Section 7 insolvency remedy survives consortium transfer talks where debt, default, and lender autonomy remain established.

A lender's Section 7 insolvency application was upheld where debt and default were admitted, the consortium minutes preserved each lender's right to pursue recovery, and an in-principle proposal to transfer the account to NARCL did not extinguish the applicant bank's remedy. The filing pre-dated the consortium decision, so maintainability was not impaired. Settlement proposals raised in appeal were also rejected because they depended on uncertain funding sources, had already been declined by the assignee of the debt, and were not materially improved on revision. No judicial direction to compel settlement consideration was warranted, and the CIRP was allowed to continue.

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Issues: (i) Whether the initiation and admission of the Section 7 proceeding could be faulted because the applicant bank had a small consortium share and the lenders had in principle agreed to transfer the account to NARCL; (ii) Whether the Tribunal should interfere on the basis of the settlement proposals submitted during the appeal and direct consideration of such proposals.

Issue (i): Whether the initiation and admission of the Section 7 proceeding could be faulted because the applicant bank had a small consortium share and the lenders had in principle agreed to transfer the account to NARCL.

Analysis: The debt and default were not disputed. The consortium minutes recorded that each lender remained independent to pursue recovery under its own policy, and the in-principle decision to transfer the account to NARCL did not take away the bank's right to proceed under Section 7. The Tribunal also noted that the application had been filed before the consortium decision and that the applicant bank was entitled to act on the default in accordance with the facility documents.

Conclusion: The objection to maintainability failed, and the admission of the Section 7 application was sustained.

Issue (ii): Whether the Tribunal should interfere on the basis of the settlement proposals submitted during the appeal and direct consideration of such proposals.

Analysis: The settlement proposals were examined and were found to depend substantially on uncertain or untied funding sources, including insurance claims and an unidentified investor. The assignee of the debt had already considered and declined the proposal, and the revised proposal did not materially cure the deficiencies. No ground was made out for judicial direction to compel acceptance of the settlement.

Conclusion: No interference was warranted on the basis of the settlement proposals.

Final Conclusion: The appeal could not dislodge the order admitting the insolvency application, and the corporate insolvency process was permitted to proceed in accordance with law.

Ratio Decidendi: A lender's right to invoke Section 7 of the Insolvency and Bankruptcy Code is not defeated by an in-principle consortium decision to transfer the account to another agency, where debt and default are admitted and each lender remains free to pursue its own recovery measures.

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