Section 7 insolvency admission follows once default and a complete application are shown, with no disciplinary bar on the proposed professional.
Under Section 7 of the Insolvency and Bankruptcy Code, 2016, default is established by non-payment of a debt when due and payable, and the financial creditor supported the claim with loan records, security documents, account statements and bank certificates while the corporate debtor did not dispute default. The application was also complete, with the prescribed particulars and supporting evidence on record, and the proposed interim resolution professional had filed the required written communication with no disciplinary proceedings pending. On that basis, the petition was admitted, the corporate insolvency resolution process commenced, and moratorium was declared.
Issues: (i) Whether the corporate debtor had committed default so as to permit admission of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016; (ii) Whether the application was complete and the proposed interim resolution professional was for appointment, warranting admission and declaration of moratorium.
Issue (i): Whether the corporate debtor had committed default so as to permit admission of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
Analysis: Default under the Code means non-payment of a debt when due and payable. The financial creditor produced loan documents, security documents, account statements, bank certificates, and other material showing the outstanding liability and non-payment. The corporate debtor also did not dispute the existence of default in its reply. The record was sufficient to establish default for the purposes of Section 7.
Conclusion: The issue was answered in favour of the financial creditor.
Issue (ii): Whether the application was complete and the proposed interim resolution professional was for appointment, warranting admission and declaration of moratorium.
Analysis: The application contained the prescribed particulars and supporting evidence required under the Code and the Rules. The proposed interim resolution professional furnished the requisite written communication and there was no disciplinary proceeding pending against him. No defect in the application was pointed out. Once default and completeness were established, no extraneous consideration could defeat admission under Section 7.
Conclusion: The application was held to be complete and fit for admission, and the proposed interim resolution professional was accepted.
Final Conclusion: The petition was admitted, the corporate insolvency resolution process commenced, and moratorium under the Code was .
Ratio Decidendi: In proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016, once default is established and the application is complete with a valid proposed interim resolution professional and no disciplinary bar, the adjudicating authority must admit the petition and cannot refuse admission on extraneous considerations.