Section 7 insolvency admission turns on proof of debt and default; limitation, quantum, and NPA objections failed.

A section 7 application under the Insolvency and Bankruptcy Code was found maintainable where loan facilities had been sanctioned and disbursed against interest, creating a debt with commercial effect of borrowing. Loan records, security documents, certified account statements, settlement correspondence, and repayment evidence established both debt and default. The limitation objection failed because acknowledgments and a later payment fell within the relevant period. The challenge to the quantum of default was rejected as beyond the limited summary scope of section 7, which only requires proof of debt and default. The NPA objection was treated as immaterial to admission. The applicant was held to be a financial creditor, the petition was admitted, and moratorium and an Interim Resolution Professional were directed.

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Issues: Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was maintainable and liable to be admitted in the light of the objections regarding limitation, status of the applicant as financial creditor, alleged excess claim, and alleged wrongful declaration of the account as NPA.

Analysis: The applicant had sanctioned and disbursed loan facilities against interest, and the debt arose from disbursement for consideration for time value of money with a commercial effect of borrowing. The record contained loan documents, security documents, statement of account duly certified under the Bankers' Books of Evidence Act, correspondence relating to the one-time settlement, and evidence of repayments including a later payment in April 2019. On this basis, the debt and default were held to be established. The objection of limitation was rejected because the record showed acknowledgments and recent payments within the relevant period. The objection relating to quantum of default was held to be outside the limited scope of section 7 proceedings, which require only ascertainment of debt and default in summary adjudication. The contention regarding NPA was also rejected as immaterial for section 7 admission.

Conclusion: The applicant was held to be a financial creditor, the application was found complete, default was found to have occurred, and the section 7 petition was admitted. The Interim Resolution Professional was appointed and moratorium was directed.

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