Section 7 IBC admission may be refused where dues were substantially recovered through SARFAESI and balance payment was tendered.

A section 7 IBC application may be declined where the creditor has already substantially recovered its dues through SARFAESI enforcement and the remaining balance has been tendered by the corporate debtor. The analysis emphasizes that admission under section 7 is not a mechanical exercise and should not be used predominantly as a recovery tool when the facts indicate substantial prior realization, the debtor remains a going concern, and the balance dues have not been accepted despite tender. On those facts, the petition was not admitted and was dismissed.

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Issues: Whether the petition under section 7 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process deserved admission in the facts of the case, particularly where a substantial part of the claimed amount had already been recovered through SARFAESI proceedings and the corporate debtor had tendered the balance amount.

Analysis: The petition was examined in the context of the amount outstanding after sale of mortgaged assets and the conduct of the parties in the parallel recovery process. The record showed that a substantial recovery had already been made through sale of secured property, reducing the liability substantially, and that the corporate debtor had also attempted to clear the balance dues. The petition was also considered in light of the principle that admission under section 7 is not to be treated as a mechanical exercise where the facts disclose that the proceedings are being used predominantly for recovery rather than resolution, especially when the corporate debtor is a going concern and the balance amount has been tendered but not accepted.

Conclusion: The section 7 petition was not admitted and was dismissed.

Ratio Decidendi: Admission of a section 7 insolvency application may be declined where the materials show that the creditor has already substantially recovered its dues through enforcement action and the circumstances do not justify invocation of insolvency as a recovery mechanism rather than a resolution process.

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