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Issues: (i) Whether the admission of the Section 7 application could be sustained despite the alleged non-compliance with the prescribed declaration of the proposed resolution professional and the requirement under Section 7(5)(a) of the Insolvency and Bankruptcy Code, 2016; (ii) whether the application was barred by limitation in view of the alleged time gap between default and filing; (iii) whether the admission order could stand despite the subsisting status quo order and the parties' conduct in relation to the one time settlement.
Issue (i): Whether the admission of the Section 7 application could be sustained despite the alleged non-compliance with the prescribed declaration of the proposed resolution professional and the requirement under Section 7(5)(a) of the Insolvency and Bankruptcy Code, 2016.
Analysis: The record showed that the declaration accompanying the application was not in the prescribed form and did not contain the requisite statement regarding absence of disciplinary proceedings against the proposed resolution professional. The Tribunal treated this as a defect falling within the statutory scheme of Section 7(5)(a), which contemplates scrutiny of completeness before admission. The defect was treated as curable and capable of rectification, rather than as an incurable bar to the proceedings.
Conclusion: The objection on this ground was accepted to the extent that the admission could not be sustained in its existing form.
Issue (ii): Whether the application was barred by limitation in view of the alleged time gap between default and filing.
Analysis: The Tribunal found that the corporate debtor had issued a written acknowledgment of debt before expiry of the limitation period and had also pursued a one time settlement proposal. Applying Section 18 of the Limitation Act, 1963, read with Article 137 of the Limitation Act, 1963, the acknowledgment triggered a fresh period of limitation. On that basis, the application was held to have been filed within time, and Section 238-A of the Insolvency and Bankruptcy Code, 2016 did not assist the appellant on the limitation objection.
Conclusion: The limitation objection failed.
Issue (iii): Whether the admission order could stand despite the subsisting status quo order and the parties' conduct in relation to the one time settlement.
Analysis: The Tribunal noted that a status quo order of the High Court was operating when the admission order was passed. It also considered the conduct of the parties in relation to the one time settlement, including acceptance of part payment and the later attempt to renew the settlement. These features weighed against a summary admission and supported affording the parties a further opportunity before the Adjudicating Authority.
Conclusion: The admission order was set aside and the matter was remanded for fresh consideration.
Final Conclusion: The appellate challenge succeeded, the admission order was annulled, and the proceedings were sent back for reconsideration after giving the parties an opportunity in relation to settlement and further hearing.
Ratio Decidendi: A Section 7 application must satisfy completeness under Section 7(5)(a), and a written acknowledgment of debt within limitation under Section 18 of the Limitation Act, 1963 gives rise to a fresh limitation period for insolvency proceedings.
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