Limitation under IBC section 7 extended by part payments; financial debt and default proved, so insolvency was admitted.

Part payments made before expiry of the limitation period and earlier acknowledgments of liability extended time under section 19 of the Limitation Act, so the section 7 IBC application was treated as within limitation; article 62 did not apply because the claim was governed by the residuary article 137. The creditor also proved financial debt and default through acknowledgments, sanction letters, mortgage documents, account statements and other records, while the corporate debtor produced no material negating liability. As the application was complete and no disciplinary proceeding was pending against the proposed insolvency professional, the corporate insolvency resolution process was admitted, an interim resolution professional was appointed, and moratorium directions followed.

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Issues: (i) Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was within limitation in view of the alleged part payments and acknowledgment of debt; (ii) whether the applicant established financial debt and default so as to justify admission of the corporate insolvency resolution process.

Issue (i): Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was within limitation in view of the alleged part payments and acknowledgment of debt.

Analysis: The application was filed on the basis of subsequent payments made by the corporate debtor and earlier acknowledgments of liability. The payments made before expiry of the prescribed period brought the matter within section 19 of the Limitation Act, 1963, as fresh limitation runs from the date of the last payment. The plea based on article 62 of the Limitation Act, 1963 was rejected because an application under section 7 of the Insolvency and Bankruptcy Code, 2016 is governed by the residuary article 137 and not by article 62, which applies to suits for enforcement of mortgage.

Conclusion: The application was held to be within limitation.

Issue (ii): Whether the applicant established financial debt and default so as to justify admission of the corporate insolvency resolution process.

Analysis: The corporate debtor did not produce material to show absence of debt or default. The record contained acknowledgments of liability, sanction letters, mortgage documents, account statements and other evidence showing disbursement of financial facilities and non-payment. The corporate debtor also admitted the debt in its counter-affidavit and raised only a grievance regarding possession of its properties. The requirements of section 7 of the Insolvency and Bankruptcy Code, 2016 were therefore satisfied, and the application was complete with a proposed insolvency professional against whom no disciplinary proceeding was pending.

Conclusion: Financial debt and default were established and the application was admitted.

Final Conclusion: The corporate insolvency resolution process was commenced against the corporate debtor, an interim resolution professional was appointed, and moratorium directions were issued.

Ratio Decidendi: For an application under section 7 of the Insolvency and Bankruptcy Code, 2016, subsequent part payment can extend limitation under section 19 of the Limitation Act, 1963, and once financial debt and default are shown by the creditor's records and supporting evidence, the application is liable to be admitted.

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