Attachment orders cannot substitute a recovery certificate for initiating insolvency proceedings under the Insolvency and Bankruptcy Code.

An application under the Insolvency and Bankruptcy Code, 2016 was held not maintainable where the only material relied on was an order under Section 4 of the Haryana Protection of Interest of Depositors in Financial Establishments Act, 2013. The Tribunal noted that the memorandum of undertaking was between the applicant and another entity, with no material linking the respondent to that arrangement or showing payment to the respondent. It further held that Section 4 authorises only an attachment order for protection of depositors, not a recovery order or recovery certificate, and such attachment orders cannot be treated as a judgment, decree, or recovery certificate to found a Section 7 proceeding. The application was therefore liable to be dismissed.

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Issues: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was maintainable on the basis of the order passed under Section 4 of the Haryana Protection of Interest of Depositors in Financial Establishment Act, 2013.

Analysis: The Memorandum of Undertaking was executed between the applicant and another entity, and there was no material to show that the respondent was connected with that arrangement or that the amount in question had been paid to the respondent. Section 4 of the Haryana Act empowers the District Magistrate only to issue an attachment order for protection of depositors and not a recovery order or a certificate of recovery. The orders relied upon by the applicant were in substance attachment orders and could not be treated as a judgment, decree, or recovery certificate creating a basis for initiating proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 against the respondent.

Conclusion: The application under Section 7 was not maintainable and was liable to be dismissed.

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