Siddharth Satish Katariya Vs Central Bank of India (NCLAT Delhi)
NCLAT Delhi held that the core issue of any insolvency proceeding is debt and default. Accordingly, when debt and default is undisputedly established, the Adjudicating Authority did not commit any error in accepting the Section 7 application for initiation of CIRP.
Facts- The present appeal filed under Section 61 of Insolvency and Bankruptcy Code 2016 by the Appellant arises out of the Order dated 07.01.2025 passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench-III) in C.P. (IB) No. 691/MB/2023. By the impugned order, the Adjudicating Authority has admitted the Section 7 application filed by the Central Bank of India admitting the Corporate Debtor/Corporate Guarantor into the rigours of Corporate Insolvency Resolution Process. Aggrieved by the impugned order, the present appeal has been preferred by the Appellant-suspended Director of the Corporate Debtor.
Conclusion- Held that the core issue of any insolvency proceeding is debt and default. Debt and default have not been contested by the Appellant. There is no submission of the Appellant that no amount is due qua their guarantee obligations. The Appellant has only tried to get over their liabilities on the ground that the earlier contract of guarantee having been novated, there was no liability on the part of the Corporate Guarantor until the new Guarantee Deed was invoked and on the ground that no occasion had arisen for the Appellant to discharge their liabilities due to insufficient stamping of the Guarantee Deeds. For detailed reasons stated above, both these grounds have been found to be devoid of merit. The admission of the Section 7 application cannot be obfuscated or defeated by raising such unfounded technical pleas. In the present case, when debt and default is undisputedly established, the Adjudicating Authority did not commit any error in accepting the Section 7 application.
