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Issues: (i) Whether the assignee of financial assets had locus to maintain the application as a financial creditor under the insolvency code. (ii) Whether existence of debt and default were established so as to warrant admission of the petition. (iii) Whether the petition was barred by limitation.
Issue (i): Whether the assignee of financial assets had locus to maintain the application as a financial creditor under the insolvency code.
Analysis: The assignment agreement transferred the debt to the applicant in its capacity as trustee of the trust. A person to whom a financial debt is legally assigned falls within the definition of financial creditor. The objection that the application was not maintainable for want of locus was rejected.
Conclusion: The applicant was held to be a financial creditor and was competent to file the application.
Issue (ii): Whether existence of debt and default were established so as to warrant admission of the petition.
Analysis: The record showed sanction of credit facilities, continuation of liability, and subsequent payments made after the assignment. The respondent did not dispute the underlying debt or the default in repayment. On that basis, both debt and default stood established within the meaning of the insolvency code.
Conclusion: Existence of debt and default was proved, and the petition was liable to be admitted.
Issue (iii): Whether the petition was barred by limitation.
Analysis: The objection of limitation was rejected in view of the nature of the secured debt and the applicable limitation period recognised for enforcement of money secured by mortgage or charge. The tribunal found no merit in the plea that the application was time-barred.
Conclusion: The petition was not barred by limitation.
Final Conclusion: The insolvency application was admitted, moratorium followed, and an interim resolution professional was appointed for commencement of the corporate insolvency resolution process.
Ratio Decidendi: An assignee of legally transferred financial debt is a financial creditor, and where debt and default are admitted, a section 7 application is maintainable and liable to be admitted if not otherwise barred.
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