SARFAESI pendency does not stay Section 7 insolvency proceedings; debt and default objections must be decided there.

Pendency of a challenge under the SARFAESI Act does not, by itself, bar or stay proceedings under Section 7 of the Insolvency and Bankruptcy Code. The Tribunal noted that the Supreme Court's earlier order only permitted the appellant to pursue Section 17 remedies and did not affect the maintainability or continuance of the insolvency application. Questions on existence of financial debt, default, and the validity of assignment were held to be matters for determination within the Section 7 proceedings themselves, not grounds to keep those proceedings in abeyance. The request to stay the insolvency case was therefore rejected.

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Issues: Whether the proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 were liable to be stayed or kept in abeyance pending adjudication of the appellant's application under Section 17 of the SARFAESI Act, 2002 before the Debt Recovery Tribunal.

Analysis: The challenge to the Section 7 proceedings was founded on the argument that the Supreme Court's earlier order permitting recourse to Section 17 proceedings implied that the insolvency proceedings should await the result before the Debt Recovery Tribunal. The Tribunal held that the Supreme Court's order only granted liberty to pursue remedies under the SARFAESI Act and did not decide, either expressly or by implication, anything about the maintainability or continuance of the Section 7 application. The pendency of SARFAESI proceedings did not curtail the adjudicating authority's jurisdiction to examine the existence of financial debt and default under the Insolvency and Bankruptcy Code. The appellant's objections on absence of debt and validity of assignment were matters to be raised and decided in the Section 7 proceedings themselves, not as a basis to halt those proceedings.

Conclusion: The request to stay the Section 7 proceedings was rejected and the appeal failed.

Ratio Decidendi: Pendency of proceedings under the SARFAESI Act does not, by itself, bar or stay proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016, and objections as to debt, default, or assignment must be adjudicated in the Section 7 proceedings themselves.

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