Section 7 insolvency admission upheld where co-borrower liability and default were proved by loan records and part-payments.

A section 7 insolvency application was treated as maintainable because the corporate debtor was shown to be a co-borrower under the loan agreement, with signatures on every page and later part-payments confirming a subsisting financial liability. Default was held to have occurred on 05.07.2021, outside the section 10A suspension period, and could be proved through the loan documents, disbursement proof, SARFAESI notice and repayment schedule even without an information utility record. Objections based on stamping, quantification discrepancies and alleged lack of authorisation were rejected, and the requirements for admission were found satisfied.

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Issues: (i) whether the corporate debtor, as co-borrower, was liable for the loan debt and the petitioning financial creditor had established a financial debt; (ii) whether the application under section 7 was barred by section 10A of the Insolvency and Bankruptcy Code, 2016, and whether default was proved by the material on record; (iii) whether non-furnishing of information utility records, alleged insufficiency of stamping, discrepancy in quantification, and lack of authorization rendered the petition not maintainable.

Issue (i): whether the corporate debtor, as co-borrower, was liable for the loan debt and the petitioning financial creditor had established a financial debt.

Analysis: The loan agreement identified the corporate debtor as a co-borrower within the definition of borrower, its name was entered in the schedule as co-borrower, and the agreement bore its signatures on every page. The record also showed part payments and later assurances to clear the instalments, which supported the existence of a subsisting financial liability.

Conclusion: The issue was answered in favour of the financial creditor, and the existence of financial debt against the corporate debtor was established.

Issue (ii): whether the application under section 7 was barred by section 10A of the Insolvency and Bankruptcy Code, 2016, and whether default was proved by the material on record.

Analysis: On the repayment schedule and the admitted part payments, the default was found to have occurred on 05.07.2021, which was outside the protected period under section 10A. The financial creditor had not filed an information utility record, but the loan sanction letter, loan agreement, disbursement proof, notice under the SARFAESI Act, 2002, and revised repayment schedule were treated as other permissible evidence of default under section 7(3)(a) and Regulation 2A. These materials, together with the corporate debtor's own conduct, were sufficient to prove debt and default.

Conclusion: The issue was answered against the corporate debtor, and the petition was held not to be barred by section 10A; default was proved.

Issue (iii): whether non-furnishing of information utility records, alleged insufficiency of stamping, discrepancy in quantification, and lack of authorization rendered the petition not maintainable.

Analysis: The absence of an information utility record did not defeat the application because other evidence of default was available. The plea of inadequate stamping was not accepted in view of the surrounding documentary record and the admitted conduct showing repayment liability. The discrepancy in the amount claimed was treated as inconsequential since the default was above the statutory threshold and the foreclosure statement supported the figures. The board resolution was held sufficient to authorize the filing.

Conclusion: The issue was answered in favour of the financial creditor, and the petition was held maintainable.

Final Conclusion: The corporate debtor's objections were rejected, the requirements for admission under section 7 were satisfied, and corporate insolvency resolution process was directed to commence with moratorium and appointment of an interim resolution professional.

Ratio Decidendi: For admission of a section 7 application, the adjudicating authority must be satisfied that a financial debt exists and default has occurred, and such default may be established by other permissible evidence even if no information utility record is filed.

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