Section 7 insolvency petition maintainable where authority and acknowledgments of debt cure limitation and default is proved.

A section 7 application under the Insolvency and Bankruptcy Code was found maintainable because the record contained authority for the signatory, and acknowledgments of liability dated 31 March 2015 and 13 February 2018 saved limitation even if the default date was taken as 29 November 2014. The Bench then held that the loan documents, security papers, CRILC report, restructuring record, and later acknowledgments established financial debt and default above the statutory threshold. As the requirements of section 7(5) were satisfied, the petition was admitted, moratorium was imposed, and an interim resolution professional was appointed.

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Issues: (i) Whether the petition under section 7 of the Insolvency and Bankruptcy Code, 2016 was not maintainable for want of proper authority and was barred by limitation. (ii) Whether default in payment of financial debt was established so as to admit the petition and commence the corporate insolvency resolution process.

Issue (i): Whether the petition under section 7 of the Insolvency and Bankruptcy Code, 2016 was not maintainable for want of proper authority and was barred by limitation.

Analysis: The record contained a letter of authority in favour of the authorised signatory, curing the objection regarding competence to institute the application. On limitation, the Bench treated the letters dated 31 March 2015 and 13 February 2018 as acknowledgments of liability within the limitation period. In view of such acknowledgments, the application was not barred even if the date of default was taken as 29 November 2014.

Conclusion: The objections as to authority and limitation were rejected and the petition was held maintainable.

Issue (ii): Whether default in payment of financial debt was established so as to admit the petition and commence the corporate insolvency resolution process.

Analysis: The financial creditor placed on record the loan documents, supporting security documents, CRILC report, restructuring record, and subsequent acknowledgments of liability. The account was classified as non-performing asset on 31 March 2017, and the materials were sufficient to establish a debt and a default exceeding the statutory threshold. The Bench therefore found the requirements for admission under section 7(5) satisfied and directed the statutory moratorium with appointment of an interim resolution professional.

Conclusion: Default was established and the petition was admitted with commencement of the corporate insolvency resolution process.

Final Conclusion: The insolvency application succeeded, the corporate debtor entered the insolvency resolution framework, and the statutory consequences of admission followed.

Ratio Decidendi: A section 7 application is maintainable where the applicant's authority is evidenced on record and acknowledgments of debt within limitation sustain the claim; once default is proved, admission and moratorium must follow under the Code.

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