Continuing acknowledgment of secured debt preserves insolvency remedy despite SARFAESI or DRT proceedings and supports admission of the claim.

Continuing acknowledgment of a secured financial debt, including audited balance sheets and recovery steps, was treated as sufficient to keep the claim alive for insolvency purposes, so the limitation objection was rejected. Pendency of SARFAESI and DRT proceedings did not bar recourse to the Code, and the assignment of debt remained effective so the applicant could proceed as a financial creditor despite the alleged advisory-services arrangement. Subsisting default, supported by NPA classification, certified account statements and pending recovery action, satisfied the admission requirements, and the application was admitted with CIRP initiated, moratorium imposed and an interim resolution professional appointed.

---

---

Issues: (i) whether the Section 7 application was barred by limitation; (ii) whether pendency of SARFAESI and DRT proceedings or the alleged advisory-services arrangement prevented the petitioner from maintaining the application as a financial creditor; and (iii) whether default and the other requirements for admission under the Code were satisfied.

Issue (i): whether the Section 7 application was barred by limitation.

Analysis: The debt was secured by mortgage and the record showed continuing acknowledgment of liability, including the audited balance sheet and recovery steps taken well within the period prescribed for enforcement of money secured by immovable property. The proceedings before the DRT and the measures under SARFAESI demonstrated that the claim had not become stale for purposes of insolvency action.

Conclusion: The limitation objection was rejected.

Issue (ii): whether pendency of SARFAESI and DRT proceedings or the alleged advisory-services arrangement prevented the petitioner from maintaining the application as a financial creditor.

Analysis: The earlier recovery and enforcement proceedings did not bar recourse to the Code, as the Code gives overriding effect to its provisions. The assignment of debt in favour of the petitioner was treated as valid, and the asserted advisory arrangement did not displace the petitioner's status as holder of the assigned debt. The contention based on forum hunting was therefore not accepted.

Conclusion: The petitioner was held entitled to proceed as a financial creditor under the Code.

Issue (iii): whether default and the other requirements for admission under the Code were satisfied.

Analysis: The records showed subsisting default, including the NPA classification, the certified account statements, the recovery proceedings, and the absence of any disposal of the main recovery application. The application was also complete and the proposed interim resolution professional was found eligible.

Conclusion: The requirements for admission under Section 7 were satisfied and the application was admitted.

Final Conclusion: CIRP was initiated against the corporate debtor, moratorium was imposed, and an interim resolution professional was appointed to take over the process in accordance with the Code.

Ratio Decidendi: For a secured financial debt, continuing enforcement and recovery steps, together with acknowledged liability, may keep the claim alive for insolvency purposes, and the existence of SARFAESI or DRT proceedings does not by itself bar admission of a complete Section 7 application where default is established.

---