Section 7 insolvency default must be tied to contractual approval conditions before possession timelines can be computed.

A section 7 insolvency application requires proof of an actionable default by the corporate debtor. Where contractual possession timelines are linked to fulfilment of approval conditions, including fire safety clearance, the period for handing over possession must be computed from the date the necessary clearance is granted. On the facts stated, the project could not commence until environmental and fire safety approvals were obtained, the fire safety approval was granted on 27 November 2014, and the possession offer was issued within the contractual timeline. No default attributable to the corporate debtor was proved, so the section 7 application was not maintainable.

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Issues: Whether the rejection of the section 7 application was justified on the ground that no default had occurred, since the contractual time for handing over possession was to be computed only after fulfilment of the preconditions attached to building approval, including fire safety approval, and the delay was not attributable to the corporate debtor.

Analysis: The contractual timeline for possession was linked to approval of the building plan and compliance with the imposed preconditions. The record showed that the project could not commence immediately after the initial approval because environmental and fire safety clearances were required before construction could proceed. The fire safety approval, treated as material for commencement of construction, was granted on 27 November 2014. On that basis, the possession period had to be reckoned from that date, and the possession offer had been issued within the contractual timeline. In such circumstances, the delay was not established as a default attributable to the corporate debtor for the purpose of section 7 of the Insolvency and Bankruptcy Code, 2016.

Conclusion: The section 7 application was not maintainable on the facts found, as no actionable default by the corporate debtor was proved.

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