INSOLVENCY AND BANKRUPTCY CODE, 2016

Section 7

Initiation of Corporate insolvency resolution process by financial creditor - “Corporate Guarantee and Undertaking Agreement” claimed by corporate debtor to be fraud - Pre-existing dispute, whether can be subject-matter of section 7 -

Adjudicating Authority admitted application under section 7 preferred by 'financial creditor'. Corporate debtor filed an appeal contending that there was no corporate guarantee given by corporate debtor and contended that “Corporate Guarantee and Undertaking Agreement” was fraud and was not reflected in records of corporate debtor available with Registrar of Companies (ROC). Held: Once adjudicating authority was satisfied on basis of records that debt was payable and there was default, adjudicating authority is required to admit application. Respondent (financial creditor) enclosed copy of the 'Corporate Guarantee and Undertaking' Agreement instituted on e-Stamp, issued by Government of National Capital Territory of Delhi. It was not open to Adjudicating Authority to deliberate on issue as to whether e-Stamp was a forged document or not. Merely because a suit was filed by the corporate debtor and pending, it could not be a ground to reject application under section 7 . Pre-existing dispute cannot be a subject matter of section 7, though it may be relevant under section 9.

Followed:M/s. Innoventive Industries Ltd. v. ICICI Bank & Anr. (2018) 1 SCC 407 (SC) : 2017 TaxPub(CL) 0600 (SC)

REFERRED :

FAVOUR : Against the appellant

A.Y. :

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