Financial debt and default established through documentary evidence; limitation saved by acknowledgments and continuing liability in insolvency proceedings.

A section 7 insolvency petition was admitted on the basis that the financial creditor produced credible documentary evidence of financial debt and default, including loan records, balance confirmations, revival letters and account statements. The corporate debtor admitted borrowing but disputed only the quantum, which did not displace the finding of default. The limitation objection was rejected because renewal of facilities, acknowledgments and a subsequent payment showed a continuing liability and kept the claim within time. The Tribunal accordingly found default, admitted the petition, declared moratorium and appointed an interim resolution professional.

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Issues: (i) Whether the financial creditor had established the existence of financial debt and default so as to warrant admission of the petition under section 7 of the Insolvency and Bankruptcy Code, 2016. (ii) Whether the petition was barred by limitation.

Issue (i): Whether the financial creditor had established the existence of financial debt and default so as to warrant admission of the petition under section 7 of the Insolvency and Bankruptcy Code, 2016.

Analysis: The application was supported by loan documents, renewal and enhancement of facilities, balance confirmation, revival letter, and statement of accounts showing the outstanding liability. The corporate debtor admitted the borrowing and only disputed the quantum and supporting calculations. On the materials placed, the Tribunal found that a debt was due and payable and that default had occurred.

Conclusion: The issue was answered in favour of the petitioner and the petition was admitted, with commencement of the corporate insolvency resolution process.

Issue (ii): Whether the petition was barred by limitation.

Analysis: The Tribunal relied on the renewal of facilities, revival letter, balance confirmation, and subsequent payment to hold that the claim was within time. The objection that the supporting documents were stale was therefore rejected.

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

Final Conclusion: The corporate debtor was found to be in default, the petition under section 7 was admitted, moratorium was declared, and an interim resolution professional was appointed for conduct of the insolvency process.

Ratio Decidendi: A petition under section 7 is liable to be admitted when the financial creditor establishes a financial debt and a subsisting default through credible documentary evidence, and limitation is saved by acknowledgments or other material showing a continuing liability within time.

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