Debenture holders may file Section 7 insolvency where debt and default are proved, and title changes do not defeat admission.

Debenture holders, as financial creditors, may maintain a Section 7 insolvency application in their own right where the debt and default are established; the trust deed did not remove that entitlement. A later change in creditor nomenclature or amendment to the cause title does not vitiate the proceeding absent shown prejudice to the corporate debtor. The admission of CIRP was also not invalidated on natural justice grounds, because the debtor had admitted default and the Adjudicating Authority only had to verify debt and default for admission. The project-specific insolvency argument was held inapplicable on the facts, and the admission order was upheld.

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Issues: (i) whether the debenture holders were entitled to maintain the Section 7 application without impleading the debenture trustee and whether the later name change or amendment vitiated the proceedings; (ii) whether the admission of the Section 7 application was vitiated by violation of natural justice or by the contention that insolvency against a real estate company must be confined only to the concerned project.

Issue (i): whether the debenture holders were entitled to maintain the Section 7 application without impleading the debenture trustee and whether the later name change or amendment vitiated the proceedings.

Analysis: The financial creditors were the debenture holders and had subscribed to the debentures under the transaction documents. The Tribunal held that there is no legal bar to debenture holders maintaining a Section 7 application in their own right, and the trust deed did not curtail that entitlement. The name change of the creditors and the amended cause title did not affect the existence of the debt or the default, and no prejudice was shown to have been caused to the corporate debtor.

Conclusion: The issue was decided against the appellant and in favour of the respondents.

Issue (ii): whether the admission of the Section 7 application was vitiated by violation of natural justice or by the contention that insolvency against a real estate company must be confined only to the concerned project.

Analysis: The Tribunal found that the corporate debtor had admitted the default, that the debt and default stood established, and that the Adjudicating Authority was required only to ascertain the existence of debt and default for admission under Section 7. The request for additional written submissions did not displace the finding of default. The project-specific insolvency principle relied upon by the appellant was held inapplicable on the facts, as the case involved admission of CIRP against the company as a whole and not a different factual setting warranting a project-basis restriction.

Conclusion: The issue was decided against the appellant and in favour of the respondents.

Final Conclusion: The admission order under Section 7 was upheld and the challenge to the initiation of corporate insolvency resolution process failed.

Ratio Decidendi: A Section 7 application is maintainable at the instance of financial creditors who are debenture holders where debt and default are established, and once default is admitted or proved, the admission of CIRP cannot be invalidated merely on the basis of a change in creditor nomenclature, alleged procedural prejudice, or an inapplicable project-specific insolvency argument.

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