SARFAESI proceedings do not bar section 7 insolvency admission when financial debt, default, and IBC requirements are established.

Pendency of SARFAESI proceedings did not bar a section 7 IBC application because insolvency proceedings operate as a distinct resolution mechanism and section 238 gives the Code overriding effect. The Tribunal found financial debt and default on the record, noted that the default met the applicable threshold, and held that section 10A did not apply because the default fell outside the protected period. On that basis, the statutory requirements for admission under section 7(5) were satisfied and the application was admitted, triggering CIRP, moratorium, and appointment of an interim resolution professional.

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Issues: (i) Whether pendency of proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 barred initiation of an application under section 7 of the Insolvency and Bankruptcy Code, 2016; (ii) Whether there was debt and default justifying admission of the section 7 application and whether section 10A of the Insolvency and Bankruptcy Code, 2016 applied.

Issue (i): Whether pendency of proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 barred initiation of an application under section 7 of the Insolvency and Bankruptcy Code, 2016.

Analysis: The application was opposed on the ground that possession of the secured asset had already been taken under the SARFAESI framework and therefore parallel recourse under the insolvency code was impermissible. The Tribunal relied on the overriding effect of section 238 of the Insolvency and Bankruptcy Code, 2016 and the settled position that proceedings under SARFAESI do not prevent a financial creditor from invoking section 7 of the Code. The insolvency process was treated as a resolution mechanism distinct from recovery action.

Conclusion: Pendency of SARFAESI proceedings did not bar the section 7 application.

Issue (ii): Whether there was debt and default justifying admission of the section 7 application and whether section 10A of the Insolvency and Bankruptcy Code, 2016 applied.

Analysis: On the documents and pleadings, the Tribunal found the existence of a financial debt and default. The default amount was stated to be above the applicable threshold, and the case was filed after the enhancement of the threshold was already in force. The Tribunal further found that the default had occurred before the period covered by section 10A of the Insolvency and Bankruptcy Code, 2016, so the embargo under that provision did not assist the corporate debtor. In these circumstances, the statutory requirements for admission under section 7(5) were satisfied.

Conclusion: Debt and default were established and section 10A was inapplicable; the application was liable to be admitted.

Final Conclusion: The insolvency application was admitted, CIRP was triggered, moratorium followed, and the interim resolution professional was appointed.

Ratio Decidendi: Pendency of SARFAESI proceedings does not preclude admission of a section 7 insolvency application where financial debt and default are established and the application is otherwise complete; section 238 gives the insolvency code overriding effect, and section 10A applies only to defaults within its protected period.

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