Acknowledgment of debt and assignment do not defeat Section 7 insolvency admission when liability remains enforceable within limitation.

Repeated renewal of the debt, a revival letter, balance confirmation, and a last payment within the relevant period amounted to acknowledgment of liability, so the Section 7 insolvency application was within limitation. Assignment of the debt did not affect the corporate debtor's underlying liability, and the assignee's consideration for assignment was irrelevant to enforceability. Allegations that the claim was exaggerated could be examined during collation and verification in the resolution process and did not defeat admission. The admission order was sustained and the appeal was dismissed.

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Issues: (i) Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was barred by limitation; (ii) Whether the claim was rendered unsustainable because the debt was assigned and the amount claimed was alleged to be exaggerated.

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

Analysis: The debt had been repeatedly renewed, the corporate debtor had executed a revival letter and a balance confirmation, and there was also an admitted last payment within the relevant period. These circumstances constituted material acknowledgment of liability and showed that the debt remained enforceable within limitation. The assignment of the debt to the assignee did not affect the underlying liability of the corporate debtor.

Conclusion: The plea of limitation failed and the initiation of corporate insolvency resolution process was held to be within time.

Issue (ii): Whether the claim was rendered unsustainable because the debt was assigned and the amount claimed was alleged to be exaggerated.

Analysis: The consideration paid for assignment was held to be irrelevant to the debtor's liability. Assignment merely substituted the creditor and conferred upon the assignee the right to enforce the debt. The question whether the claim would ultimately be accepted after collation and verification was held to be a matter for the resolution process and not a ground to defeat admission under Section 7.

Conclusion: The objection to the claim on the ground of alleged exaggeration and assignment was rejected.

Final Conclusion: The admission order was sustained and the appeal was dismissed for want of merit.

Ratio Decidendi: A financial creditor or assignee may maintain a Section 7 application where the debt is acknowledged within limitation, and the assignee's consideration for assignment does not dilute the corporate debtor's liability to discharge the outstanding debt.

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