debtor fell outside the definition of corporate person because it was a financial service provider was not taken by the corporate debtor at the stage of admission and the order admitting the section 7 application was not under challenge. In that situation, the status of the corporate debtor as a financial service provider was not decided in the appeal, and the appellants could not bypass the existing admission order by raising that issue against the interim directions. The alleged violations of the moratorium, if any, could attract action under the penal provisions of the Code.

Conclusion: The appeal was not entertained on the financial service provider objection and was dismissed.

Final Conclusion: The appellate challenge failed because the admission of insolvency proceedings remained unassailed, leaving the interim directions intact and permitting further action for any alleged contravention of the Code.

Ratio Decidendi: A challenge to interim directions issued in a pending insolvency process cannot be used to contest the debtor's eligibility under the Code when the admission order initiating the process has not been appealed.

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