Established debt and default justified admission of insolvency, while interim appellate protection was excluded from the CIRP timeline.
Established debt and default, together with the unanimous rejection of settlement proposals by the lenders and opposition from key stakeholders, did not justify interference with the admission of the Section 7 insolvency application, and the corporate insolvency resolution process was permitted to continue in accordance with law. The period during which interim protection operated in appeal, during which the resolution process could not progress beyond claim collation, was directed to be excluded from computation of the CIRP timeline.
Issues: (i) Whether the order admitting the Section 7 application and commencing insolvency proceedings required interference in view of the settlement proposals and objections raised by the corporate debtor and supporting stakeholders. (ii) Whether the period during which interim protection operated in the appeal should be excluded from the CIRP timeline.
Issue (i): Whether the order admitting the Section 7 application and commencing insolvency proceedings required interference in view of the settlement proposals and objections raised by the corporate debtor and supporting stakeholders.
Analysis: The disbursement of loan, the declaration of default, and the existence of debt stood established on the record. The corporate debtor's settlement proposals were considered by the lenders and were unanimously rejected. The project stakeholders, including the registered homebuyers' association and YEIDA, also opposed acceptance of the proposals. In these circumstances, the matter did not justify interference with the admission order, and the corporate insolvency resolution process had to proceed in accordance with law.
Conclusion: The challenge to the admission of the Section 7 application failed and the decision was against the appellant.
Issue (ii): Whether the period during which interim protection operated in the appeal should be excluded from the CIRP timeline.
Analysis: Since the appeal remained under interim protection for a period during which the resolution process could not progress beyond claim collation, that interval was directed to be excluded from the CIRP period.
Conclusion: The intervening period was excluded from the CIRP timeline in favour of the appellant only to that limited extent.
Final Conclusion: The appeal did not succeed against the admission of insolvency proceedings, and the CIRP was permitted to continue in accordance with law, with the interim period excluded from computation of the resolution timeline.
Ratio Decidendi: Where debt and default are established and settlement proposals are unanimously rejected by the lenders and opposed by key stakeholders, the appellate forum will ordinarily not interfere with an order admitting a Section 7 application; any period during which the resolution process was stayed in appeal may be excluded from the CIRP timeline.
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