Assigned financial debt and balance-sheet acknowledgment can sustain a timely section 7 insolvency application.

A legally assigned financial debt may support a section 7 insolvency application, because the definition of financial creditor extends to an assignee of the debt. A duly registered deed of assignment was treated as valid at the admission stage, and an alleged stamp duty defect did not defeat the applicant's status. The application was also held within limitation: article 137 of the Limitation Act applied, the debt became due on classification of the account as non-performing, but the corporate debtor's balance-sheet acknowledgment extended limitation. On that basis, the section 7 application was admitted and CIRP commenced with moratorium directions.

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Issues: (i) Whether the applicant could be treated as a financial creditor on the basis of the deed of assignment. (ii) Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation.

Issue (i): Whether the applicant could be treated as a financial creditor on the basis of the deed of assignment.

Analysis: The definition of financial creditor includes a person to whom a financial debt has been legally assigned or transferred. The deed of assignment was found to be duly registered and, on a prima facie view, valid. Any alleged deficiency in stamp duty would not render the assignment illegal, and the objection to its validity could not defeat the admission stage inquiry.

Conclusion: The applicant was held to be a financial creditor. This issue was decided in favour of the applicant.

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

Analysis: The limitation period for a section 7 application was treated as governed by article 137 of the Limitation Act, 1963. The debt had become due when the account was classified as non-performing asset, and the application was filed after three years from that date. However, the corporate debtor's balance-sheet for the year ending March 2016 acknowledged the liability, and such acknowledgment extended the claim within limitation.

Conclusion: The debt was held not to be time-barred. This issue was decided in favour of the applicant.

Final Conclusion: The application under section 7 was admitted and the corporate insolvency resolution process commenced, along with moratorium and consequential directions.

Ratio Decidendi: A legally assigned financial debt may sustain a section 7 application, and acknowledgment of liability in the corporate debtor's balance-sheet can extend limitation for insolvency proceedings.

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