Section 7 insolvency admission requires only proof of debt and default, not a detailed reconciliation inquiry.

In a section 7 insolvency proceeding, the Adjudicating Authority must limit itself to verifying the existence of financial debt and default from the creditor's records and evidence; it cannot turn admission into a detailed audit, reconciliation exercise, or inquiry into alleged forgery or fabrication. The record here was found to show financial debt and default through loan documents, account statements, CIBIL data, correspondence, financial statements, and admitted letters of credit. Parallel proceedings or disputed entries did not displace that material. The refusal to admit the petition was set aside, the section 7 application was restored, and CIRP was directed to proceed.

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Issues: (i) Whether the Adjudicating Authority could refuse admission of a section 7 application and direct entry-wise reconciliation and scrutiny of accounts in a summary insolvency proceeding. (ii) Whether the record disclosed a financial debt and default so as to warrant admission of the section 7 application and commencement of corporate insolvency resolution process.

Issue (i): Whether the Adjudicating Authority could refuse admission of a section 7 application and direct entry-wise reconciliation and scrutiny of accounts in a summary insolvency proceeding.

Analysis: The statutory scheme under section 7 of the Insolvency and Bankruptcy Code, 2016 confines the Adjudicating Authority to ascertaining the existence of default from the records of the information utility or other evidence produced by the financial creditor. At the admission stage, the Adjudicating Authority is not required to conduct a detailed dispute resolution exercise, embark upon an entry-by-entry audit, or decide complex questions concerning alleged forgery, fabrication, or reconciliation of accounts. Such directions travel beyond the limited jurisdiction contemplated by the Code.

Conclusion: The refusal to admit the application on the basis of a directed reconciliation exercise was not sustainable and was set aside.

Issue (ii): Whether the record disclosed a financial debt and default so as to warrant admission of the section 7 application and commencement of corporate insolvency resolution process.

Analysis: The Tribunal relied on the loan documents, account statements, CIBIL record, acknowledgments in correspondence and financial statements, and the admitted availing of letters of credit to conclude that the debt was due and that default had occurred. The existence of parallel proceedings or disputed entries did not negate the material showing financial debt and default for the purpose of section 7. Once default was established and the application was otherwise complete, the statutory consequence under section 7 was admission of the petition.

Conclusion: The debt and default were held to be established, and the section 7 application was directed to be admitted for initiation of corporate insolvency resolution process.

Final Conclusion: The impugned order was interfered with, the section 7 petition was restored, and the matter was directed to proceed in accordance with the Insolvency and Bankruptcy Code, 2016.

Ratio Decidendi: In a section 7 proceeding, the Adjudicating Authority must confine itself to the existence of financial debt and default and cannot convert admission into a detailed adjudicatory inquiry or a reconciliation exercise.

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