Limitation and debt assignment objections do not defeat a Section 7 insolvency petition where financial debt and default are established.

Section 7 insolvency applications require proof of financial debt and default, with limitation governed by section 238A of the Insolvency and Bankruptcy Code and the Limitation Act. The claim was treated as enforcement of mortgage-secured debt under Article 62, and the petition was found within time. Objections based on uncertified account statements and the debt assignment were rejected because the bank records were sufficient and the assignment was treated as valid. The tribunal also held that pendency of the Joint Lenders' Forum did not affect admission, found financial debt and default established, and admitted the petition, commencing CIRP and appointing an interim resolution professional.

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Issues: (i) Whether the petition under section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation; (ii) Whether the statement of accounts and the assignment of debt rendered the application defective or the claim invalid; (iii) Whether there was a financial debt and default justifying admission of the petition and commencement of insolvency proceedings.

Issue (i): Whether the petition under section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation.

Analysis: The limitation objection was examined in the light of section 238A of the Insolvency and Bankruptcy Code, 2016 and the law applying the Limitation Act to insolvency applications. The claim was treated as one for enforcement of money secured by mortgage, attracting Article 62 of the Limitation Act, 1963. On the admitted dates of default and filing, the petition was found to be within time.

Conclusion: The limitation objection was rejected and the petition was held to be within limitation.

Issue (ii): Whether the statement of accounts and the assignment of debt rendered the application defective or the claim invalid.

Analysis: The objection regarding uncertified statements of account was rejected because the materials filed satisfied the requirements for consideration of bank entries in the application. The challenge to assignment and the contention that only one loan survived were also rejected. The tribunal treated the assignment as valid and held that the bank records were sufficient for the purpose of the application.

Conclusion: The objections to the statement of accounts and the assignment of debt were rejected.

Issue (iii): Whether there was a financial debt and default justifying admission of the petition and commencement of insolvency proceedings.

Analysis: The tribunal found that the debt was a financial debt within section 5(8) of the Insolvency and Bankruptcy Code, 2016 and that default within section 3(12) of the Insolvency and Bankruptcy Code, 2016 had been established. The pendency of the Joint Lenders' Forum was held irrelevant to admission under section 7. The petitioner's compliance with the prescribed formalities and the absence of any disqualification against the proposed interim resolution professional were also noted.

Conclusion: A financial debt and default were established and the petition was admitted.

Final Conclusion: The application under section 7 was allowed to proceed, the corporate insolvency resolution process was commenced, and an interim resolution professional was appointed with moratorium to follow.

Ratio Decidendi: In an application under section 7 of the Insolvency and Bankruptcy Code, 2016, the adjudicating authority is required to determine only the existence of financial debt and default, while limitation under the Limitation Act applies and extraneous issues such as internal lender arrangements do not defeat admission.

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